Coffee shops in China: Expansion of Western chains

China is a tea-drinking culture. However, urban consumers are acquiring a taste for coffee and coffee shops have sprung up to serve them. Starbucks and Costa are present and expanding rapidly there. They face price competition from McDonalds and KFC. This report examines the strategies of these companies for entering the market, expanding their business, and dealing with competitive challenges.

Scope

Discover the leading Asian and Western players in the Chinese coffee shop market.

Find out how Starbucks and Costa have adjusted their offering to suit Chinese consumers.

Reasons to buy

Why is a nation of tea-drinkers starting to frequent coffee shops?

How many stores do Starbucks and Costa operate in China, and what ownership models are used?

What competitive threats do the Western coffee shop chains face in China?

Companies mentioned

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Table of Contents

OVERVIEW

Catalyst

Summary

COFFEE SHOP CHAINS IN CHINA

China's historic preference is for tea

The coffee consumer demographic is expanding

Local players are well-established

UBC

Pacific Coffee

C.Straits Café

Maan Coffee

Caffebene

Zoo Coffee

Paris Baguette

Where is China in the market life cycle?

Introduction

Growth

Maturity

Decline

The Chinese coffee shop market is at the Growth stage

Local players often model themselves on Western coffee shops

STARBUCKS AND COSTA ARE EXPANDING

Starbucks entered the Chinese market in 1999

The company is now expanding aggressively there

Starbucks offers a subtly localized proposition to consumers

Prices are higher than expected

Franchising is a common route to growth in foodservice

Franchising can be difficult in China

Limited local management skills

Starbucks intends to continue its expansion in China

Costa

Costa entered China in 2007

It operates via joint ventures in China

Like Starbucks, Costa has localized its offering

FAST FOOD CHAINS ARE COMPETING

McDonalds has opened McCafé outlets in China

China is KFC's largest market

KFC is offering premium coffee

The fast food chains will challenge Starbucks and Costa

CONCLUSIONS

The Chinese coffee shop market is a surprising opportunity

APPENDIX

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