---
title: "Observations on the Evolution of Coffee Consumption: From Scene Prop to Consumer Protagonist"
description: "This article examines the transformation of coffee consumption in China, from a social accessory to a standalone product, driven by the rise of new coffee brands like Luckin Coffee. It argues that the future growth of China's coffee market will come from Generation Z, who prioritize value, convenience, and brand authenticity, and that Luckin is poised to take over market education from Starbucks."
author: "张仪"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2022-01-17"
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# Observations on the Evolution of Coffee Consumption: From Scene Prop to Consumer Protagonist

> This article examines the transformation of coffee consumption in China, from a social accessory to a standalone product, driven by the rise of new coffee brands like Luckin Coffee. It argues that the future growth of China's coffee market will come from Generation Z, who prioritize value, convenience, and brand authenticity, and that Luckin is poised to take over market education from Starbucks.

Source: Paidong Business Review (ID: paidongshangye) Author: Zhang Yi
In the 1980s and 1990s, a large number of foreign consumer brands such as Procter & Gamble and L'Oréal began to enter China, leading the consumer trends of that era. At that time, consumers were more focused on the social attributes attached to product functionality, pursuing "face" when showing off. Coffee was one of the most representative categories.
Starbucks entered mainland China in 1999. The first generation of coffee brands, represented by Starbucks, placed more core value on providing a workspace for social interaction, with coffee itself playing a supporting role. So I define **coffee consumption in that era as coffee being a social accessory.**
Now, more than 20 years later, coffee, a foreign beverage, has not only taken root in China, a land with an exceptionally developed tea culture, but has also entered a new era.
Whether it's Luckin, which rose by reshaping the coffee consumption experience with internet thinking, or smaller boutique coffee chains like Manner and Seesaw, or coffee brands like Satuday and Yongpu that focus on instant retail products and primarily operate online, coffee is accelerating its penetration in the Chinese market, increasingly showing a "de-spatialization" characteristic. **Coffee itself is increasingly like an actor who has struggled for years and can finally take the lead, building a brand based on the coffee product itself without relying on spatial value.**
With these observations, we want to further explore the following questions in this article:
1) Why has coffee consumption in China undergone such changes? 2) What consumer needs do the rise of these new coffee brands satisfy? 3) Where will the largest increment in China's coffee market come from in the next decade? 4) Who will take over the baton of market education as coffee accelerates its penetration in China?
******Unmet Coffee Demand**
**The popularization of coffee culture is inevitably accompanied by the emergence of a large number of new mental workers.** This rule applies not only to Starbucks' successful rise in China but also to the global coffee market, including France, the United States, Japan, South Korea, and Singapore.
In the late 19th century, the French Revolution and the Industrial Revolution gave rise to numerous literary giants, philosophers, and the new middle class, supporting exquisite French coffee.
In the 1980s, the booming information industry in the United States gave birth to new groups such as yuppies and IT elites. Starbucks, based in Seattle, gradually expanded globally (Seattle is a hub for IT and internet companies in the U.S., with Microsoft, Amazon, T-Mobile, and other new-generation internet companies headquartered there).
In the 1990s, coffee had fully penetrated Japan and entered a period of elimination. Starbucks managed to carve out its own space there by seizing the large number of professional women that emerged from social structural changes. In 1985, the Japanese Diet passed the Equal Employment Opportunity Act for Men and Women, allowing more white-collar women to hold important positions outside of administrative roles, thereby increasing their spending power.
China's coffee market also exhibits this characteristic. Starbucks' arrival in China in 1990 was not accidental because, after China's reform and opening up, **the first large-scale emergence of mental workers began in the 1980s and 1990s.**
At that time, top foreign enterprises from various industries, such as Procter & Gamble, L'Oréal, KFC, Nestlé, General Electric, Microsoft, McKinsey, KPMG, and Ogilvy, successively entered China. **These foreign enterprises brought modern corporate management and technology, and also introduced coffee consumption habits to China. The coffee consumption habits of that generation were educated by Starbucks during the same period.**
With the development of China's economy, Chinese consumers are also changing. **China currently has two major sources of mental labor: white-collar workers and students, both with unmet coffee consumption needs.**
For white-collar workers, when coffee consumption needs arise in scenarios outside of business socializing, such as in the office, at home, or during commutes, they only want to pay for the coffee itself. They need coffee brands with higher cost-performance, leaving a gap in the freshly ground coffee market monopolized by Starbucks.
