Pocket-friendly coffee creates big buzz in smaller towns

As China's county economies continue to thrive, more customers from lower-tier cities and towns are seeking affordable and high-quality coffee drinks.

In a small town of Huojia county in Central China's Henan province, a Lucky Cup cafe, with an average order price of 6 yuan ($0.83), draws a steady stream of customers.

"We use three rolls of receipt paper and 5 kilograms of coffee beans on average every day," says Wang Zechang, head of the cafe. In less than 10 months, the cafe has already generated nearly 800,000 yuan in turnover.

Wang has opened two cafes in the county, and plans to launch two more this year to meet rising demand.

Founded in 2017, Lucky Cup is dedicated to deliver high-quality yet affordable coffee, and is a coffee chain under beverage giant Mixue Bingcheng. The chain has since expanded to over 5,000 outlets nationwide, with 61.5 percent located in third-tier or smaller cities, according to its regional manager Ge Shihao.

As coffee consumption habits take root, first- and second-tier cities have seen a saturation of coffee shops. Now, the spotlight is shifting to smaller markets. "Third- and fourth-tier cities are the next 'blue ocean' for the coffee industry," says Shi Jun, secretary general of the coffee professional committee of the Shanghai Food Association.

International brands are also diving into these emerging markets, as one such brand reported in its fiscal first quarter of 2025 that it had entered over 1,000 county-level markets across the mainland.

Data from e-commerce platform Meituan show that in 2024, coffee delivery orders in county-level areas for established brands had surged by 97 percent, while the number of coffee shops soared by 159 percent.

According to food industry analyst Zhu Danpeng, residents in around half of China's counties and townships have already developed a basic "coffee consciousness". However, many still associate coffee drinking with upscale consumption, often assuming prices to be around 30 yuan per cup. "The emergence of affordable coffee options of good quality has successfully tapped into and activated latent demand," Zhu says.

In addition to flavor and affordability, coffee has also taken on emotional significance. On social media platform RedNote, the hashtag #GoodCoffeeInSmallTowns has racked up over 9 million views, with netizens sharing artfully staged photos and recommendations for hidden-gem cafes.

The rise of cost-effective coffee relies on streamlined supply chains and advanced logistics systems, which combine to improve operational efficiency and cut down costs. According to Wang, Lucky Cup can source coffee beans of equal quality at a cost of around 30 yuan per kilogram lower than the market price.

Consultancy firm McKinsey predicted that by 2030, county economies would account for more than 66 percent of China's personal consumption growth.

The booming coffee scene in small towns is not only a testament to rising disposable incomes but also a signal of evolving consumer trends in China's lower-tier markets, says Zhu.