Dual Growth of Freshly Brewed and Retail Coffee
Structural Differentiation Becomes Prominent
By 2025, China’s coffee market has entered a phase of high-quality growth, driven by both freshly brewed and retail segments. On the freshly brewed side, as of August 2025, there are 288,000 coffee and beverage stores nationwide. Among them, new first-tier cities such as Chengdu and Hangzhou are seeing the fastest growth, with over 12,000 stores each — an 18% increase from 2024. The overall freshly made beverage market is expected to surpass 319 billion yuan, with coffee contributing over 40% of the share, making it the second-largest freshly made beverage category after milk tea.
In terms of new product offerings, among 1,992 newly launched products from January to July 2025, coffee items accounted for 23.2% (462 types) — an increase of 3.5 percentage points compared to 2024. Notably, fruit-infused coffee accounted for more than 50% of all new coffee products, becoming the mainstream direction of innovation.
(Source: Hongcan Industry Research Institute)
The retail segment appears even more vibrant. The coffee industry’s total market size reached 313.3 billion yuan in 2024 and is expected to climb to 369.3 billion yuan in 2025. Online channels serve as a key growth engine — there are nearly 100,000 coffee shops on Taobao and Tmall, with instant coffee shops making up 45%, while drip coffee shops saw 32% growth, reflecting a balance between convenience and premium demand. Domestic specialty coffee is thriving — Yunnan coffee’s online sales surpassed 417 million yuan, far exceeding the industry average, with the average order value rising by 12 yuan compared to 2024, indicating a stronger consumer willingness to pay for local premium coffee.
Clear Differentiation Paths
Building Multi-Dimensional Competitive Barriers
Coffee innovation revolves around breakthroughs in categories, ingredients, and visual design.
Category Innovation:
Classic beverages (latte, Americano) still account for 60%+ of freshly brewed sales but grew only 5.8%. In contrast, fruit coffee and signature blends surged 28.3%. Luckin’s “Coconut Latte” surpassed 1.2 billion cups in annual sales, while Heytea’s “Duck Shit Aroma Latte” sold over 2 million cups in its first month, becoming a viral hit. About 90.5% of new coffee products came from coffee brands, while 9.5% were introduced by tea brands. Nayuki Tea even launched a dedicated “tea-coffee fusion series,” signaling a shift from occasional crossover to regular competition.
Ingredient Innovation:
The supply chain is evolving toward localization, premiumization, and health-consciousness. Yunnan coffee beans now account for 18% of freshly brewed applications, with beans from Pu’er and Baoshan included in exclusive ingredient lists by Starbucks and MStand. Premium beans make up 25%, with anaerobic fermentation and honey processing methods used in 15%, adding depth to flavor profiles. As for health trends, plant-based milk coffee represents 30% of total offerings, with oat milk and coconut milk as mainstream options. Some brands even launched “sugar-free coconut lattes,” balancing taste with wellness.
(Source: Hongcan Industry Research Institute)
Visual Design Innovation:
Brands are maximizing visual appeal. Over 80% of new drinks showcase the natural colors of their ingredients — for instance, the pink-white layers of strawberry lattes or the orange-yellow gradients of mango sparkling coffee becoming social media favorites. About 75% use transparent cups to highlight texture, letting consumers see fruit chunks and foam thickness. Starbucks’ “seasonal cup sleeves” and MStand’s “minimalist cup designs” became viral discussion topics, each generating over 50 million reads online — proving that “the product itself is the best marketing.”
(Source: Magic Mirror Insights)
Domestic Potential Unleashed
Global Competitiveness on the Rise
Consumer behavior now shows urban segmentation and brand stratification.
City-Level Differences:
First-tier cities account for 29% of total transactions, where consumers prefer independent coffeehouses and premium instant coffee. New first-tier cities make up 35%, split between chain brands and local specialty cafés. Lower-tier cities contribute 36%, though their per capita consumption is only one-third that of first-tier cities. Brands like Cotti Coffee and Lucky Cup are capturing this segment with 5–8 yuan low-price coffee, leading to a 25%+ increase in store count across lower-tier markets in 2025.
Brand-Level Differences:
Mass-market brands such as Cotti and Luckin dominate with prices ranging from 8–15 yuan per cup, capturing 60% of total market share. Luckin even launched a “9.9 yuan unlimited refill” campaign to further strengthen its dominance. On the premium end, 70% of Yunnan coffee now qualifies as specialty grade, and 85% of its beans undergo deep processing. “Yunnan Arabica Estate Direct-Supply” products exceed 100 yuan per pack, with some even entering European and American boutique cafés, boosting the global reputation of Chinese premium coffee.
(Source: Nong Xiaofeng)
Cross-Border Expansion:
In 2024, China’s coffee machine exports reached 17.46 billion yuan, with 60% of shipments being small home-use coffee machines—mainly exported to Southeast Asia and Europe. Meanwhile, coffee bean imports totaled 6.92 billion yuan, with Brazil supplying 40% and Colombia 25%, ensuring diverse flavor options. Coffee concentrate exports hit 1.36 billion yuan, growing over 40%, emerging as a new export driver.
In terms of brand globalization, Chinese single-serve coffee machines now hold 5% of the U.S. market. Some brands even launched “American-style black coffee capsules” to match local taste preferences precisely.
(Source: Weiyun Technology)
From Functional Drink to Lifestyle Symbol
As coffee evolves from a functional beverage to a lifestyle symbol, the next phase of growth is clear:
Closer synergy between freshly brewed and retail coffee. For example, Luckin integrates “store + e-commerce” channels, allowing customers to order online for in-store pickup or buy instant coffee directly.
Deeper value extraction from domestic raw materials. Yunnan coffee may become the hallmark of “Chinese Coffee,” transitioning from raw material supplier to brand exporter.
Upgraded cross-border expansion. It’s no longer just OEM manufacturing, but the export of Chinese brands and culture — such as single-serve coffee machines tailored to overseas markets or tea-coffee fusion flavors introducing Chinese creativity to the world.
For industry players, success in this 369.3-billion-yuan market depends on balancing local roots with a global vision — to brew their own “hit cup” in the new wave of China’s coffee renaissance.
