Hot Drinks in China

COVID-19 impact on hot drinks

During the coronavirus (COVID-19) pandemic, cities and towns adopted closed-off management measures to prevent virus transmission. For consumer foodservice, the outbreak of COVID-19 during the Spring Festival in China had a severe impact on on-trade consumption as the vast majority of outlets had to shut down.

COVID-19 country impact

There was a strict lockdown in Hubei province in China from 23 January to 8 April, while other provinces imposed different social distancing policies and partial lockdowns. Movement in and out of the worst-hit provinces was banned until 4 February, with 14 days quarantine required for those moving between provinces.

Company response

The pandemic had a catastrophic impact on industry players in hot drinks, with many having to adopt extraordinary measures to ensure their survival. Some fared better than others depending on their existing business structure and product range.

Retailing shift

Some retailers were forced to close during the pandemic, while those that were allowed to open, had to maintain strict hygiene standards and social distancing measures, and restrict the numbers in their stores at any time. Many people also avoided retailers even after lockdowns ended for fear of catching the virus.

Foodservice vs retail split

The shift of hot drinks consumption from foodservice to retail was particularly strong in 2020 as the former shut down during lockdown with business reduced thereafter due to the imposition of stringent social distancing measures, which limited the number of people allowed in outlets. The switch from foodservice to retail was particularly strong in coffee with leading specialist coffee shops brand, Starbucks Corp, closing over half its stores in China during the pandemic.

What next for hot drinks?

Hot drinks is expected to register a mixed performance in 2021 and beyond. The growth spikes seen in coffee during 2020 are expected to return to more normal levels as consumers spend more time socialising and visiting foodservice outlets, which will switch at-home consumption to consumer foodservice.

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