Costa Coffee, Britain's largest and the world's fifth largest coffee house chain, is planning to open 250 stores in China over the next three years to compete with Starbucks and other café operators in the country. It has already opened almost 70 stores during the past four years. Following Starbuck's lead which last month signed a contract with the Yunnan government to grow coffee beans to supply the Chinese market, Costa has sent a team to southwestern China's Yunnan province to examine local coffee beans, said Costa China chief operating officer Qiu Zibao.
Despite its tradition of being a nation of tea drinkers China has seen very strong growth in coffee sales. China consumed 88% more freshly boiled coffee in 2008 than in 2003, and sales revenue surged 104.3% over the period, according to a Euromonitor International report. According to Marubeni, a Japanese trading company, China's coffee sales are growing at a 20% pace every year.
This growth has led other cafe operators to expand their growth plans in China. Pacific Coffee, Hong Kong's second largest café chain owned by China Resources Enterprises Ltd (HKG: 0291), said in October it would open up to 1,000 stores on the mainland in the years to come, with Shanghai and Shenzhen to receive the first 50 to 100 new openings. Starbucks has established more than 400 stores across 28 mainland cities. Starbucks CEO Howard Schultz said in April that the US coffee company would boost the number to a thousand, without giving a timetable.