Last year, the coffee plantation area, yield and output value of beans in Yunnan accounted for more than 98 percent of the total nationwide, said iResearch, a market research company in China.

By 2025, coffee market sales in China are expected to exceed 1 trillion yuan ($143.8 billion), which is about three times higher than the current figure. In 2021, sales revenue from the domestic coffee sector reached 381.7 billion yuan. The number of chain cafes is less than 13 percent of the total number, iResearch found, meaning ownership in the sector is highly fragmented.

With the number of coffee drinkers in China rapidly growing, the country is becoming one of the most important coffee consumption markets globally, which has boosted the confidence of the coffee industry in Yunnan.

Nationwide, Shanghai has taken the lead in coffee consumption for three consecutive years. Beijing, Hangzhou, Zhejiang province, and Guangzhou ranked next, according to a report by food delivery platform Ele.me.

As of June 30, Shanghai operated 7,857 cafes, exceeding New York, London and Tokyo. More coffee retailers in Shanghai are using coffee beans produced in Yunnan, according to a report by online food ordering and delivery service provider Meituan.

Though there is significant room for further growth, there are also limitations on the industry's development. Bean planting in Yunnan is highly concentrated in mountainous areas, where large-scale mechanized farming is difficult. Planting and picking are largely done by hand.

"Additionally, most coffee growing areas in Yunnan are located in high altitude regions, and those places sometimes suffer from temperature swings and drought," Huang said.