East Asia: A nexus of opportunity for global café brands in 2021

  • East Asia’s branded coffee shops resilient in the face of severe Covid-19 disruption, with 13 out of 17 markets achieving outlet growth in 2020 

  • The two largest markets, South Korea and China, comprise 62% of the entire East Asian branded coffee shop market by outlets 

  • Multinational operators comprise the majority (63%) East Asia’s coffee shop outlets  

  • China, the fastest growing market in 2019 at 23.2%, saw outlet growth fall to 2.9% due to Covid-19 disruption and the significantly slowed expansion of troubled domestic chain, Luckin Coffee  


China, the fastest growing market in 2019 at 23.2%, saw outlet growth fall to 2.9% due to Covid-19 disruption

Project Café East Asia 2021 is World Coffee Portal’s expansive new study of 17 East Asian branded café markets, including South Korea, China and Japan. It reveals the region’s vast and opportune coffee shop market grew by 3,630 outlets over the last 12 months to reach 74,535 stores, representing 5.1% growth.

East Asia’s coffee shops weather the worst of Covid-19 disruption in 2020 

East Asia’s branded coffee shop market has proved remarkably resilient in the face of severe Covid-19 disruption, with 13 out of 17 markets achieving outlet growth over the past 12 months. The three largest markets, South Korea, China and Japan, achieved outlet growth of 8.3%, 2.9%, and 2.3% respectively. 


Boasting a remarkable 482 branded cafés per million inhabitants, South Korea’s 24,905-outlet branded café market is East Asia’s largest and most developed. While industry leaders surveyed by World Coffee Portal reported a 20-30% sales decline due to the pandemic, South Korea’s densely populated and domestic chain-led market achieved impressive outlet growth over the last year.  


Despite the challenges of the Covid-19 pandemic in 2020, 59% of Chinese operators surveyed by World Coffee Portal reported positive sales growth over the last 12 months. A further 67% of industry leaders surveyed believe current trading conditions are positive. 


Cambodia is East Asia’s small, but fastest growing branded coffee shop market, increasing from 259 outlets to 331 in the last year, representing 27.8% growth. Brunei saw its market contract the most (-5%), while Singapore and Taiwan contracted by -3.3% and -2.2% respectively.  


Opportunities abound in China’s booming coffee shop market 

Coffee and café culture is gaining significant traction China’s relatively undeveloped branded café market, now home to 21,464 outlets. Highlighting the strong opportunities for international coffee chains in the world’s most populous country, 54% of industry leaders surveyed believe China will become a predominantly coffee-drinking nation over the next five years.  


With formidable global brands, such as Starbucks, McCafé and Costa Coffee, as well as a fast-growing domestic segment, investing heavily in Chinese expansion, competition looks set to become fierce in 2021.  


Chinese consumers leading East Asia’s digital coffee shop revolution  

Despite financial controversy in 2020, domestic chain Luckin Coffee’s pioneering e-commerce strategy continues to be embraced by major competitors and consumers alike – with the pandemic accelerating digital integration in coffee shops. 86% of Chinese consumers surveyed indicate they have previously ordered takeaway coffee for delivery, with more than half doing so 2-3 times a week.  


In Japan’s traditionally cash-centric society, the pandemic has impelled many operators to rapidly embrace digital transactions, online ordering and e-commerce platforms, with industry leaders surveyed forecasting deep structural changes in East Asia’s third-largest branded café market as a result.  


East Asia forecast to exceed 100,000 branded café outlets by 2025 

World Coffee Portal forecasts the East Asian branded coffee shop segment will exceed 79,700 outlets over the next 12 months, representing 7% growth. The market is anticipated to reach 103,500 outlets by November 2025, displaying five-year growth of 6.8% CAGR, making it by far the world’s largest branded coffee shop market.  


Commenting on the report findings, Allegra Group Founder and CEO, Jeffrey Young, said:  


“East Asia is fast developing into a global powerhouse of the 21st Century and its therefore unsurprising that this vast and vibrant region is also becoming one of the bright spots of the global coffee industry. A growing population, coupled with rising appetite for café culture, especially among the under-30s demographic, makes East Asia a major opportunity for international and local coffee businesses alike.”  



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