Author |Liu Shuhan
Cover**|Photo.com
Nana (not her real name) first became impressed with coffee in the 2006 American film The Queen Wears Prada. The lead actress Anne Hathaway, dressed in bright clothes and holding a Starbucks in her hand, traverses the streets of New York with heavy traffic, and that figure constitutes her original imagination of urban white-collar workers.
17 years later, Nana, who has become a new urban "worker", rarely drinks Starbucks. The ** of coffee is getting lower and lower, and there are more and more choices. She stocked up on several 8s8 yuan, 99 yuan coupon, Luckin and Cudi drink it instead. She doesn't care about the origin and flavor of her coffee beans, coffee is just a necessity to help her refresh her life.
With the popularization of coffee culture, China's coffee market has entered an era of "parity".
According to an article in the British newspaper The Guardian on December 12, the total number of stores of Chinese chain coffee brands has approached 50,000, making it the country with the most branded coffee stores in the world. The competition between various freshly brewed coffee brands is becoming increasingly fierce, and the low-price strategy is used to the extreme.
The logic of consumption has been reversed. In China, no cup of coffee escapes the "nine pieces of nine".
The ** battle, which lasted for a year, was fired by Cudi with the first shot.
In February this year, Cudi, which was newly established, launched the "Coffee Carnival in 100 Cities and 1000 Stores", during which the audience except for newcomers was 8In addition to the 8 yuan event, there are more than 70 hot-selling products in total, all 9Starts at $9. Within two weeks, Cudi's total sales exceeded 1.53 million.
At the beginning of April, while Cudi's promotional activities were suspended, Luckin began a targeted sniping of Cudi: all Luckin stores with newly opened Cudi stores in the vicinity began to distribute 9$9 coupon.
The following May, Cudi restarted 99 yuan preferential policy. On June 1, Cudi officially announced that it would become the global sponsor of the Argentine national team and launched the "1 yuan full purchase" campaign to attract new users.
Almost at the same time, Luckin announced the launch of the weekly 9 on June 59 yuan of "10,000 stores celebrate" ** activity. Luckin announced at its Q2 earnings communication that the event would "last for at least two years".
Cudi and Luckin's rivalry continued throughout the spring and summer, and it was quite endless. Many consumers joked on Xiaohongshu: Thank you for opening a Cudi downstairs and letting me drink 99 yuan of Luckin.
The involution set off by two "root-born" coffee brands has almost involved players of all sizes.
In the parity market, coffee brands whose living space is squeezed by Cudi are "red-eyed" for the price difference of one or two yuan. Coco can be launched 3$9 for Americano vs. $89 yuan coconut cloud latte;Nova coffee with 88 yuan a cup of ** head-on against Luckin and Cudi;The activity launched by the lucky coffee under Mixue Bingcheng is: Enjoy 2 cups of 9 every day$9.
Although the old chain coffee brands represented by Starbucks have not directly reduced prices, they have lowered the price of a single cup of coffee through third-party platform coupons, member account discounts, points, etc.
As soon as you open the Starbucks app, you can see 399 yuan for two cups of American or latte "star send" opening screen advertisement, and 499 yuan double cup of new coffee, 699 yuan for a limited time, three drinks and other activities. This means that the average unit price of Starbucks' core products and new products launched in the current season falls in the range of about 20 yuan per cup.
On major life service platforms such as Douyin and Dianping, Starbucks is also constantly launching 199 yuan a cup discount. Someone summed up the rule, after the event of one platform is over, it will be launched on the next platform.
Canadian coffee chain brand Tims also pulled coffee ** to 9 for the first time in September this year$9. Although the campaign has been discontinued, on third-party platforms such as Meituan, Douyin, etc., 99 yuan or even 6$9 a cup of Tims coffee is very common.
*Manner, which has a range of about 20 yuan, has become the first local specialty coffee brand with more than 1,000 stores. Brands that maintain high pricing face the reality that it is difficult to scale quickly. According to the data of Narrow Door Restaurant, as of December 26, ** with Grid Coffee, Seesaw and PEET at about 30 yuan's coffee, with 27, 135 and 196 stores.
Fast food giants have also joined the coffee track.
In August 2022, McDonald's announced in a high-profile manner that its "McCoffee" brand is operating independently. On the official mini program, the average price of McCafe's products is about 20 yuan, but in the third-party shopping platform and live broadcast room, several coffee products are 9You can buy it for 9 yuan. KFC, which announced the opening of its independent coffee shop "KCOFFEE" this year, began with the slogan "Popular products only cost 7 yuan" printed on the promotional poster.
There are many entrants, and the price reduction is large. They have only one purpose: to get consumers to come in and stay.
In China, coffee is a foreign product. In many people's initial impression, it may not be delicious, but it must be exquisite, expensive, and high-threshold. With more than 30 yuan at every turn, coffee can only become a choice for a few people to consume or try.
According to data from Service Partner One, a German enterprise office management service platform, in October 2016, Zurich, the most expensive city in the world, a cup of Starbucks** accounted for only 01%。In Beijing, the figure is as high as 076%。
In 2018, the third wave of global specialty coffee and the wave of "consumption upgrading" swept through, and China's specialty coffee market surged: according to Qichacha data, the number of financing events in China's coffee industry reached 23 this year, with a total amount of about 317.1 billion yuan. In 2019, the total amount of financing reached 583.2 billion yuan.
In those years, specialty coffee represented by Seesaw and M Stand once overtook Starbucks and took on the task of popularizing knowledge and educating the market. Varieties such as Yirgacheffe, Geisha, Oiran and several major coffee producing areas in the world have entered the field of vision of consumers.
But soon, the craze for coffee specialization hit a cold snap.
