Britain's Costa Coffee will open a number of stores in Guangdong province in the next 12 months and double the number of its locations in the provincial capital Guangzhou, said Louise Smalley, chairman of Whitbread, Costa Coffee's parent, without revealing the exact number of new openings.
Global coffee chains such as Costa and Starbuck Corp (Nasdaq: SBUX) are trying to gain an advantage in China before the market gets saturated.
Costa came to this lucrative coffee market in 2006, and currently operates more than 200 stores across the nation. Starbucks was an early bird in the country and has a strong presence there. However, the booming Chinese coffee-drinking population that Starbucks has groomed over the past decade is targeted by other international coffeehouses.
On top of Costa, which offers relatively high-end drinks, McDonald's Corp's (NYSE: MCD) cheaper McCafe poses a challenge to Starbucks also. When McCafe launched its first store in Shenzhen as well as in southern China in 2010, Starbucks had opened over 300 across China. As of the end of April 2012, McCafe was running over 300 stores nationwide and expects the number to climb to 470 by the end of this year. It took Starbucks 11 years to see its network in China reach that size.
Hong Kong's Pacific Coffee said it would open 120 stores on the mainland this year and aims to operate 1,000 in the near future. Lavazza, known as the most popular coffee in Italy, announced plans to open 200 stores in China's first and second tier cities in the coming three years.
China's spending on coffee will potentially be worth as much as ¥1 trillion but currently stands below ¥100 billion. Consumption of fresh coffee in the country has grown over 20% annually over the past two years, according to Euromonitor International, a market researcher and analyzer.