Chinese Coffee Culture Undergoing Evolution – CoffeeTalk

Coffee culture is gaining popularity in the Chinese market, with a boom in cafes and takeout orders leading to price wars and rapid innovations. However, a quieter trend is emerging: at-home and workplace coffee consumption. The capsule coffee sector holds steady promise as more consumers embrace the convenience and quality of making coffee on their own. Brands like Nespresso, a coffee unit of Nestle, are capitalizing on this shift by establishing capsule coffee as a staple of daily life.

Bernie Gao, a research analyst at the Mintel Group, believes that the capsule coffee market has ample growth potential due to rising coffee consumption and demand for consistent quality. Capsule coffee is increasingly appealing to office workers and younger consumers, penetrating further into various-tier cities.

Nespresso, the capsule coffee business of Nestle, has adopted a premium positioning strategy and embraced local touches in the Chinese market to have an edge amid competition with the country’s on-premise coffee and tea sectors. One of its flagship stores in Shanghai is situated in a crowded corner with Starbucks and Manner, two coffee chains in the country.

Nespresso has scaled up its retail strategy since September, with Nestle’s third quarter fiscal report showing coffee as the largest growth contributor with mid-single-digit growth, supported by the three leading coffee brands — Nescafe, Starbucks, and Nespresso. The company operates 42 directly owned stores, with more than 10 opened this year alone.

In-home coffee solutions, the core of Nespresso’s business, have been a way of life in Europe for years, but Chinese consumers are becoming more aligned with their peers in Europe and the US.

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