At the time when the market and consumer groups are expanding, China's consumption has entered the "era of parity": thirty or forty-one bowls of ramen and dozens of ice creams have ushered in business failure;The main affordable pot ring food exchange, sweet lala and honey snow ice city have quietly become the first giant.
The huge and diverse Chinese market, which has a consistent and strong pursuit of "cost performance", all differentiated efforts have finally returned to a simple and crude war.
The logic of coffee consumption is also changing. The high-end coat has faded, and young consumers represented by young white-collar workers and college students have become the core audience, and the importance of ** has become increasingly prominent.
In 2023, the coffee industry will officially enter the era of "parity running", and the coffee ** belt will begin to move to 15 yuan, 10 yuan, and even 8 yuan$8 migration.
The ** battle that lasted for a year, and the effect was visible to the naked eye.
The low-price strategy of major coffee brands has attracted more unplanned consumers to enter the market, and the sinking market has grown rapidly. According to CBNDATE data, in 2023, nearly half of the people who buy coffee online will come from second-tier cities, and consumers from third- and fourth-tier cities and below will account for nearly 40%, much higher than first-tier cities. At the same time, the growth rate of new coffee users in the sinking market is also higher than that in first- and second-tier cities.
Merchants ** estimates, Luckin is in the opening of 9After the 9 yuan event, the revenue of a single store increased by 5% to 10% month-on-month. In the second quarter of 2023, Luckin's net income and operating profit both hit record highs of 6201.4 billion and 1172.8 billion yuan, sitting on the throne of China's "coffee brother".
Cudi is also growing at a high speed with an aggressive low-price strategy. A regional development manager of Cudi told Snow Leopard Finance that the average order volume of Cudi stores that launched the ** preferential activity increased by 10% to 20%, which is equivalent to a daily sales increase of 100 200 orders. Cudi stores, which have a good business, can sell an average of more than 700 cups a day.
Starbucks, which has cut prices in disguise, has also achieved a steady increase in various figures in the Chinese market. In the fourth quarter of this year, Starbucks China's revenue increased 15% year-over-year to 8$40.6 billion;Full-year revenue of $3.0 billion, up 11% year-over-year.
Low prices have changed the coffee narrative in the Chinese market. The winner of the battle is not yet known, and this crazy involution will continue.
The price cut only pulls the coffee back to the "normal" belt - Li Yingbo, chief strategy officer of Cudi, once declared.
Cudi calculated the coffee shop's break-even statement in detail in the investment PPT: counting raw materials, rent, manpower, depreciation, water and electricity, the cost of a cup of coffee is 955 yuan. Coupled with the low price subsidies provided by the company from time to time, without considering the quality of coffee beans, even if the ** is down, a cup of coffee still has room for profit.
However, the promises made when attracting investment are often the ideal blueprint drawn by the brand for franchisees, and the reality is often not satisfactory.
A Cudi associate told Snow Leopard Finance that the top-selling product in his store, the "Pampas Blue Cheese Latte", has an ingredient cost of $75 yuan, and plus various expenses such as rent and clerk's salary, the cost of each cup is more than 10 yuan, "basically selling a cup and losing a cup". (For details, see Snow Leopard Finance Club "Cudi Soaring for 300 Days, Can You Make Money Joining Now?")》）
If the affordable business wants to be long-lasting, it needs low-cost support. But for non-head brands, the construction of the first chain is not an overnight achievement.
Taking Cudi as an example, although it has squeezed into the top ranks in terms of scale, the construction of the brand's ** chain and operation system has obviously not kept up with the speed of opening stores.
A Cheng, a co-venture of Cudi in Fuzhou, told Snow Leopard Finance that since June this year, his stores have often encountered shortages of raw materials for popular products, and the most serious problems broke out in September this year.
In September, Cudi co-branded Wuchang Rice launched the "Rice Milk Latte", with the slogan "Late night wine hurts your liver, early morning porridge nourishes your stomach". The industry generally believes that this is a planned counterattack by Cudi to Luckin's "sauce latte". However, in the second week of the product's launch, before the heat faded, Ah Cheng's store fell into a state of no goods to sell.
Cudi is also aware of the lack of capacity of the **chain. In July this year, Cudi announced that the first ** chain base was settled in Dangtu, Ma'anshan, Anhui Province, with a total investment of about 200 million US dollars, and it has been put into operation in the second half of this year.
A practitioner in the coffee industry told Snow Leopard Finance that among domestic coffee brands, Luckin's first-chain capacity belongs to the "king" level, which can control the loss to a very low level. Therefore, Luckin Coffee sells for 99 yuan a cup, you can still maintain profits.
For many franchisees, the strategic loss of the coffee brand hurts their core interests.
Fan Jianchao, a coffee chain investment consultant, found in the survey that after the first war this year, the return cycle of franchisees was greatly extended, and the gross profit margin fell from 50% to below 30%. "The franchisees of coffee chain brands are like death squads that go forward and follow, relying on brand subsidies to fight a protracted battle without profits. He told Snow Leopard Finance Agency.
Zhu Danpeng, an analyst in the food industry, believes that the low-price strategy is feasible to seize the user market in the early stage, but at present, the management, operation, chain, and personnel costs are all in the world, and the low-price strategy must be unsustainable.
A consumer investor also told Snow Leopard Finance that the current chain coffee brand mainly relies on subsidizing franchisees to maintain store operations, and this money-burning model is very damaging to the brand's vitality, so the ** war "will last until the second half of 2024 at most".
China's coffee market is still incremental, with brands choosing to sacrifice profits in the short term to gain more market share. But how long will this crazy game of burning money for the market continue?The industry cares, the franchisee cares, but the consumers don't.
For them, it doesn't matter which brand they choose, what matters is that they drink and cherish the coffee of Nine Pieces and Nine.
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