For a large number of students, on one hand, coffee's refreshing effect is a rigid demand; on the other hand, the improvement in living standards gives them stronger spending power for leisure beverages than the previous generation. They have higher requirements for the taste and refreshing effect of coffee as a beverage, leaving a gap in the instant coffee market monopolized by Nestlé.
******Generation Z: The Largest Increment Source in China's Coffee Market in the Next Decade**
Among the above two mental labor groups, the newly employed white-collar workers and students, i.e., Generation Z, will be the largest increment source in China's coffee market in the next decade.
According to the "2021 Mid-Year Consumer Report: Definition and Characteristics of Generation Z" released by Qingshan Capital, after rigorous research and measurement, the following conclusion was drawn: **China's Generation Z should be born between 1998 and 2014, with a total population of 280 million, mostly concentrated in emerging markets outside of Beijing, Shanghai, Guangzhou, and Shenzhen. One-third have reached adulthood, and nearly a quarter have entered high school.**
**Generation Z has not yet truly entered society; they have started their careers gradually since last year and will become the most important backbone of society in the next 10 years.**
This massive Generation Z exhibits many new characteristics: personalization, self-pleasing consumption, higher spending power, digital nativity, diverse aesthetics, and circle differentiation. **What do these mean for coffee brands?**
**First, Generation Z consumes more rationally.**
Their consumption decisions are based on fully transparent information. Having grown up experiencing numerous marketing tactics, they are also the most savvy generation of consumers. They can spend lavishly on brands they like, investing enthusiasm akin to fandom; but for products they don't recognize or need, they won't spend a penny.
**In many consumption scenarios, whether coffee is a functional beverage for refreshment or a leisure drink to satisfy cravings, no matter how beautifully coffee companies tell their brand stories, Generation Z only wants to pay for the value of the coffee itself, such as taste, appearance, and effects.**
**Second, Generation Z's value orientations are more diverse.**
It's hard to label Generation Z with the aesthetics and value orientations of the previous generation: professional women aren't limited to a mature style; professional men don't have to wear suits and ties. Sweet, mature, and yuppie styles are attractive, but trendy and gender-neutral styles are also cool.
Work isn't just for money; spiritual satisfaction is also important. Life doesn't have to be all about work or achieving success; enjoying life and being an ordinary person is also good. Men showing vulnerability and tenderness isn't weakness, and women displaying strength and talent can also be beautiful...
**These diverse value orientations will make Generation Z examine brand personas more comprehensively, from the models on posters and language styles in ads to the choice of brand ambassadors and directions of product innovation. Generation Z will perceive brand image through various touchpoints, determine whether the brand is on the same wavelength as them, and then decide whether to like the coffee brand.**
**Third, it's hard to find Generation Z concentrated in one place.**
The diversification of interest circles and the development of social media mean that if coffee brands still rely on traditional marketing methods and media channels, they may not reach many Generation Z consumers at all.
To do business with more Generation Z, brands cannot rely solely on offline channels. **The online world occupies a large portion of their attention, so coffee brands need to proactively enter their online world and communicate their brand philosophy using their discourse system.** Additionally, while communicating sincerely with the brand, they must also uphold their own values; otherwise, Generation Z will think the brand lacks attitude and is too cheap.
******Why Luckin?**
**China's coffee market is still in the stage of attracting more people to accept their first cup of coffee, requiring continuous market education. The primary role in market education must be played by large chain coffee brands.** Currently, among chain coffee brands with over 5,000 stores, Luckin ranks first, Starbucks second, and their store counts are several times higher than the third.
