- China’s coffee boom continues, but CoE demand is shifting
- Luckin and Cotti’s rapid expansion is fuelling mass-market coffee, leaving ultra-premium lots for a niche few
- Japan, South Korea, and Taiwan are snapping up CoE coffees as China’s specialty scene pivots to trendy, hybrid drinks
For years, China’s coffee market was hailed as a rising force, with annual consumption growing by 15%, vastly outpacing the global average of 2.2%.
International chains such as Starbucks and Tim Hortons rushed to expand their presence, while local players like Luckin Coffee introduced aggressive expansion strategies, making coffee more accessible to a broader demographic.
In the midst of this spectacular growth, high-end specialty coffees did incredibly well, with China becoming one of the world’s major Cup of Excellence (CoE) coffee buyers.
But today, demand for CoE coffees – once seen as a symbol of China’s growing taste for connoisseur-grade beans – is changing, if not waning. Other countries like Japan and South Korea, for example, are emerging as prominent buyers in CoE auctions.
The shift away from CoE lots – or towards different origins at least – reflects structural changes in consumer preferences, economic realities, and a rapidly evolving coffee culture.
“I don’t see this as a retreat but rather a strategic shift toward what the market demands,” says Mau Perez, Purchasing Manager for Shanghai Cooway Trading Company. “Chinese buyers are prioritising origins with the strongest consumer appeal, particularly Panama, Ethiopia, and Colombia. Chinese bidders are still competing for the highest-priced lots – look at the 2024 Best of Panama (BoP) auction.”
“Meanwhile, some producing countries have struggled to compete in this landscape. Guatemala, for instance, has been unable to export to China, while Honduras only regained access at the end of 2023. These restrictions limit supply from certain origins, reducing their competitiveness in CoE auctions. At the core of this shift is demand – Chinese buyers are selective, not absent, choosing coffees with strong brand recognition and consumer appeal over lesser-known origins.”
China’s coffee market growth is slowing down and has reached a point of saturation, prompting local brands like Luckin to expand abroad and both domestic and international brands to diversify their product lines. This evolution is steering consumers towards more accessible, trend-driven beverages rather than premium specialty coffee.
Luckin Coffee, for example, has increasingly turned to tea-inspired offerings, launching jasmine-flavored milk tea coffee hybrids to capture crossover demand from China’s tea-drinking heritage. The rise of HeyTea and Chagee – two dominant tea chains – has created a highly competitive market where innovation and affordability trump exclusivity and provenance.
“The coffee market mirrors the wine industry in a way, offering a broad spectrum of products at varying price points,” says Steve Wu, Marketing Manager for Melitta Professional in China. “With greater market education, there will always be a place for high-end coffees, just as premium wines cater to specific demographics and occasions.”
“From what I hear within the industry, specialty bean consumption isn’t necessarily shrinking – but brands must work harder than ever to differentiate themselves and actively engage their target consumers across multiple channels to stay relevant.”
Meanwhile, the surge in DIY iced beverages is reshaping consumer demand. Convenience stores across China now offer pre-packaged cups of ice, allowing consumers to create customised iced drinks at home – a significantly cheaper alternative to high-end café offerings. In fact, Cotti Coffee now plans to open convenience stores as part of its expansion strategy.
Social media has further amplified this trend, with influencers promoting affordable, at-home brewing techniques over expensive single-origin purchases.
“There will always be a market for high end coffees, but it will remain a niche segment, as it already is,” says Mau. “The rapid expansion of Luckin Coffee and Cotti Coffee has fueled mass coffee consumption in China, making coffee more accessible and mainstream. Consumers are drinking better coffee overall, but high-end lots are not for the average drinker.”
“Ultra-premium coffees cater to a specialised audience that can appreciate and afford them. The vast majority of Chinese consumers, however, gravitate toward more conventional, everyday coffees over rare, competition-winning lots.”
Against this changing backdrop, CoE coffees seem to hold less relevance. The mass market is gravitating toward cost-effective, familiar, and sweetened drinks, moving away from the black filter coffee that CoE typically represents.
Economic pressures drive down premium demand
Beyond shifting tastes, economic pressures have played a decisive role in the decline of CoE coffee sales in China.
Despite China’s booming economy in recent decades, recent years have seen slower GDP growth and weakened consumer confidence. This downturn is making price sensitivity a key factor in purchasing decisions.
