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China Coffee Part Two: Who’s drinking it?

Monday, June 25, 2012 | By:

Most foreigners’ impression of China’s coffee consumption boils down to two bite-sized misconceptions: 1) there is no good coffee in China, and 2) Starbucks has successfully marketed the coffeehouse experience among China’s growing middle class.  As the story goes, Starbucks has cracked open the market, caffeinated the nation, and awakened the thirst for coffee among Chinese consumers.

As a matter of fact, few people doubt that China, a nation of tea-drinkers, will hesitate to adopt coffee before long, and the words “tipping point” seem to trip of the cognoscenti’s tongues. Those in the coffee industry hopes to see China’s coffee market continue to grow, and frequently compare it with that of the Japanese market, where coffee imports reached a tipping point in 1965 and skyrocketed. They expect that China’s imports in coffee will soon skyrocket as well.

With more than 500 stores in China’s coastal, developed cities, and plans for expansion into second-tier cities inland, Starbucks seems be leading the charge in bringing coffee culture to a nation of tea-drinkers. There are certainly plenty of pretenders to testify to the popularity of Starbucks.

Assumedly the coffee is genuine, at least

But some great imponderables remain: who is drinking coffee in China? Are they drinking daily, and can they afford Starbucks prices?  To most Chinese consumers, Starbucks coffee is more a luxury product than something for everyday consumption, and they’re definitely not ordering it black at the counter.

“In Beijing, people in my age group – 40-something – when they say they drink coffee, they have a cup of gigantic hot milk with a single shot of coffee in it once a week,” says Stuart Eunson, a founder of Arabica Roasters.  Arabica Roasters is a foreign-owned specialty coffee roaster and supplier established in Beijing in 1994, long before Starbucks arrived in China.

“The ones who are a little bit less successful, [they’re drinking coffee] once a month. It’s not the 40-somethings that are drinking coffee every day, they’re not changing the curve. It’s the 20-somethings and 30-somethings, those who are white-collar and making enough to afford Starbucks.

“At home they’re drinking Nescafe.”

Eunson believes that Starbucks arrived at the right time and did the right things – but it did not drive the growth of the coffee market. Nor does it monopolize the coffee culture of China to the extent that Western media portrays. With more than 15 years of experience in China’s coffee market, Eunson had a different take on Starbuck’s role in China’s coffee market.  It was Nescafé, he says, and the Columbia Coffee Grower’s Association, that laid the groundwork for increased knowledge and awareness of coffee.

“We got into these old-fashioned mianbaoche taxis in 1994, 1995, 1996, and you know, you’d be chatting with the driver, you inevitably get to the question of what you do in China, and we’d say coffee. You can hear the gears in their heads turning.  “咖啡,咖啡,怎么听说咖啡,到底是什么? Coffee…coffee… where have I heard of ‘coffee’, what is it exactly…?”

Port cities like Shanghai, Tianjin, and Dalian were an exception, but Eunson says that mid-1990s Beijing was fairly representative of the rest of the country at the time.  People had heard of the two characters kafei, but they didn’t know what they meant. While coffee did exist in China, it was available mostly in hotels and high-end restaurants, and the price was formidable.

So how did the average Chinese person learn the ropes? Through the 1990s, Nestlé invested heavily in radio and television advertisements, until the Chinese words for “Nestlé” (雀巢) became synonymous with “coffee.”

From 1990 to 1999, Nestlé and DHL sponsored a music program called Nescafé Music Time (NMT 雀巢咖啡音乐时间), which introduced UK and American pop music to China. “Anybody who is late 20s to mid-50s would be familiar with 雀巢音乐时间,” says Eunson.

At the same time, television advertising like this showed how easy it was to make a cup of coffee with Nestlé (“one spoon of Nescafé instant, add water, add sugar, add Coffee-mate or milk, and you’ll instantly have a cup of delicious and fresh coffee.”).  Nescafé was sold in boxed sets, like the ones below, which could easily be wrapped up and offered as a gift to a single person, newlywed couple or family.

Short TV advertisements showed that coffee was the perfect companion for families, friends, couples and young professionals, and always came with the message: “The taste is great 味道好极了.”

In addition to Nestlé, the Columbia Coffee Grower’s Association also had full-walled video displays in train stations through the country in the mid-to-late 90s.  While most of the people who saw these ads might not know the name Juan Valdez or ever had a drop of coffee, they were certainly imbued with an at least subconscious awareness of Columbian coffee.  Around the same time, according to Eunson, the International Coffee Organization (ICO), which helped coffee producing countries partner up with coffee-consuming countries, hosted coffee festivals in China in 1996, 1997 and 1998.

In conclusion, Eunson says, “Starbucks did a great job, but there was a lot of knowledge about coffee that was planted in people’s minds long before Starbucks had several hundred stores here.”

Nescafé’s dominance of China’s coffee market cannot be underestimated.  For nearly a decade and more, it has defined Chinese habits of consumption, and continues to do so with new brand ambassadors like Han Han, a popular blogger, writer, and racecar driver.  In the “Live Out Your Boldness” campaign, targeted at young adults, coffee (with milk and sugar, of course) is portrayed as the fuel that drives the post-80s and post-90s generations as they explore their ambitions, pursue their dreams and live life to the fullest. Today, while urban Chinese with enough disposable income flock to Starbucks and Costa for $4 Americanos, Nescafé – with its iconic red mug and its 2+1 signage– remains the byword for coffee for the majority of the population.

For part one of our China Coffee series, click here.

For part three of our China Coffee series, click here. 

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