In-depth analysis report on the development trend of China's coffee industry (2024-2028)

* Industry Overview and Market Size

1.1 Development History of China's Coffee Market

The Chinese coffee market has undergone a transformation from a niche luxury product to an everyday consumer good. With China's rapid economic development and accelerating urbanization, coffee culture has gradually become part of Chinese consumers' daily lives. The past decade in particular has seen explosive growth in the Chinese coffee market, initially dominated by international brands, to a diversified competitive landscape where both domestic and international brands coexist.

1.2 Market Size and Growth Trend

According to the latest data, China has surpassed the United States to become the world's largest branded coffee shop market. By 2023, the number of coffee shops in China is expected to reach 49,691, a year-on-year increase of 58%. In terms of market size, China's coffee market is expected to reach US$19,037.09 million (approximately RMB 190.37 billion) in 2023 and is projected to grow to US$37,548.79 million (approximately RMB 375.49 billion) by 2030, with a compound annual growth rate (CAGR) of 10.19%.

years

Market size (million US dollars)

Number of stores

Year-on-year growth rate

2023

19,037.09

49,691

58%

2024

20,977.19 (forecast)

55,500 (forecast)

11.7%

2025

23,114.92 (forecast)

62,000 (forecast)

11.7%

2028

31,000.00 (forecast)

86,300 (forecast)

11.7%

2030

37,548.79 (forecast)

96,000 (forecast)

10.19%

This growth trend indicates that China's coffee market is still in a rapid development phase and will continue to maintain rapid growth in the next few years. It is worth noting that although the number of stores has surpassed that of the United States, China's per capita coffee consumption is still far lower than that of developed countries, which means that the market still has huge growth potential .

* Mainstream brands and market structure

2.1 Brand Structure and Market Share

The Chinese coffee market presents a pattern of coexistence of local brands and international brands, but local brands have already taken a dominant position. According to statistics, more than 80% of coffee chain brands in China are local brands. The main brands include:

* Luckin Coffee : With 16,200 digital stores, it has surpassed Starbucks to become the coffee brand with the largest number of stores in the Chinese market.
* Starbucks : With about 7,000 stores in China, it remains the leader in the high-end coffee market .
* Cotti Coffee : Founded by former Luckin Coffee executives , it has opened more than 6,000 digital stores since 2022.
* Manner Coffee : Positioned as a boutique and affordable coffee brand, it has more than 2,500 stores in China.
* Tim Hortons China (Tims China) : manages more than 900 stores in China, focusing on the fusion of coffee and light meals .
* Other brands : including Costa Coffee, M Stand, % Arabica, Nowwa Coffee, etc.

The following table shows the number of stores and market share of major coffee brands:

brand

Number of stores (2024)

Market share (by number of stores)

Growth rate (year)

Luckin Coffee

16,200

32.6%

25%+

Starbucks

7,000

14.1%

8-10%

Cotti Coffee

6,000+

12.1%

200%+

Manner Coffee

2,500+

5.0%

30%+

Tim Hortons China

900+

1.8%

20%+

Other brands

17,091+

34.4%

Variety of changes

2.2 The rise of local brands and the response of international brands

The most notable change in China's coffee market is the rapid rise of local brands. Luckin Coffee surpassed Starbucks in early 2023 to become the coffee brand with the most stores in China, marking a significant shift in the market landscape. Local brands are rapidly expanding their market share through price competition, digital operations, and localized innovation.

"Foreign coffee chains used to dominate the Chinese market, but now local coffee shops have proliferated across the country, posing stiff competition to their international counterparts." [Source: China: 1.4 billion reasons to sell coffee]

Faced with the rise of local brands, international brands like Starbucks are also actively adjusting their strategies. Starbucks co-CEO Belinda Wong stated in January 2024 that Starbucks "does not intend to participate in a price war," but the brand has maintained its competitiveness through app discounts and the introduction of smaller cup sizes.

