LUXURY FASHION, jewellery and lifestyle brands in China have started to dabble in the coffee market, with many of them launching cafés in a bid to retain existing customers and attract traffic from young, affluent spenders.

China’s coffee shops experienced explosive growth during 2023, mainly driven by Cotti Coffee and Luckin Coffee’s booming popularity. Gen Z and millennials are at the root of this market expansion, as they represent 66% of China’s  coffee consumption.

Meanwhile, China’s luxury market – the largest in the world today – increasingly caters to Gen Z, which has been identified as one of the highest spending powers. Combining luxury and coffee is simply a strategic move, and one that is trending.

In Taikoo Li in Sanlitun, a shopping centre in Beijing, Ralph Lauren launched its first café in its flagship store a few years back. The first few months following its opening saw long queues at the store entrance, despite the relatively high prices of the coffees on offer.

Hot on the heels of this success, Ralph Lauren opened another café that same year in Shanghai at the Jing’an Kerry Center store, which was an immediate hit in the city.

In 2022, Shanghai’s Taikoo Li retail project announced the launch of its first Dior café in mainland China. The café attracted netizens to the Dior brand flagship store and café, motivated by its luxury afternoon tea experience complete with a curated selection of desserts, teas and coffees. 

Burberry, Louis Vuitton, Armani, Chanel, Fendi, and luxury jeweller Bulgari have also been increasing their presence in the Chinese coffee market over recent years as a way of tapping into new demographics.

Luxury Brands Are Moving from “Class to Mass” 

Luxury brands can no longer rely uniquely on their niche clientele, and are feeling the need to become more accessible to new consumer groups to stay afloat or grow their brand.

Dior and Ralph Lauren aren’t trying to join the coffee industry by opening cafés, but rather seek to provide customers with a different type of consumption scenario that narrows the distance between brand and consumer and reaches audiences beyond their usual radar.

Tapping into a broader range of consumers through coffee shops or pop-up events is a strategy to drive the sales of their more accessible products or product ranges without losing any of the luxury allure that makes them attractive in the first place.

For Chinese consumers, it’s about experiencing an extension of the brand’s environment. Cafés and other F&B venues not only convey the brand’s culture and philosophy, but also allow consumers to immerse themselves in the brand’s atmosphere. 

However, coffee remains a side business for luxury brands – it’s a marketing strategy rather than a commercial investment. The main goal is to bring more traffic to “offline” stores and to provide a branding space for promotional activities. 

If the strategy works, it could mark the start of a new promotional model for other sectors and regions looking to grow by marketing a lifestyle, and looking to boost their “offline” presence again.