《Daily Economic》   December 10, 2013 in Business, China. Tags: China's coffee market
 

An increasing number of brands and enterprises are cramming into China’s coffee market, fueling competition and spawning a variety of marketing strategies to lure consumers and boost profits.

The Guatemalan coffee chain operator Fox Coffee is the latest among a number of international brands to have entered China, eyeing huge growth potential.

Besides running physical stores, Fox Coffee is seeking to expand its revenue sources by selling coffee machines to mobile coffee vendors and online retailers, according to the Chinese-language National Business Daily.

The coffee machine project has drawn a 300 million yuan (US$49.3 million) investment from the Hong Kong-based Culturecom Holdings and C&P Investment Management.

With coffee consumption maturing in China, operators are simplifying and streamlining their operations. Many are deploying droves of small vehicles to peddle their coffee, a source in the trade of chain beverage stores told the paper.

China has attracted international brands including Starbucks, Japan’s UCC Ueshima Coffee, Britain’s Costa coffee shop chain, and Nespresso, a unit of Swiss Nestle Group that sells coffee machines.

Starbucks has ventured into the retail channel in a bid to expand its market, putting two products, including its popular frozen coffee drink Frappuccino, on the shelves of major supermarkets, convenience stores and shopping malls in eastern and southern China, according to Starbucks China.

Convenience stores, fast food restaurants and bakeries are launching their own offerings, according to an analyst from the Beijing S&P Information Consult, eyeing the lucrative business in coffee and the rapid pace at which the market has been growing in recent years.

According to some estimates, the Chinese coffee market is growing at an annual rate of 25%, and it is expected to become the world’s largest market in 10 years.

The number of coffee stores in China has grown from more than 10,000 to top 30,000 in the past five years.