2.3 Regional Distribution and Lower-tier Markets

China's coffee market exhibits significant regional differences. First-tier cities and the eastern coastal areas are the most mature markets for coffee consumption, while second- and third-tier cities are currently the fastest-growing regions.

It's worth noting that there's a significant disparity in urban and rural consumption. Data shows that wealthy urban households consume coffee at a much higher rate than rural households, suggesting that a significant portion of the rural market remains untapped. This presents an opportunity for coffee brands to expand into lower-tier markets.

* Average Order Value Analysis and Price War Trends

3.1 Comparison of Average Order Value of Different Brands

Average customer spending is a key indicator of coffee brand positioning and profitability. The Chinese coffee market exhibits a distinct stratification in average customer spending, with different brands employing different pricing strategies to attract target consumer groups.

brand

Average customer spending range (yuan)

position

Target consumer groups

Cotti Coffee

8.8-12

Ultimate cost-effectiveness

Price-sensitive consumers

Luckin Coffee

10-15

mass consumer market

Young white-collar workers and students

Manner Coffee

15-20

Boutique and affordable

Quality-seeking consumers

Tim Hortons China

18-25

Coffee + light meal fusion

Consumers who pursue diversified experiences

M Stand

25-35

mid-to-high-end boutiques

Consumers who pursue quality and the environment

Starbucks

30-40

High-end lifestyle

Consumers who pursue brand and social experiences

% Arabica

40+

Ultra-high-end boutique

Coffee connoisseurs, high-income groups

Data shows that consumers now generally expect to pay US$2.20-3.20 (about RMB 15-22) for an 8-10 ounce cup of regular coffee, while prices for established international brands such as Starbucks and Costa Coffee remain higher, ranging from US$4.30-5.80 (about RMB 30-40).

3.2 Evolution and Impact of Price Wars

2023 is known in the industry as the "first year of the coffee price war," with major brands vying for market share through price cuts and promotions. The main manifestations of this price war include:

* Low-price promotions have become normalized : Cotti Coffee launched the "8.8 yuan any drink" campaign, while Luckin Coffee has long implemented the "9.9 yuan special offer" strategy.
* Prices are dropping : Fast food chains like McDonald's McCafe and KFC's KCOFFEE have also joined the price war, with the latter even selling single-origin espresso for 9 RMB (about $1.30), just one-third the price of Starbucks' similar product.
* Margin pressure : Luckin Coffee's profit margin fell 2.6% year-on-year to 13.4% in the third quarter due to the impact of the price war .

"Due to intense price competition, many small coffee chains have struggled to compete, leading them to close stores or convert to franchises of Luckin Coffee or Kudi . Other chains such as Nowwa Coffee, Manner Coffee, and M Stand have also adopted value-oriented strategies to remain competitive." [Source: China: 1.4 billion reasons to sell coffee]

This observation shows that price wars have had a profound impact on the market structure, leading to accelerated industry integration and increased survival pressure on small and medium-sized brands.

3.3 Analysis of the Sustainability of Price Wars

While price wars can help brands expand market share in the short term, their long-term sustainability is questionable. In February 2024, Luckin Coffee reduced its 9.9 yuan discount, which originally applied to all beverages, to only eight standard drinks, suggesting that its extreme low-price strategy may be unsustainable.

Industry experts believe that price wars will eventually shift to value competition. Luckin Coffee 's experience demonstrates that relying solely on low prices and agility is not enough to win in the long term. To maintain relevance, Luckin Coffee is investing in higher-priced innovative products and larger stores in key locations.

* Analysis of the competitive strategies of various brands

4.1 Luckin Coffee 's Digital Operation Strategy

Luckin Coffee 's success is largely attributed to its unique digital operating model and low-cost strategy.

Digital full-chain operations : Luckin Coffee has established a complete digital operations system, including app ordering, intelligent site selection, central kitchen production, store pickup/delivery, private domain operations , and data analysis. This system enables Luckin to effectively manage costs and improve operational efficiency.

