The coffee war is far from over, the vast sinking market is being explored, and the coffee era belonging to the Chinese has just begun.
Author |Qingling.
Edit |Eucommia.
* |Tidesight (ID: Tidesight).
2023 is a year for chain coffee to run blindfolded, and this year, Luckin and Cudi have teamed up to open more than 110,000 coffees have helped China to reach the top of the "first coffee country", and a situation of one super and many strong is taking shape.
2023 is also a year of disaster for mid-waist brands and independent cafes, independent cafes opened next to Luckin and Cudi have been dragged into the quagmire of the first war, even Pacific Coffee, which was once a rival to Starbucks, now has only more than 100 stores left.
But it is undeniable that it is the head brand that beats coffee to sugar water, which makes more people start to taste coffee, and also makes China the country with the most cafes in the world with more than 50,000 cafes at the end of the year.
Since Starbucks entered China in 1999, the spread of coffee has only been 30 years, and the real upheaval has only been in the past 5 years.
But the coffee war is far from over, the vast sinking market is being explored, and the coffee era belonging to the Chinese has just begun.
Like most consumption tracks this year, the key word of coffee is low price, and the "catfish" that brings the whole industry to low prices is Cudi Coffee, which has only been established for one year.
Although Cudi is a rookie on the track, its founder Lu Zhengyao is an industry veteran, who single-handedly founded Luckin Coffee five years ago, and directly hit the market price of coffee from Starbucks from 30 yuan a cup to less than 10 yuan, and it is his consistent style to capture consumers through low prices.
5 years later, Lu Zhengyao's style of play has not changed, and in February this year, Cudi Coffee launched a full product 99 yuan ** activity, although only 3 months have passed since the opening of the first store, but according to the data of narrow door dining eyes, as of the end of January, the number of stores of Cudi Coffee has approached 400.
Unlike when he founded Luckin, he achieved rapid expansion by burning investors' money, Lu Zhengyao changed the ammunition depot of Cudi Coffee from an investor to an associate, and realized risk sharing and profit sharing based on the joint operation model of profit sharing.
At the end of 2022, Lu Zhengyao's team has shouted the slogan of "10,000 stores in three years", and as of the end of April this year, Cudi Coffee has run out of more than 1,600 stores in 7 months.
The pace of expansion after that may have made Lu Zhengyao wonder if the "three years and 10,000 stores" was too conservative. On October 22, the first anniversary of the first store of Cudi Coffee, Qian Zhiya, chairman and CEO of Cudi Coffee, mentioned that the number of stores of Cudi Coffee has exceeded 6,000 worldwide, ranking fourth in the world.
The same founder, the same pace of expansion, the same low-price play, and even the stores are posted with Luckin, and the banner does not shy away from writing the words "Luckin founder". Through the pixel-level reproduction of Luckin, Cudi became the largest "catfish" in the coffee track in just one year, and also completely turned the whole industry into the low-price vortex.
At the beginning of April, Cudi suspended 9On the occasion of the 9 yuan ** event, Luckin launched the store celebration ** activity, launching 9 every week9 yuan for a single coffee item;At the end of April, Cudi increased its ** price from 99 yuan to 88 yuan, and at the end of May to start the "summer ice drink season, 99 "** Activities.
Then, on June 5, Luckin announced the opening of the weekly 99 yuan of normalized preferential activities, and claimed that the event will last for at least two years, and the price reduction will become a normalized low price.
As the battle between the two sides escalated, other players had to lean over to participate. Starbucks, which takes the high-end route, has launched 19A limited-time offer of 9 yuan a cup, consumers can even buy 9 in some activities$9 for a cup of Starbucks coffee.
Tims Tianhao Coffee, which relies on bagels to make a name for itself in China, also lowered its drink** to 9 for the first time in September this year$9;The native Nova coffee has more than 99 yuan coffee coupon, also launched 01 yuan early adopter activity;Even the lucky coffee, which was originally very low, has launched 9$9 for two cups of activity.
9.The 9 yuan ** war has also accelerated the process of industry reshuffle.
According to the third quarter report of 2023, the low-price strategy has caused Luckin's gross profit margin in the third quarter to decline by 5% compared with the previous quarter6%, but overall revenue still increased by 84 compared to the same period last year9%, of which the revenue of the associated stores was 1047% high growth.
The same is true for Starbucks, which reported that its overall revenue, same-store sales and same-store transactions increased despite a 3% year-over-year decline in average order value.
In contrast, small and medium-sized brands that lack the head brand effect and the strength of the first chain are struggling in the first battle. According to the data of Narrow Door Restaurant, from January 1 to October 13 this year, there have been nearly 350,000 stores closed.
According to the 2023 China Urban Coffee Development Report, the proportion of chain coffee in Shanghai is increasing, and the proportion of independent coffee shops has increased from 64 at the end of January 20218%, down to 55% at the end of April this year.
Previously, Li Yingbo, chief strategy officer of Cudi Coffee, had mentioned that the cost of a cup of coffee can be controlled within 9 yuan, but the unit price is too close to the cost is tantamount to walking on the verge of loss.
