That's because Chinese consumers are trading up – accepting higher prices and buying premium, value-added, products across a whole range of categories, and not just coffee. And they're doing it for social status, healthier lifestyles, improved personal appearance and an alternative to mass-market brands.
Geoffrey Wong, UBS-AM Head of Emerging Markets and Asia-Pacific Equities believes that identifying the companies that are benefiting can be very interesting. He says: "If we look at sales of cars in China, it is not that fast, it is about 3.5% growth per year, but if you look at sales of premium cars like BMW and Mercedes-Benz, these are going at 15% to 25%, so there is much more growth in the premium end".
The same thing happens in even more modest goods like beer. Low-end beer is actually shrinking in sales in China but premium beers are rising at 15% per annum.
So identifying those companies selling into the premium end of the market is an interesting investment idea.