"Luckin Coffee's IT capabilities are comparable to those of a second-tier internet company. Regular Luckin users know that whether they're using the app, official account, mini-program, or purchasing offline, they're often prompted to add the ' Luckin Chief Welfare Officer' on WeChat. Once added, the Chief Welfare Officer will add the user to the nearest social group, granting them access to group benefits and coupons." [Source: 2023, Coffee Enters an Era of Price Wars]

This digital operating model enables Luckin to bring users from the public domain into the private domain, and accurately deliver coupons through algorithms to increase user repurchase rates.

Low-cost advantage: Luckin Coffee has significantly reduced operating costs through smaller stores, a pickup and delivery model, and digital operations. According to analysis, Starbucks's cost structure consists of approximately 10 yuan in rent, 5 yuan in labor costs, and a total cost of approximately 20 yuan, with a selling price of over 30 yuan. By optimizing its cost structure, Luckin Coffee has managed to keep costs around 10 yuan, with a selling price of around 15 yuan, while still maintaining a profit of approximately 5 yuan.

Product Innovation and Marketing: Luckin Coffee has demonstrated outstanding product innovation and marketing. Since its launch in April 2021, its hit product, the "Raw Coconut Latte," has achieved numerous sales milestones, including "selling out in one second," "online rush for stock," and "100 million cups sold in one year." Luckin has also partnered with renowned brands like Moutai to launch co-branded products, such as the " Sauce Flavor Latte," further enhancing its brand influence.

4.2 Manner Coffee: Affordable and Boutique Products

Manner Coffee is positioned as a boutique and affordable coffee brand, attracting young professionals by providing high-quality coffee and stylish store design.

Price advantage : Manner's drink prices are 30-40% lower than those of Western chains, giving it a competitive advantage in the price-sensitive Chinese market.

Sustainable development concept : Manner conveys the concept of sustainable development to consumers by offering discounts to customers who bring their own cups, attracting young consumers with strong environmental awareness.

Community penetration : Manner Coffee focuses on community penetration by opening small stores in high-traffic locations such as community centers and office areas to increase brand visibility and convenience.

4.3 Comparison of International Brands' Market Strategies in China

Different international brands have adopted different strategies in the Chinese market to adapt to the local market environment and consumer preferences.

Costa Coffee : Focusing on local market analysis, the company tailors its products to the tastes of consumers in different regions. Consequently, a Costa coffee in Beijing might taste slightly different from one in Shanghai. The British chain offers a wide selection of coffees, a quiet environment, and a loyalty program consisting of a card and app.

Tim Hortons China : Adopting a "Four Cornerstones" strategy: True Local Relevance, Continuous Innovation, True Community, and Uncompromising Convenience. Yongchen Lu, CEO of Tims China, said, "Success in this extremely fast-changing environment requires a very clear philosophy, and our philosophy is rooted in four fundamental cornerstones: True Local Relevance, Continuous Innovation, True Community, and Uncompromising Convenience."

The following table compares the strategic differences of major international brands in the Chinese market:

brand

Degree of localization

Pricing Strategy

Degree of digitization

Expansion speed

Starbucks

medium

High-end pricing

high

medium

Costa Coffee

high

mid-to-high-end pricing

middle

Low

Tim Hortons

high

mid-range pricing

high

medium to high

McCafe

middle

Low price

middle

high

* Consumer behavior and preference analysis

5.1 Consumer Profile

Chinese coffee consumers are primarily concentrated in urban areas, particularly among young professionals and students in first- and second-tier cities. According to survey data, Chinese coffee consumers exhibit the following characteristics:

* Age distribution : Mainly concentrated in the young group aged 18-35, among which consumers aged 25-30 account for the highest proportion.
* Occupational distribution : White-collar workers, creative industry practitioners, and students are the main consumer groups.
* Income level : The middle and high-income groups are the main consumer force, but as the price war progresses, coffee consumption among low-income groups is also increasing.
* Consumption habits : 89% of consumers visit or order from a coffee shop at least once a week, and 20% of consumers consume coffee every day.
* Regional differences : The average per capita coffee consumption in first-tier cities such as Shanghai is about 20 cups per year, which is still five times lower than that in developed countries (including Japan).