More importantly, in the case of low gross profit, wanting to obtain more abundant profits undoubtedly puts forward higher requirements for the sales of stores, and also brings higher challenges to Cudi's ** chain capabilities.
Interestingly, Cudi previously announced that as of October 1, only 21 stores had been closed;However, according to GeoQ data, in the first half of 2023, the number of store closures of Cudi Coffee topped the list of coffee chain brands, as high as 318.
In general, the leading brands led by Luckin, Cudi and Starbucks have further opened up the consumption space through low prices, and with the rapid expansion of stores, more people have drunk coffee.
However, the war has also accelerated the reshuffle of the industry, and many small chains or independent coffee shops have become difficult to gain a foothold because of the expansion of the head brand.
For a long time, when demonstrating how large the market space for coffee is in China, the market generally adopts the comparative analysis method, that is, by comparing the coffee consumption of Chinese with Europeans, Americans, Japan, South Korea and other Chinese people to prove that Chinese coffee drinking is far from enough.
But this argument ignores the premise that Chinese who have come out of the "hard days" are willing to drink coffee, and the slow development of coffee in China over the past few decades has indeed proved that this speculation is not groundless.
It wasn't until Luckin came out with a raw coconut latte that there was a clearer answer to this question, and this cup of coffee mixed with coconut milk for less than 20 yuan contributed 12 to Luckin Coffee in just 8 monthsThe revenue of 600 million yuan can be called a lifesaver for Luckin.
More importantly, it makes the industry realize that Chinese are not used to drinking coffee, but just not used to drinking "Western-style coffee". As a result, the product ideas of the freshly ground coffee industry have been completely reconstructed, and products that follow Western flavors such as American style and latte have become the basic models of the store, and coffee-based beverages that mix and match different raw materials are the popular products of the store.
Taking Luckin as an example, after launching a raw coconut latte in 2021, Luckin will launch a coconut cloud latte in 2022 with Coconut Tree, and in 2023, it will launch a sauce latte with Moutai, which not only creates marketing popularity, but also verifies its ability to make explosive models.
In addition to Luckin, whether it is the local Nova Coffee, Lucky Coffee, Cudi, or overseas Starbucks have begun to test the "coffee + X" route, such as Cudi and Wuchang Rice jointly launched a rice milk latte this year, and Starbucks relied on the cooperation with Oatly to bring the oatmeal latte to the fire.
Although in the eyes of many coffee fundamentalists, this kind of caffeinated drink with coffee as a base is not orthodox coffee, it must be admitted that it is the normalization of the top brands that has made more and more consumers develop the habit of drinking coffee.
What's more, even Starbucks has made localized innovations for espresso, by adding water and milk, espresso into Americano and latte, and then creatively adding ice cream to coffee to create the super item "Frappuccino".
Nowadays, whether it is tea, sparkling water, juice, coconut, beer or milk tea, common sago dew, coconut fruit, barley, Oreo crumble and other small ingredients, have been grafted into the base of coffee, and "the end of coffee is milk tea" has become a tacit consensus in the industry.
But on the other hand, if this trend closes the coffin, it is also biased to conclude that Chinese cannot drink authentic "bitter coffee", and the localization of chain brands is to compete for the first sip of coffee among young people, but for veteran coffee lovers, this caffeinated drink is not favorable.
In other words, chain coffee is aimed at coffee novices, which determines that their coffee must be tea-based to meet the demands of the masses, but for independent cafes, they are aimed at senior players, which means that their coffee needs to develop in the direction of specialization and specialization.
Although coffee has been a niche consumer product in China for decades, it has produced a group of coffee lovers. In addition, with the rapid expansion of coffee chains, coffee culture has moved to more people.
In particular, major cities have begun to hold coffee culture festivals to provide offline communication opportunities for independent cafes and coffee lovers, and also give birth to the city's coffee culture. Taking the Lujiazui Coffee Cultural Festival in April as an example, according to Shangguan News, the cultural festival attracted more than 260 brands and more than 170,000 spectators.
In the coffee festival, in addition to the variety of special coffee, another out-of-the-circle element is coffee**, which is 9Ordinary consumers who are used to feeding at 9 yuan may find it difficult to accept the coffee that can easily cost hundreds of yuan in the coffee festival, and they will also be surprised that the American style of 35 yuan a cup has become a conscience price here.
But for veteran coffee lovers, it is worth it to drink a cup of Geisha pour-over coffee blended by a top coffee master, even if it costs hundreds of yuan, after all, a kilogram of Geisha green beans can cost tens of thousands of yuan.
At the same time, this year's sky-high coffee has also taken turns on the hot search, from 2888 yuan to 4998 yuan to 6200 yuan, coffee has refreshed the public's cognition again and again, but it has also used the hot search effect to ordinary people to popularize the value of coffee behind green beans, manors, roasting methods, flavor substances and other aspects.
To a certain extent, coffee as an imported product in China is gradually approaching tea or liquor, and the market value and cultural value are increasingly recognized.
