Against a backdrop of intensifying industry competition and falling coffee prices, freshly made coffee must establish a clear value anchor. Through differentiated product innovation and communication, it can effectively convey its value to an increasingly complex and diverse consumer base, catering to drinking needs at different stages.
Aaron Liu, Associate Research Analyst, China
Market Definitions
This Report explores consumers’ on-premise coffee consumption habits and interest in related innovations, while also examining their perceptions of and attitudes towards different purchase channels. On-premise coffee refers to freshly made coffee beverages available through foodservice and leisure channels, including but not limited to coffee shops, convenience stores, full-service restaurants, fast food outlets, tea shops, bakeries and dessert shops. It does not include packaged coffee products such as ready-to-drink (RTD) coffee, instant coffee, drip bag and capsule coffee.
Subgroup definitions:
- High-frequency consumers are those who drink freshly made coffee once a day or more
- Medium-frequency consumers are those who drink freshly made coffee once a week or more, but not daily
- Low-frequency consumers are those who drink freshly made coffee less than once a week
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Executive summary
- Key issues in this Report
- Definitions
- What you need to know
- Key indicators of the freshly made coffee market
- Market factors
- New product trends
- Consumer trends and future opportunities
- What we think
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The market
- Market size and forecast
- Freshly made coffee maintains double-digit growth, but rate is stabilising
- Graph 1: best- and worst-case forecast for retail value sales* in the freshly made coffee market, 2020-30
- Coffee brands continue expansion, driving further growth in store numbers
- Graph 2: best- and worst-case forecast for total number of freshly made coffee stores*, 2020-30
- Market factors
- Consumers plan to tighten spending on food, drink but willingness to trade up remains high
- Graph 3: categories consumers plan to spend more on in the next three months, 2025
- Graph 4: trading up in non-alcoholic drinks – would buy a more expensive product, 2023-24
- A steady stream of coffee-themed events helps drive wider spread of coffee culture
- Delivery wars still pushing down prices of freshly made coffee
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Companies and brands
- Market share
- Domestic brands strengthen lead through rapid expansion, driving further industry concentration
- Chain coffee brands adopt multi-brand strategies to tackle intensifying local competition
- Tea drink brands disrupt coffee landscape by leveraging store networks, supply chain advantages
- New product trends
- Boost alertness claims, enhance drinking experience with extra-strength coffee
- Unlock the differentiated value of fruit flavours
- From adding salt to incorporating vegetable flavours: craft a richer taste experience
- Multidimensional innovation caters to cooling needs during hot weather
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Consumer trends and future opportunities
- Deepen coffee experience both vertically and horizontally to meet evolving consumption needs
- Freshly made coffee outpacing instant, RTD; continues expansion across city tiers
- Graph 5: coffee consumption penetration – foodservice channels/coffee houses, by city tier, 2023-25
- Graph 6: coffee segments, by penetration rate, 2023-25
- Preferences shifting towards freshly made coffee among both higher- and lower-income groups
- Graph 7: changes in coffee segment penetration, by monthly household income, 2025 vs 2024
- Consumption habits for freshly brewed coffee gradually take shape, with Tier 2 cities leading growth in high-frequency consumers
- Graph 8: consumption frequency – freshly made coffee from foodservice channels/coffee houses, 2023-25
- Graph 9: proportion of high-frequency drinkers – freshly made coffee from foodservice channels/coffee houses, by city tier, 2023-25
- Penetration of domestic coffee chains outstrips international brands; fast food, tea shops follow closely behind
- Graph 10: consumption channels for freshly made coffee, 2025
- Graph 11: ranking of consumption channels for freshly made coffee, 2024-25
- Expertise, value for money are key differentiators in brand perception
- Graph 12: perceptions of freshly made coffee brands, 2025
- Rising rankings of domestic coffee brands, convenience stores suggest value for money is key consumer demand
- Graph 13: perceptions of freshly made coffee brands – expertise and value for money, 2025
- Beyond specialist expertise, international coffee brands can strengthen their image as aspirational choices by aligning with lifestyle values