Over the past two decades, Starbucks has played the role of market educator. **In the next decade, I believe Luckin will take over the baton from Starbucks and continue to educate China's younger Generation Z coffee consumers.**
This is not only because Luckin currently has the most stores among coffee brands, but also because the recent "China Urban Chain Coffee Consumption Report" released by CBN (First Financial) shows that Luckin has a younger user base (especially students) and a higher share in new first-tier and second-tier cities, which is highly consistent with the demographic characteristics of China's Generation Z.
**How exactly did Luckin win over young consumers?** I believe Luckin mainly got the following points right:
**First, meeting convenience needs.** As Generation Z grew up with mobile internet, they value service "convenience" more than the previous generation.
Luckin used internet thinking to transform the coffee consumption experience, such as leveraging digitalization to achieve "order online, pick up on-site"; offering delivery services from the start; and scientifically selecting locations, opening stores in areas where young people gather for life, work, and study, ensuring a 5-minute coffee convenience.
Take Luckin's store strategy in Shanghai as an example. The aforementioned CBN report also showed that 50% of Luckin's stores in Shanghai are located in areas not covered by Starbucks. A large portion of these areas, compared to the city center with higher living costs, are also where more young people choose to live.
**Second, boldly "de-spatializing" to lower the threshold for coffee consumption, making it affordable for students and young people just entering the workforce.**
Luckin's store formats include Enjoy stores, Brand stores, and Pick-up stores. The first two account for a relatively low proportion, while the core store format is small-area pick-up stores that don't offer dine-in and focus on "self-pickup + delivery." Luckin's Q3 2021 financial report shows that out of 4,206 self-operated stores, 4,077 are pick-up stores. Small-area stores significantly reduce labor and rent costs, which is the core reason Luckin can offer high cost-performance coffee.
**Third, addressing new users' discomfort with coffee's bitterness and acidity through product innovation.** The bitter and sour taste of coffee itself, as well as the stomach discomfort caused by caffeine boosting metabolism and promoting gastrointestinal motility, are important reasons why many new users find it hard to make coffee a daily beverage.
Luckin identified this pain point and continuously developed milk coffee, tea coffee, and other series that are more beginner-friendly to help new users gradually adapt to coffee's unique taste. Luckin's ability to produce a phenomenal hit every year proves the correctness of this strategy, such as the Thick Milk Latte in 2020 and the Coconut Latte in 2021.
**Fourth, aligning with young people's aesthetic preferences, entertainment preferences, and value orientations.** For example, a more "trendy" and "cool" brand visual.
Taking official Weibo materials as an example, Starbucks' style leans more toward traditional business, while Luckin's is generally trendier and more youthful. Additionally, Luckin chooses younger and more popular ambassadors, such as Lixiu Lu, who is self-aware and a rational anti-involution fighter, and Gu Ailing, a young skiing champion representing new female power.
******Starbucks Hasn't Been Left Behind by the Times, and Luckin Has Seized the New Era**
Through its efforts over the past two decades, Starbucks remains a leader in China's chain coffee market, but now it must become one of the leaders.
In recent years, Starbucks China has successively opened concept stores such as "Roastery," "Greener Store" (an environmental experiment store), "Intangible Cultural Heritage Experience Store," and "Shared Space Concept Store," going further down the path of scene storytelling. This is Starbucks' brand heritage and will inevitably make Starbucks an irreplaceable chain coffee brand in this field.
But it's clear that the expansion of the coffee market requires returning coffee to the essence of a beverage, where the largest increment lies. From a scene prop to a consumer protagonist, coffee has undergone a transformation in China's consumption process.
Any form of consumption has the possibility of survival in China. Starbucks will not be abandoned by the times, but Luckin, with its younger products, younger brand, and younger strategy, will inevitably lead the coffee first experiences of successive generations of young people, as well as their sustained demand as they grow. It can be said that Luckin, through this strategy, will inevitably become a leader in the next era.
**Are you "watching" me?**


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