HONG KONG—California-born Jim Lee moved to China four years ago to open a gourmet coffee and tea shop. His Ocean Grounds store in Shanghai, which sells lattes for 38 yuan ($5.97) each, has seen booming traffic that has broadened over that time. The clientele began largely as urbane young Chinese professionals and expats, but now ranges from “younger people to old people—it’s really hard to say” who our average customer is, Mr. Lee said. “This market is exploding.” ...
Whilst other commodities appear to be on the wane in China, demand for small luxuries, such as gourmet coffee, wine and imported fresh fruit, are burgeoning, as the market is driven by changing tastes and an expanding middle class. The Chinese government has also been trying to boost domestic consumption of luxury goods with a series of tax breaks that have helped fuel growth at home but hurt exports abroad. National Australia Bank has also noted that as people move from the lower class to the middle class in China, their consumption shifts significantly, with wine consumption, for instance, increasing by over 700%.