- Graph 14: brand perceptions – domestic vs foreign coffee shop chains, 2025
- Fine-tune operations to attract consumers based on shared interests
- Penetration gap between milk, black coffee narrows further; infused coffees help reach a broader consumer base
- Penetration gap between milk, black coffee narrows further; combos help reach a broader consumer base
- Graph 15: on-premise preferences, 2025
- Milk coffee has broader appeal, while black coffee is favoured by the more discerning
- Graph 16: selected on-premise preferences, by consumption frequency, 2025
- Deepen focus on black coffee to meet demand for purer flavour experiences
- Cultivate high-frequency consumption through flavour exploration, drinking experiences
- Graph 17: selected on-premise preferences, by consumption frequency, 2025
- Extend the coffee experience horizontally and vertically: from single items to combos
- Caffeine-free products attract more low-frequency users than frequent drinkers
- Graph 18: selected on-premise preferences, by consumption frequency, 2025
- Achieve full-day coverage with naturally decaffeinated coffee, non-coffee options
- Effectively communicate product value through differentiated messaging
- Ideal price for black coffee continues to rise; signature blends still offer greater premium potential
- Graph 19: price ranges, by product type, 2025
- Graph 20: average ideal price*, by product type, 2024-25
- Willingness to pay for coffee declines in lower-tier cities; value perception of black coffee remains weak in these markets
- Graph 21: average ideal price*, by city tier, 2025
- Medium- and high-frequency consumers more willing to pay; low-frequency consumers more sensitive to price of milk coffee
- Graph 22: average ideal price*, by consumption frequency, 2025
- Flavour conveys coffee’s value more effectively than function, especially for younger groups and low-tier consumers
- Graph 23: premium factors, 2025
- Graph 24: premium factors – flavour, by age and city tier, 2025
- Foundational flavours, elevated content
- Leverage the ‘health halo’ of flavour ingredients to drive value from quantity to quality
- Brands, third spaces more obvious carriers of value for low-frequency consumers
- Graph 25: premium factors, by consumption frequency, 2025
- Strengthen brand image through effective co-branding
- Medium- and high-frequency consumers value craftsmanship, coffee beans; high-quality beans, frequent new launches key to retaining core users
- Graph 26: consumption attitudes for freshly made coffee – selected options, by consumption frequency, 2025
- Graph 27: premium factors – selected options, by consumption frequency, 2025
- From origin segmentation to estates: building identity, quality credentials for coffee beans
- Freshness a key driver of quality upgrades, helps highlight differentiated value
- Beyond coffee and ingredients, the value of water warrants stronger communication, further exploration
- Upgrade to ‘coffee plus’ by aligning with consumption scenarios from messaging to product
- Work, indoor leisure still key consumption occasions, amid growing demand in outdoor leisure
- Graph 28: drinking occasions, 2024-25
- Younger consumers acquiring the habit of drinking coffee while working, studying
- Graph 29: drinking occasions – study/work, by age, 2024-25
- Craft authentic, stripped-back productivity boosters with no added burden
- Graph 30: health attributes of freshly made coffee, by consumption occasion, 2025
- Effectively communicate health benefits through reduction-led innovation
- Consumers prefer black coffee in outdoor leisure scenarios
- Graph 31: on-premise preferences, by occasion, 2025
- Meal pairing now the main consumption occasion for milk coffee
- Graph 32: on-premise preferences, by occasion, 2025
- Heavy users show distinct occasion-based drinking habits, fitness occasions merit attention
- Graph 33: drinking occasions, by consumption frequency, 2025
- Unlock growth potential in fitness occasions, starting with higher-tier cities
- Graph 34: drinking occasions – before/after working out, by city tier, 2025
- From marketing aligned with sports occasions to ingredients that meet athletic needs, coffee is honing its image as an exercise drink
- Make additions to coffee tailored to exercise scenarios
- Graph 35: selected health attributes, by consumption frequency, 2025
- Graph 36: interest in added ingredients, 2024
- Highlight content, naturalness to create a healthier ‘coffee plus’
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Appendix – market size and forecast, research methodology and abbreviations
- Market size and forecast − retail value sales
- Market size and forecast – number of stores
- Methodology: consumer survey
- Methodology: TURF analysis
- Abbreviations
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