5.2 Consumption Scenarios and Channel Preferences

Chinese coffee consumers show distinct characteristics in their consumption scenarios and channel choices:

Consumption scenarios : Office consumption, commuting, social gatherings, and study spaces are the main coffee consumption scenarios. Unlike Western countries, Chinese consumers tend to use coffee as a functional beverage rather than a social experience.

Channel Preference : Data shows that over 85% of Chinese consumers have reserved or ordered coffee takeout in the past 12 months, and 57% prefer coffee takeout to in-store consumption, reflecting the high priority Chinese consumers place on convenience.

Digitalization : Chinese coffee consumers are highly digitalized. They are accustomed to placing orders through digital channels such as apps and mini-programs, and actively participate in brands' digital marketing activities.

5.3 Product Preferences and Taste Trends

Chinese consumers have unique preferences when it comes to coffee products and flavors:

* Product Type : Fresh milk and milk drinks constitute the largest segment of the coffee market, accounting for 42.5% of coffee consumed in 2021. This is followed by powdered milk at approximately 32% and yogurt at approximately 24%.
* Taste preference : Unlike Western countries, Chinese consumers prefer fruity and flavored coffee. According to statistics, fruit-infused and flavored coffee is very common in China.
* Innovative products : Innovative products launched through brand collaborations are popular among consumers, such as the " Sauce-flavor Latte " launched by Luckin Coffee and Kweichow Moutai, and the "Wuchang Rice Milk Latte " by Cotti Coffee .
* Regional differences : Consumers in different regions have different taste preferences. For example, consumers in Beijing and Shanghai tend to prefer sweet flavors, while consumers in Guangzhou prefer sweet flavors.

* Digital transformation and technological innovation

6.1 Analysis of Digital Operation Model

Digital operations have become one of the core competitive advantages of Chinese coffee brands, especially local brands, which have performed outstandingly in this area.

Omni-channel digitalization : China's leading coffee brand has established an omni-channel digital operation system, including its own app, mini-programs, official accounts, third-party food delivery platforms and other touchpoints to achieve digital coverage of the entire consumer journey.

Private domain operations : Private domain traffic management is a key strategy for Chinese coffee brands. For example, Luckin Coffee , by guiding users to add its "Chief Welfare Officer" on WeChat, draws users from the public domain into the private domain. This is followed by increased user stickiness and repeat purchase rates through community engagement .

Data-driven decision-making : Leading brands use big data to analyze consumer behavior and preferences to guide product development, marketing strategies, and store location selection. Luckin Coffee 's coupon distribution strategy is based on algorithms and data analysis, rather than random distribution.

6.2 Mobile Payment and Membership System

Mobile payment and membership systems are important components of the digitalization strategy of Chinese coffee brands:

Mobile payment penetration rate : Chinese coffee consumers are very receptive to mobile payments, and almost all major coffee brands support mainstream mobile payment methods such as WeChat Pay and Alipay.

Membership system innovation : Coffee brands are increasing user loyalty through innovative membership systems. For example, Starbucks' membership program integrates with platforms like Alipay and WeChat Pay , offering personalized offers and experiences. Costa Coffee offers a loyalty program that includes both a card and an app.

Digital Marketing : Brands conduct targeted marketing campaigns through digital channels. As a fast-moving consumer goods company, Luckin Coffee 's talent for marketing and its ability to capitalize on buzz are key to its success.

6.3 E-commerce and New Retail Model

In addition to offline stores, e-commerce and new retail models have also become important ways for coffee brands to expand their sales channels:

E-commerce Penetration : In China, the B2C market is dominated by Alibaba Group 's Tmall portal , which holds a 56.6% market share. Other operators lag far behind, with JD.com in second place at 24.7%. A growing number of Chinese consumers are purchasing imported products online through various Chinese government-approved e-commerce platforms.

Online-offline integration : Coffee brands are actively exploring new retail models that integrate online and offline channels. For example, Starbucks partnered with Alibaba to offer food delivery through the Ele.me platform, while also opening an official flagship store on Tmall to sell coffee beans, coffee utensils, and other products.

