The resurgence in public outdoor mobility and tourist arrivals, and the proliferation of café chains will spur on-premise consumption of hot tea and coffee in the coming years. Consumer spending on hot drinks will be bolstered by new product launches and marketing campaigns by leading tea and coffee producers. As a result, the Chinese hot drinks market will expand to CNY344.7 billion ($53.9 billion) by 2027, registering a compound annual growth rate (CAGR) of 6.9% over 2022–27, says GlobalData, a leading data and analytics company.

GlobalData’s report, ‘China Hot Drinks – Market Assessment and Forecasts to 2027’ reveals that hot tea will be the dominant category. However, hot coffee will register the fastest value CAGR of 8.8% over 2022–27, reflecting the growing café culture in China.

Kiki Wu, Consumer Business Development Manager at GlobalData China, comments: “China’s per capita expenditure (PCE) on hot drinks increased from $18.3 in 2017 to $26 by 2022, surpassing the Asia-Pacific average of $22.2. However, the spending levels lag the global average of $34.5, indicating ample room for future growth. Among distribution channels, convenience stores accounted for the highest share of hot drinks sales in 2022, as consumers preferred to shop for groceries in stores close to their homes amid the COVID-19 lockdowns and quarantines. E-retailers performed well in 2022 as consumers sought safety, convenience, and cost-savings amid the consumer mobility restrictions and spiraling inflation.”

Bobby Verghese, Consumer Analyst at GlobalData, notes: “However, after the authorities lifted the Zero COVID policy in late 2022, public outdoor movement and tourist arrivals have been on the rise. The improving economic conditions and consumer sentiment will unleash pent-up consumer demand and boost household spending on hot drinks. On-premise hot drinks consumption is set to resurge as consumers leave their homes more often for work, education, shopping, dining out, socializing, travel, and leisure.”

Wu adds: “Hot tea will dominate the hot drinks sales in China, underpinned by rising sales of black tea and fruit/herbal teas. Instant coffee will contribute the bulk of hot coffee sales due to increasing demand from students and white-collar employees, as they return to colleges, universities, and offices. Fresh coffee sales will also surge in line with the recovery of foodservice businesses. Additionally, the rising purchase of coffee machines during the pandemic will sustain demand for coffee capsules. Moreover, with more students resuming full-time learning at schools, the demand for nutritious children’s drinks will bolster the growth of the other hot drinks category.”

Nestlé, China Tea Co. Ltd, and Zhejiang Xiangpiaopiao Co. Ltd were the top three companies in the Chinese hot drinks market in value terms in 2022. Innovative new product launches, marketing campaigns, and retail promotions by such leading players will bolster consumer spending on hot drinks.

Verghese concludes: “The China Tea Marketing Association is undertaking initiatives to motivate consumers to trade up to premium tea products. The proliferation of multinational and domestic café chains, including Starbucks, will also catalyze the growth of China’s coffee culture and the premiumization of its hot coffee market. Accordingly, GlobalData projects China’s PCE on hot drinks will surge to $38.4 by 2027.”