China embraces coffee culture craze, thanks to millennials

SHANGHAI, China -- Starbucks recently revealed plans to build nearly 3,000 new stores in China over the next five years. That almost doubles the number of stores there now. And it marks a notable shift in the tastes and purchasing power of this growing market.

It's no secret there's a lot of tea in China. Its tea fields are legendary, providing the leaves for the hundreds of cups of tea the average person here drinks every year, reports CBS News correspondent Ben Tracy.

But coffee, not tea, is increasingly becoming the caffeine fix of choice for China's rapidly growing middle class. Coffee consumption in China has nearly tripled in the past four years, with coffee imports growing 16 percent a year compared to about 2 percent in the United States, according to the International Coffee Organization and the U.S. Department of Agriculture. 

"You have a very young population that has been exposed to Western influences," Dave Seminsky said. He owns Sumerian Coffee in Shanghai. He first came to China to work for Apple but saw a coffee craze brewing.

"As the Chinese got wealthier, why weren't they just drinking fancier tea? Why a big switch to coffee?" Tracy asked.

"It's perceived as having a level of status when you're adopting Western products. So that's why companies like Chanel, Hermes, and Starbucks do well here," Seminsky said.

Starbucks just opened its largest store in the world right in the heart of Shanghai, where lines sometimes stretch down the street. The company is opening a new store in China every 15 hours, and it now has plenty of competition.

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CBS News

In Shanghai there are now more than 6,500 coffee shops and to say there's one on every corner would be a gross understatement. On one street, Tracy spotted three right next to each other.

Costa Coffee is opening hundreds of new stores here thanks to China's millennials who are embracing coffeehouse culture.

"To be seen in a coffee shop with which you identify yourself, this is a way for them to express themselves and to say who they are…the products they consume, the food they buy, the coffee they drink," Esteban Liang, managing director of Costa Coffee in Asia, said.

There's still a lot of room for the bean business here to grow. The average person in mainland China consumes just three cups of coffee per year. Compare that to 250 cups per person in the U.K. and 363 cups in the U.S., according to Euromonitor International. But that demand, coupled with the impact of climate change on the world's coffee supply, could lead to a caffeine crash — fewer beans and higher prices for consumers.

"In the next 30 years, China could be importing two to three million tons of coffee…and currently the global supply of coffee is 6.9 million tons," Seminsky said.

"If coffee really does take off here, is there enough supply?" Tracy asked.

"No," Seminsky responded.

Thankfully, there's still all that tea in China.