Instant coffee market : The instant coffee market on e-commerce platforms is also showing rapid growth. According to statistics, in March 2023, the number of instant coffee products priced below 10 yuan accounted for 8.74% of the total market , and sales accounted for 37.29% of the total instant coffee market, with sales increasing by 87.52% month-on-month and 23.2% year-on-year.

* Supply chain and cost structure analysis

7.1 Coffee Bean Supply and Origin Analysis

China's coffee bean supply mainly relies on imports, but domestic production is also increasing year by year:

Domestic origin : Yunnan Province is China's most important coffee producing area, contributing more than 60% of the country's coffee production.

Import Dependence : Despite increasing domestic production, China still relies heavily on coffee bean imports to meet demand.

Price Fluctuations : Fluctuations in international coffee prices have a significant impact on the Chinese coffee market. According to ICO data, the ICO Composite Indicator Price (I-CIP) averaged 310.12 US cents per pound in January 2025, a 3.5% increase from December 2024. This price fluctuation impacts the cost structure of coffee brands.

7.2 Cost Structure and Profit Model

There are significant differences in the cost structure and profit model of different coffee brands:

Starbucks cost structure : In Starbucks' cost structure, rent accounts for about 10 yuan, labor costs account for about 5 yuan, the total cost is about 20 yuan, and the selling price is more than 30 yuan.

Luckin Coffee's cost structure : Luckin Coffee controls its costs at around 10 yuan through small stores, self-pickup and takeout models, and digital operations. With a selling price of around 15 yuan, it can still maintain a profit of about 5 yuan.

Profit margin comparison : Luckin Coffee 's profit margin in 2023 is higher, but its long-term strategy is to maintain a net profit margin of around 10%. Starbucks' profit margin in the Chinese market is also around 10%.

The following table compares the cost structure and profit model of major coffee brands:

Cost Items

Starbucks

Luckin Coffee

Cotti Coffee

rental costs

High (about 10 yuan/cup)

Low (about 3 yuan/cup)

Low (about 3 yuan/cup)

Labor costs

High (about 5 yuan/cup)

Low (about 2 yuan/cup)

Low (about 2 yuan/cup)

Raw material costs

Medium (about 5 yuan/cup)

Medium (about 5 yuan/cup)

Medium (about 4 yuan/cup)

Total cost

About 20 yuan/cup

About 10 yuan/cup

About 9 yuan/cup

Price

30-40 yuan/cup

10-15 yuan/cup

8.8-12 yuan/cup

Gross profit margin

About 33-50%

About 33-50%

About 25-33%

Net profit margin

About 10%

About 10%

About 5-8%

7.3 Scale Effect and Supply Chain Optimization

As the market scale expands, coffee brands are paying more and more attention to economies of scale and supply chain optimization:

Central kitchen model : Brands such as Luckin Coffee adopt a central kitchen model to centrally produce coffee concentrate and standardized ingredients to improve efficiency and ensure quality consistency.

Digital supply chain : Leading brands are using digital technology to optimize supply chain management, improve efficiency, and reduce costs. Luckin Coffee has made significant progress in supply chain management and digital empowerment across the entire supply chain.

Advantages of scale procurement : As the scale expands, leading brands have significant advantages in procuring raw materials, and can obtain more favorable prices and more stable supply.

* Forecast of development prospects in the next three years

8.1 Market Size and Growth Forecast

Based on existing data and industry trends, we make the following predictions for the development of the Chinese coffee market over the next three years:

Number of stores : China's branded coffee shop market is expected to exceed 86,300 by 2028, with a compound annual growth rate (CAGR) of 11.7%.

Market size : China's coffee market size is expected to grow from US$19,037.09 million in 2023 to US$37,548.79 million in 2030 , with a compound annual growth rate (CAGR) of 10.19%.

Per capita consumption : China's per capita coffee consumption is expected to increase from 42 cups/year in 2022 to 68 cups/year in 2028, but it will still be far below the level of developed countries.

