China’s prepackaged coffee drink market enters new era of quality

The country’s ready-to-drink coffee market has grown rapidly in recent years, transforming from a simple pick-me-up product into a lifestyle statement

LeadLeo Research Institute

China’s ready-to-drink (RTD) packaged coffee market has been expanding rapidly, evolving from a simple energy booster into a symbol of lifestyle and personal identity. Driven by convenience stores, supermarkets, and e-commerce platforms, RTD coffee has become a “grab-and-go” daily choice for many young consumers — shifting from a purely functional alertness booster to expressions of health and individuality. Brands are integrating low-sugar, low-fat, and functional ingredients to meet growing health awareness.

At the same time, the trend towards premium products is accelerating. Offerings are expanding from single flavors to diversified categories such as cold brew, latte, and oat milk coffee, with more refined packaging that appeals to consumer demand for quality and personalization. China’s RTD coffee market is thus moving from expansion in quantity to competition in quality.

RTD coffee — pre-packaged beverages ready for immediate consumption — now stands alongside instant and freshly brewed coffee as one of the three major categories. Its explosive growth reflects a deep shift in consumer behavior: from a social beverage to a daily necessity, and now a lifestyle symbol, mirroring the diversification of consumption patterns in China.

Industry data shows that China’s RTD coffee retail revenue grew from 12 billion yuan ($1.68 billion) in 2020 to 28 billion yuan in 2024, representing 18% annual growth, outpacing the overall beverage industry. Online channels have become the main growth driver, with their market share rising from 9% to 35%.

New generation redefining coffee market

According to data from Douyin, China’s domestic version of TikTok, coffee category sales in China grew 110% year-on-year in 2024, while the number of participating brands and listed products surged 142.9% and 380.3%, respectively. Livestreaming e-commerce has lowered barriers to entry, on-demand retail has enhanced convenience, and content-driven marketing has stimulated consumer interest — combining to power explosive online growth.

Competition is intensifying as the market shifts from international dominance to a mix of global and domestic players. The first tier includes Nestlé (NESN.ZU) and Starbucks (SBUX.US), which together hold about 60% of the market. The second tier — comprising Nongfu Spring (9633.HK), Uni-President (0220.HK), and Coca-Cola (KO.US) — is carving out space using health positioning and value-for-money strategies, while emerging brands are rising rapidly using innovative products and digital marketing.

Channel strategies are becoming increasingly differentiated. International brands rely heavily on supermarket and hotel channels, while local brands focus on e-commerce and membership-based retailing channels. For example, Tasogare Coffee’s 1L RTD coffee gets over 60% of its sales online, while Nongfu Spring thrives in Sam’s Club stores, reflecting a reshaping of consumption scenarios.

Health functionality has become the main direction for product upgrades. With growing consumer awareness, brands are adding functional ingredients and launching specialized formulations to meet segmented needs. These precision-nutrition strategies not only enhance premium pricing power but also create clear differentiation from traditional brewed coffee.

Localization through regional flavor innovation highlights the deepening maturation of China’s RTD coffee market. Brands are developing products inspired by local taste preferences — such as Yunnan small-bean coffee blended with local fruits, Sichuan pepper coffee, and frozen pear coffee — turning beverages into emotional and cultural connectors. The share of regional-flavor RTD coffee is expected to rise from 15% to 30%, becoming a key driver of market growth.

Packaging formats and technological innovation continue to push the boundaries of the RTD coffee experience. Beyond traditional bottles and cans, coffee powders, capsules, and concentrates are emerging, offering greater variety and flexibility.

Sugar-free and low-sugar options have shifted from niche differentiation to standard expectation. Data from leading grocery delivery company Dingdong Maicai shows that 87% of large-bottle coffee sales now come from sugar-free versions, compared with around 50% three years ago. This “health-as-default” trend is reshaping the market and pushing sweet, milk-heavy coffee drinks out of the mainstream.

Ingredient and formulation innovation underscore the market’s move toward professionalism and more premium products. Brands are moving beyond the simple coffee-sugar-milk formula, embracing specialty coffee principles that emphasize bean origin, roast profile, and extraction methods. At the same time, formulations are becoming more scientific — using natural sweeteners instead of artificial ones and adding dietary fiber and other nutrients.

Propelled by the dual drivers of health and quality, China’s RTD coffee market is entering a stage of high-quality competition. Only brands that can balance wellness attributes with superior sensory experiences will stand out in this new phase of the industry’s evolution.

LeadLeo Research Institute is an original content platform for research on banks and companies and an innovative digital research service provider with nearly 100 senior analysts. You can contact the platform at CS@leadleo.com.

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