(Yicai Global) Oct. 14 -- Nestlé has launched its first ultra-premium instant coffee as part of US coffee-house chain Starbucks’ line up in China. Using the latest freeze-drying technology, it is one of the global food and beverage giant’s most expensive coffee products.

The new instant coffee is a world away from the original Nestlé jars and tins that still line supermarket shelves. The latest offering comes in popular mini-can packaging and uses freeze-drying technologies to rapidly freeze the liquid into ice and also sublimate some of it into gas to retain the coffee aroma, said He Wenlong, senior vice president of Nestlé’s coffee business in China. However, the process is quite costly and a set of 18 capsules costs CNY158 (USD24.55).

Nestlé is clearly planning to enter the hot new market of specialty coffee brands with the help of Starbucks’ brand influence in China and its own mature sales channels, Wang Zhendong, chairman of Shanghai Feiyue Investment Management, told Yicai Global.

China’s coffee market has been expanding at an annual growth rate of 30 percent. But since 2018, new forms of coffee such as freeze-dried capsules and cold-extracted liquids have become more popular. The growth rate of freeze-dried capsules has more than doubled, according to a May report released by CBNData.

In the first seven months, around CNY6 billion (USD932 million) from 28 financing rounds were pumped into China’s coffee industry, according to Qichacha. But He believes there is still plenty of room for growth.

Coffee is one of Nestle’s biggest growth points. The Vevey, Switzerland-based firm’s coffee business expanded 11 percent in the first half from the same period last year. Its tie-up with Starbucks, which allows it to incorporate its coffees into the Starbucks brand as well as distribute Starbucks coffee worldwide, grew 16.7 percent in the period with sales of CHF1.4 billion (USD1.52 billion) across 79 markets.

Editor: Kim Taylor