The following table shows the main forecast indicators of China's coffee market in the next three years:

index

2024

2025

2026

2027

2028

CAGR

Number of stores

55,500

62,000

69,300

77,400

86,300

11.7%

Market size (100 million yuan)

2,097.7

2,311.5

2,546.9

2,806.7

3,093.0

10.19%

Per capita consumption (cups/year)

46

50

55

61

68

8.5%

Proportion of freshly ground coffee

54%

57%

60%

64%

67%

5.6%

8.2 Brand Landscape Evolution Trend

In the next three years, the brand landscape of China's coffee market is expected to undergo the following changes:

Local brands dominate the market: Local brands will continue to dominate the market, especially in second- and third-tier cities and lower-tier markets. Luckin Coffee is expected to maintain its leading position, but its growth rate may slow.

Adjustments by international brands : International brands such as Starbucks will place greater emphasis on localization and digital transformation, and may slow down their expansion to focus on improving the efficiency and profitability of existing stores.

Integration of small and medium-sized brands : As price wars continue and market competition intensifies, small and medium-sized brands will face pressure to integrate or be acquired, and market concentration will further increase.

Opportunities for emerging brands : Despite fierce competition, opportunities still exist in niche markets. There is still room for emerging brands that focus on specific scenarios (such as office coffee) or specific products (such as specialty coffee).

8.3 Consumption Trends and Product Innovation

Over the next three years, China's coffee consumption trends and product innovation are expected to show the following characteristics:

Health trend : Healthy coffee products such as low-sugar, low-fat, and plant-based will receive more attention.

Localized innovation : Innovative products that incorporate traditional Chinese elements and flavors will continue to emerge, such as tea- coffee fusion and Chinese-flavored coffee.

Diversification of scenarios : Coffee consumption scenarios will become more diversified. In addition to traditional coffee shop consumption, home coffee, office coffee, outdoor coffee and other scenarios will also be developed.

Sustainable development : Sustainable development concepts such as environmentally friendly packaging and sustainable procurement will be more widely used in the coffee industry.

* Industry Challenges and Risk Analysis

9.1 Risks of price war sustainability

Price war is one of the biggest challenges currently facing the Chinese coffee market:

Margin pressure : The ongoing price war will put pressure on the brand's profit margins. Luckin Coffee 's profit margin in the third quarter fell 2.6% year-on-year to 13.4%.

Balance between quality and innovation : Under price pressure, brands need to balance the relationship between cost control and product quality and innovation.

Market expectation management : A low-price strategy may lower consumers' price expectations for coffee products, making future price increases difficult.

9.2 Market Saturation and Homogenization Risks

As the market expands rapidly, the risks of saturation and homogenization are also increasing:

Saturation in first-tier cities : First-tier cities already have a high density of coffee shops, leaving limited room for new store additions. Starbucks ' rapid expansion in China has sparked concerns about market saturation.

Product homogeneity : Products of various brands are highly homogenized. For example, popular products such as Raw Coconut Latte and Soy Sauce Latte are widely imitated.

Differentiation Challenge : In a fiercely competitive environment, brands need to find new points of differentiation beyond price and product.

9.3 Supply Chain and Cost Risks

Supply chain and cost risks should not be ignored:

Coffee bean price fluctuations : Fluctuations in international coffee bean prices may impact the brand's cost structure. In January 2025, the ICO Composite Indicator Price (I-CIP) averaged 310.12 US cents per pound, a 3.5% increase from December 2024.

Rising labor costs : As China's labor costs rise, coffee brands are facing increasing labor cost pressures.

Rental cost pressure : The high rental costs of prime commercial locations pose a challenge to the profitability of coffee brands.

9.4 Policy and Regulatory Risks

Changes in the policy and regulatory environment may also have an impact on the coffee industry:

Food safety regulation : As regulations become stricter, coffee brands may face increased compliance costs for food safety .

Environmental protection requirements : Environmental protection requirements for disposable packaging, plastic products, etc. may increase the brand's operating costs.