As Du Gan, general manager of Wuyishan Xiangjiang Yunchaxing Tea at the Liangzhu 2023 Science and Technology Guochao Industry Conference, said, it is very difficult for chain coffee shops to survive under the attack of Luckin and Cudi.
But independent coffee shops with ideas survive because coffee has a strong social and professional nature. ”
Since the reform and opening up, China has introduced countless imported consumer goods, but the development of coffee has always been tepid.
In 1999, Starbucks first introduced coffee to Beijing International Trade Center, but due to the high unit price, Starbucks has been limited to high-end business people for many years, and for ordinary Chinese, their first cup of coffee often comes from instant coffee from Nestle or Maxwell.
In fact, in the past five years, Luckin has been an inescapable milestone in China, and it is a witness to the drastic changes in China's coffee market, as well as a direct promoter.
While achieving Chinese coffee, Luckin has also written itself into business textbooks twice.
The first time was in 2018, which was the 20th year of Starbucks' entry into China, and Luckin used 99 yuan pulled coffee down from the altar of high-end people, and since then, coffee has begun to move to the mass market in China.
However, with the financial fraud incident, Luckin has faded the halo of "the light of domestic products", and the jokes of "Wall Street Scythe" have spread to the streets and alleys, making Luckin's reputation fall to the bottom, and the argument that Fang is alive and dead is very loud.
No one expected that the aftermath of the counterfeiting had not yet dissipated, but Luckin would once again become a business legend, expanding its store volume to more than 14,000 in 2023, ranking first among China's chain coffee brands.
Lu Zhengyao did a lot of out-of-the-ordinary business initiatives, such as the famous "strategic loss", but he did anticipate the growth of China's coffee market in a forward-looking manner.
After 2018, as Luckin radically opened up the mass market of coffee with a revolutionary attitude, Manner, Nova Coffee, Seesaw, and Lucky Coffee sprung up, and international brands such as Arabica Coffee and Bluebottle also entered one after another.
At the same time, cutting-edge instant coffee brands such as Santonban, Sumida River, and Yongpu have also emerged from the cracks of giants such as Nestle and Maxwell as subversives, and China's coffee market has entered a new stage of development.
2023 is another new watershed year. The industry ** war has lasted vigorously for a whole year, although it has led to the acceleration of the industry reshuffle, but on the other hand, it has further released the habit of Chinese people to drink coffee.
According to a recent report released by World Coffee Portal, a research institute under Allegra Group, the number of coffee stores in China will be close to 50,000 in 2023, ranking first in the world, and this title has been belonging to the United States for the past 20 years.
If in 2018, the low-price model provoked by Luckin opened up the coffee drinking habits of first- and second-tier cities, then the battle of the champions in 2023 will release the coffee demand in the sinking market.
According to data from Narrow Door Restaurant, nearly half of Luckin stores are in second-tier cities and below, and only 37% of Cudi Coffee's stores are in first-tier and new tier-1 cities. Even if it is as noble as Starbucks, it once said: "Starbucks values not only more than 300 prefecture-level markets across the country, but also nearly 3,000 county-level markets." ”
According to the 2022 China Freshly Made Coffee Category Development Report, the number of coffee stores in third-tier cities grew the fastest from 2021 to 2022, reaching 19%. Meituan data shows that from January to February 2023, coffee delivery in third- and fourth-tier cities increased by 101 in the same period9%, more than 72 in first- and second-tier cities14%。
In the past five years, coffee as a foreign product, from China's first- and second-tier urban white-collar workers to break through, with the expansion and war of the head brand all the way to the third and fourth tier and even more sinking county market penetration, today's coffee has long bid farewell to the exclusive label of high-end business people, and has become a popular beverage choice.
But is the coffee story over?No, the story of Chinese coffee has just begun, Starbucks global CEO Na Sihan once listed a set of data, "China's current annual per capita coffee consumption is 12 cups, of which Shanghai will be higher, but this data from the world, Japan is 200 cups, the United States is 380 cups." ”
According to the 2023 China Urban Coffee Development Report, the scale of China's coffee industry in 2022 will be 200.7 billion yuan, and it is expected to reach 369.3 billion yuan in 2025.
On the other hand, Chinese's understanding of coffee is also maturing, although 1000 yuan coffee has been repeatedly pushed to the hot search this year, but 100 yuan coffee has been strange, in addition to the simple drinking attributes, Chinese have begun to pay attention to the origin of coffee beans, growing estates, roasting technology, aroma and taste and even the cultural attributes behind it.
At the same time, coffee has also grown a strange posture in China, with unique blends and blends that are occupying the taste buds of Chinese, and the owners of coffee brands with independent personalities and excellent tastes behind them are an important driving force for coffee culture to take root and grow new leaves in China.
When chain coffee relies on large-scale stores and strong ** ability to turn coffee into the daily drink of Chinese people, independent coffee shops are also telling coffee or localized or international cultural narratives with their own abilities, and the coffee culture belonging to Chinese is beginning to brew, and the situation of a hundred flowers is coming.
The next "China" in the coffee market is still China.