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In China, This Addictive Drink Is About To Explode

July 13, 2018
china coffee

For many people, the whole process of drinking coffee is a required morning ritual to start the day. There’s the addictive caffeine component, the smell, the sipping of warm liquid, and the taste which makes people crazy for their cup of joe.

The coffee culture in the US is especially cult-like, with a coffee shop on nearly every corner of every city in the country. But, if we look at China, this social addiction has barely even started.

“The average person in mainland China consumes just three cups of coffee per year. Compare that to 250 cups per person in the U.K. and 363 cups in the U.S.”  – CBS

That means that the Chinese coffee industry would have to multiply well over 300 times in order to catch up to the US… and that’s just on an average cup-per-person metric.

China’s population is over four times the size of the United States. So, if the Chinese coffee market were to match the US coffee market, then we’re talking about an ENORMOUS explosion in world coffee consumption.

In fact, there is not enough coffee in the world today that would supply the new demand. Not even close. That means that coffee prices would explode higher, until new farms are developed.

Of course, all of that would happen only if the general Chinese population actually started to drink more coffee. It’s easy to play a numbers game and compare statistics, but in order for this to happen, coffee would need to be more accessible to the average Chinese consumer.

And that’s exactly that is starting to happen. Starbucks, for example, is opening up a new store every 15 hours in China. Their goal is to open a total of almost 3,000 new stores by 2022.

Source: Statista

Starbucks sees the growing middle class in China, which will now be able to afford a morning drink. They intend to corner this new market, just as they have captured many other countries throughout the world.

Starbucks is not alone. If you go to any Chinese city, you’ll see all kinds of independent coffee shops who play host to a new hipster population who love to sip on a warm drink and tap on their smartphone.

There are also some major new chain stores who are preparing to launch.

“China’s fast-growing “new retail” startup and purveyor of coffee, Luckin, has announced it has completed its A round of financing worth $200 million valuing it at $1 billion.”

With Asia’s middle class exploding, Luckin is just one of many new retailers who are positioning themselves to serve this new coffee consumer.

Source: Brookings

There are dozens of ways that you can invest in this coffee trend. The easiest way is to buy one of the many publicly traded coffee companies, which are listed on nearly every stock exchange throughout the world. You can also invest in an actual coffee farm or in an ancillary products company.

However you decide to invest, the trend is clear. China is about to start drinking coffee.