Mainland China’s economy is entering what Forbes has coined as its “Historical Garbage Time,” as it grapples with underlying structural challenges that range from high government debt, demographic decline and youth unemployment to growing tension with trade partners.
Major coffee chains are feeling the squeeze – Starbucks China, for example, reported a 14% drop in comparable store sales in the latest quarter due to rising competition and consumer cutbacks.
Faced with an uncertain financial climate, Chinese consumers are increasingly prioritising affordability, opting for mid-range or budget-friendly coffee options over premium lots. Unlike a decade ago, when affluent young professionals sought out high-scoring single origins and traceable farm lots, today’s consumers are more pragmatic.
The demand for CoE coffees – known for their premium pricing and auction-based sales – has faded, as mainstream consumers weigh cost over perceived prestige. But a core niche market for high end specialty coffee still holds firm in China. Though small, it remains an important market for specialty coffee producers to tap into, according to Mau.
“China’s coffee market will continue to grow, including the high-end segment, but as before, demand for premium coffees will remain concentrated on specific origins, processing methods, and varieties,” he says. “Panama Geisha, whether washed or natural, holds immense value in China, making the country the largest market for Panamanian growers.”
“Looking ahead, market conditions will shape how this segment evolves, but for now, affordable coffees dominate the mainstream consumer base, while high-end demand remains limited to select origins and varieties. Meanwhile, roasters and coffee shops are already under pressure, struggling to compete with Luckin and Cotti’s aggressive expansion – making it difficult to rely exclusively on expensive, ultra-premium lots.”
At the same time, the economics of importing CoE coffee have become more complex. High-end specialty coffee importers once relied on a niche but growing segment of affluent consumers. With that demand shrinking, the financial risk of holding expensive inventory has increased.
“It’s hard to predict what’s next for the Chinese market,” says Steve. “Affordability remains key as coffee becomes an everyday staple for more Chinese consumers. That doesn’t mean high-end specialty coffee will disappear, but if CoE demand is indeed shrinking, it raises a question – is the industry pushing more premium beans than the market actually wants right now?”
The future of specialty coffee in China
The combination of changing consumer preferences and economic pressures has reshaped China’s specialty coffee landscape.
While CoE coffees once symbolised status, sophistication, and a growing specialty coffee culture, they are now struggling to justify their high price tags in a market increasingly driven by affordability and innovation.
But does this mean specialty coffee is in decline? Not necessarily. Instead, the industry is shifting towards a different type of “premium” experience – one that prioritises convenience, customisation, and hybrid flavors over exclusivity and origin-based storytelling.
“The Chinese coffee market is highly dynamic, constantly evolving with harvest cycles, emerging processing methods, and sought-after varieties,” says Mau. “Buyers are always on the lookout for the next big coffee farm or grower, particularly from origins that have already established a strong country brand in China.”
“Right now, we’re in a cycle of high prices and rising costs, which will push roasters to innovate in order to adapt to mounting pressure. Flexibility will be key this year, but I don’t expect major shifts in the high-end coffee segment – instead, we’re likely to see more movement in other specialty-grade coffees as the market adjusts.”
While demand for CoE lots has waned, other markets – Taiwan, South Korea, and Japan – are picking up the slack, with buyers in these regions still willing to pay for exclusive competition-winning lots.
Chinese roasters who remain committed to high-end offerings may pivot towards these alternative export markets, rather than focusing solely on domestic demand. Meanwhile, some industry players speculate that China’s appetite for CoE coffee could return – but in a different form.
“Striking a balance between affordability and quality would be ideal,” says Steve. “As the market matures, consumers are becoming more discerning, but the price gap between everyday coffee and ultra-premium beans is widening dramatically – 9.9 RMB for Luckin or Cotti vs. 60 RMB for a Panama Geisha.”
“As a coffee drinker myself, I’d be willing to pay twice the price of a regular coffee for something exceptional – which used to be the norm (think Starbucks at 30 RMB). But with more budget-friendly options flooding the market, the price difference feels even more extreme, making high-end beans seem even less accessible – even though their actual prices haven’t skyrocketed. This growing perception gap is a real barrier to specialty coffee’s growth, especially in today’s economic climate.”
Instead of black pour-over brews, the future of high-end coffee in China may come in espresso-based drinks, bottled cold brews, or even tea-infused hybrids that align more closely with consumer habits.
In the short term, however, the verdict is clear: China’s coffee scene is evolving, and Cup of Excellence coffees no longer fit the mainstream narrative.
Coffee Intelligence
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