Specialty Coffee %Arabica Opens up in Chinese Second-tier Cities

Opening shops in shopping malls may tarnish the charm of this original brand.

 |  ZHANG Qin
Photo by Clu Soh on Unsplash

Photo by Clu Soh on Unsplash



Although still under renovation, a shop at Chengdu Sino-Ocean Taikoo Li has become a “must-go” place for young people. They enjoy taking photos with the “%” logo on the fence and post them on social media. 

It is the logo of specialty coffee %Arabica. Having set up eight shops in Shanghai, Shenzhen, and Beijing, it now enters China’s second-tier cities.

Recently, %Arabica announced on its official Instagram account that a new shop will open in January next year at Hangzhou Kerry Center. Before that, several other shops will open later in 2019 at Beijing Sanlitun Taikoo Li, Xiamen MixC, Nanjing Deji Plaza, Chengdu Sino-Ocean Taikoo Li, and Guangzhou Parc Central, all of which are landmark commercial developments of the respective city.

%Arabica officially announced that it will set up a shop in Hangzhou. Source: %Arabica Instagram

Following the opening of its first shop in Shanghai in October 2018, %Arabica opened another three shops, then three in Shenzhen, and one in Beijing.

It is apparent that %Arabica has sped up its expansion in mainland China.

The statistics of London-based International Coffee Organization shows that coffee consumption in China is growing by 15% every year, while the percentage in the world is only 2% on average. It is predicted that by 2025, China will develop into a huge coffee consumption market worth 1,000 billion yuan (around 140.8 billion USD).

This hundred-billion market is becoming increasingly particular about coffee quality. According to QYR, a market research institute, the turnover of imported specialty coffee beans in China grows by 9.6% from 2014 to 2020, showing an obvious consumption upgrade.

%Arabica features Japanese minimalism and specialty coffee beans. In the past four years, it has set up 38 shops in 11 countries nationwide.

%Arabica has gained vigorous momentum this year and opened shops from Bangkok and Singapore to London. It seems to have grown confident enough to target specialty coffee consumers around the world. 

Observing the path %Arabica has taken in mainland China as it sets up stores, it is noticeable that it has cultivated the business opportunities in second-tier cities, or the so-called “new first-tier cities”.

Indeed, coffee consumers’ demographic ranges from major cities to small and medium-sized cities. The Insight of China’s Coffee Industry in 2018, a report published by CBNData, suggests that in 2017, only 40% of the online coffee consumers were from first and second-tier cities, and the rest were from third and fourth-tier cities, or even rural areas. 

%Arabica’s unhindered development in China is closely bound to its popular brand attributes.

%Arabica has done a signature work in setting up the Arashiyama store in Kyoto, which turned into a pilgrimage site for %Arabica fans. The store is situated next to the Togetsukyo Bridge, so that people could enjoy a view of broad water and a stretch of hills through the window. The inside is decorated mostly in white and burlywood. There is no seating indoors, but a row of them outside the store.

Shita, a practitioner in coffee industry, tells Jiemian News that %Arabica tends to set up its stores in stand-alone buildings. %Arabica’s choice of shop locations is an expression of modern Japanese culture, where people are respective to each other, but keep a distance to avoid disturbance. 

%Arabica in Arashiyama, Kyoto.

However, this consideration in Japanese market does not continue in %Arabica’s site selection in China. Maybe for business reasons, %Arabica set up most of its shops in commercial developments, except for its first store in Wukang Road where stores popular online cluster, instead of opening small but artistic shops in less-known streets,.

Although Chinese consumers mainly shop in shopping malls, over- homogenization in opening new stores will tarnish the charm of %Arabica to some extent. After all, as more and more specialty coffee stores appear in China, %Arabica needs to focus more on the younger generation who pursue individuality and uniqueness.