Cross-border e-commerce policies : Changes in cross-border e-commerce policies may affect the supply and price of imported coffee beans and coffee products.

* Conclusion and Strategic Recommendations

10.1 Industry Development Summary

China's coffee market is in a stage of rapid development, showing the following characteristics:

* The market size is growing rapidly : China has surpassed the United States to become the world's largest branded coffee shop market, with the number of stores reaching 49,691 in 2023, a year-on-year increase of 58%.
* Rise of local brands : Local brands account for more than 80% of the market share, and Luckin Coffee has surpassed Starbucks to become the market leader with 16,200 stores .
* Price wars have become normalized : brands compete for market share through low-price strategies, and the average order value shows a clear stratified structure.
* Accelerated digital transformation : Digital operations have become the core competitiveness of coffee brands, especially local brands, which have performed outstandingly in this area.
* Consumption habits are forming : Coffee is transforming from a "luxury product" to a "daily consumer product", with consumption frequency and penetration rate constantly increasing.

10.2 Brand Strategy Recommendations

Based on our analysis of market trends and competitive landscape, we offer the following strategic recommendations for different types of coffee brands:

Leading local brands ( such as Luckin Coffee) :

* Moderately adjust pricing strategies to avoid over-reliance on low-price competition
* Strengthen product innovation and brand building to improve brand premium capabilities
* Exploring overseas markets, such as Luckin Coffee's 47 stores in Singapore, which are about to become profitable.
* Optimize supply chains and digitalize operations to further improve efficiency and reduce costs

International brands (such as Starbucks) :

* Strengthen localized innovation to adapt to the tastes and preferences of Chinese consumers
* Enhance digital capabilities, especially in mobile payments, membership systems, and food delivery services
* Optimize the store network, possibly slowing down the pace of expansion and focusing on improving the efficiency and profitability of existing stores
* Explore strategic cooperation with local enterprises to enhance market competitiveness

Small and medium-sized brands :

* Find niche markets and differentiated positioning to avoid direct competition with leading brands
* Strengthen community penetration and scene innovation, such as office coffee, community coffee, etc.
* Leverage digital tools to improve operational efficiency and reduce costs
* Consider collaborating with or joining a leading brand, such as becoming a franchise store of Luckin Coffee or Kudi .

10.3 Key Success Factors for Future Development

In the next three years, the key success factors for the Chinese coffee market will include:

* Digital capabilities : Full-link digital operations will become the core capability of brand competition.
* Supply chain optimization : Efficient supply chain management will help brands control costs and maintain price competitiveness.
* Product innovation : Continuous product innovation will help brands maintain their market appeal and differentiation.
* Scenario expansion : A diversified consumer scenario layout will help brands expand market coverage and increase consumption frequency.
* Brand building : Strong brand building will help brands improve their premium capabilities and reduce their reliance on price competition.
* Localization capabilities : The ability to deeply understand Chinese consumer needs and cultural preferences will be key to brand success.

10.4 Investment Opportunities and Risk Warnings

For investors, the Chinese coffee market is full of opportunities but also presents risks:

Investment opportunities :

* Continued growth of leading brands: For example, Luckin Coffee expects its profit to reach 3.8-4.6 billion yuan in 2025.
* Innovation opportunities in niche markets: Niche markets such as boutique coffee and specialty coffee still have considerable room for development.
* Supply chain and technological innovation: Companies that provide supply chain solutions and technical support to coffee brands are expected to benefit.

Risk Warning :

* Price wars may lead to a decline in industry profit margins and affect returns on investment.
* Intensified market competition may make it difficult for small and medium-sized brands to survive and increase investment risks.
* Changes in the consumption environment may affect the growth of coffee consumption, such as increased downward pressure on the economy.

Overall, the Chinese coffee market remains in a period of rapid development and will continue to experience rapid growth over the next three years. For brands and investors, grasping market trends, adapting to changing consumer demands, and enhancing core competitiveness will be key to success in this dynamic market.

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