In China, the boundaries between coffee and tea beverages have been fading, leading to a deep integration within the beverage industry.
Omnicom's 4A creative agency TBWA\China, in collaboration with Mintel China, has released the "2025 China Freshly Made Coffee and Tea Beverage White Paper", revealing disruptive growth opportunities within this evolving landscape.
The Coexistence of Coffee and Tea Beverages
When Chinese annual coffee consumption per capita rises from 9 cups to 22.24 cups, and the growth rate of the tea market slows to 9.5 percent in 2024 from 21 percent in 2023, does this indicate that the industry has reached its ceiling?
The report provides a markedly different answer: the freshly made beverage industry in China is shifting from "scale expansion" to "value cultivation."
Coffee has successfully penetrated a broader market through affordable pricing strategies and channel expansion, while tea has achieved vertical penetration in consumption frequency and scenarios by addressing segmented consumer needs and engaging across generations.
Three Growing Consumer Segments for Freshly Made Coffee
- The silver generation is “taking over” coffee shops. In Starbucks stores in Beijing and Shanghai, have you noticed an increasing presence of older adults? This group of "leisurely silver generation" is redefining the coffee consumption scene. For them, coffee has transcended its simple role as an energising beverage; it has become a ritual of life and a social bond.
- Youth in county towns are creating a local coffee culture. The demand for coffee among youth in rural areas is no longer just about replicating beverages; it represents a comprehensive space that integrates local culture, social needs, and self-expression.
- Pet lovers are creating a new scene where people share drinks with their pets. Young pet owners in first- and second-tier cities are seeking social spaces where they can enjoy experiences with their pets. They are willing to pay for customised "coffee" and healthy snacks for their pets and place greater importance on the warmth, companionship, and shared experiences offered by the store.
Parents with kids: An overlooked growth segment
As all brands chase young people, the parent-child demographic is becoming a largely invisible main force in tea beverage consumption. Tea drinks play multiple roles in their lives: as the “mood booster” for daily parent-child moments, the “softener” for parent-child communication, and the “energy recharge station” to encourage children.
Chinese Tea Beverages Going Global
Ten years ago, when we talked about Chinese elements in overseas markets, they were visible primarily as cultural symbols; what we call the “1.0” era. This was driven by local consumers’ curiosity about unfamiliar culture: from Chinese red and knots to Kung Fu and Bruce Lee.
Today, as a new wave of Chinese brands going overseas, we see a different approach: the “2.0” era, characterised by subtle symbols, strong aesthetics, and a deep understanding of local cultures.
The success of HeyTea in the United States is a perfect case. It gained attention in the U.S. by integrating its logo into fridge magnets featuring local landmarks.
Born in China’s social media-driven market, the brand’s open logo design enabled seamless cross-cultural collaborations.
HeyTea’s U.S. collaborations mainly feature creators with an Eastern cultural background who are highly recognisable locally: Alexander Wang, Yayoi Kusama, and Chinese-American designer Sandy Liang. This approach preserves a sense of local identity while demonstrating the brand’s sincerity toward the host culture.
Besides, HeyTea’s U.S. operations don’t mimic the visually bold local styles. Instead, they convey Chinese-inspired Zen and relaxation through visuals and community activities. This reflects a brand grown from cultural confidence and a new understanding of cultural influence.
By responding to local social media trends, collaborating with designers with an Eastern cultural background, introducing localised product innovations, and creating an aesthetic for life, Heytea has moved from “cultural symbols” to “cultural understanding”.
Future growth lies in life scenarios.
The report concludes that the future competition in the coffee and tea beverage market will no longer be a battle of categories, but rather a competition for scenarios and consumer mindsets.
Brands need to consider the following: How can they become the inevitable choice for consumers at specific moments in their lives? How can they embed more emotional value into a single beverage?
More insights here
