Coffee culture comes to the boil in Shanghai

Although the streets of downtown Shanghai are already dotted with coffee houses, some industry players do not appear too concerned about oversaturation. Rather, it is consumption levels that are giving players cause to be optimistic. According to the International Coffee Organization, the average consumption in China is only about five cups a year. In contrast, the global average is 240.

Seminsky said the current consumption levels give a company such as Starbucks a growth strategy that cannot be matched elsewhere in the world.

"If China's per capita consumption climbs from five to 10 cups per year, which is a plausible scenario, all their (Starbucks') bets will have paid off. This rise in consumption won't happen in the coming year, but possibly in a decade," he said.

A search for "coffee shop" on the consumer review site Dianping.com yields more than 7,500 results. In addition to the host of outlets operated by major chains, there are dozens of smaller local coffee entities such as Greybox Coffee, Coffee Box and Manner Coffee, many of which have only emerged in the past two years.

Despite only opening in the middle of last year, RATIO, a high-tech coffee and cocktail establishment that uses a robotic arm to prepare its beverages, has been warmly received by consumers. Pathross said he is relatively pleased with the welcome given to his brand and technology.

Regarding the competition, he believes the number of coffee outlets in Shanghai's central business district is nearing saturation point.

Nils Weisensee, the founder of Cafe del Volcán, said players in the specialty coffee market have been facing the issue of oversaturation. Specialty coffee refers to that which achieves a score of more than 80 points on a scale set by the Specialty Coffee Association of America. It is also generally considered to be of higher quality and more expensive than commercial options.

"I think Shanghai's specialty coffee market entered a bit of a bubble last year. The actual consumption of specialty coffee in the city center is not quite catching up with the supply," Weisensee said.