China overtakes U.S. in coffee outlets: report

China has overtaken the U.S. as the largest branded coffee shop market in the world by outlets, according to a report by World Coffee Portal released on Tuesday. The rapid growth in the Chinese market amid rising consumption presents a massive opportunity for domestic and foreign coffee brands, analysts said.

China’s branded coffee shop market has grown 58 percent over the last 12 months to reach 49,691 outlets. Growth was led by the rapid expansion of the small store format and delivery focused Luckin Coffee and Cotti Coffee, which added 5,059 and 6,004 new stores, respectively, according to the report.

Starbucks opened 785 outlets in China during the period and is the second-largest branded coffee operator in the country by outlets.

Commenting on the report findings, Allegra Group Founder and CEO Jeffrey Young said: “The East Asian coffee shop market is clearly experiencing rapid growth led by phenomenal outlet expansion in China, which has fast become a global coffee industry powerhouse.”

China is the fastest-growing market in East Asia ahead of Malaysia and the Philippines, according to the report.

The rapid growth of the coffee market in China indicates that Chinese consumers' demand for coffee is continuously increasing, which presents more business opportunities for both domestic and foreign coffee companies in the Chinese market, analysts said.

More than 90 percent of 4,000 Chinese coffee shop consumers surveyed drink hot coffee weekly, while 64 percent consume iced coffee at least once a week. Meanwhile, 89 percent of consumers surveyed visit or order from a coffee shop at least once a week, with a fifth of those doing so daily, according to the report.

The growth of the coffee market in China also reflects the trend of consumer upgrading.

Retail sales in October expanded 7.6 percent year-on-year to 4.33 trillion yuan ($596.56 billion), showcasing accelerated consumption in China as the services sector continued to grow faster than sales of goods.

In the first 10 months, retail sales topped 38.54 trillion yuan, up 6.9 percent.