Produced | Tiger Sniff Commercial, Consumer and Mobile Group
The author | Miao Zhengqing
Caption image| IC Photo
If you're used to having a cup of coffee at work in the morning, you may need to weigh your wallet in 2022.
The big rise in the price of coffee is already on the string.
At the beginning of January, Tim Hortons Coffee quietly completed the price increase, and made a small adjustment of an average of 1 to 2 yuan for several store SKUs. Not long ago, a domestic first-line coffee brand adjusted the price of takeaway products in some cities, and the average price of some products increased by about 2 yuan. On January 6, Starbucks adjusted the price of its store base SKU in some cities in the southwest, and some single products rose by about 2 yuan.
The wind of price increases has even blown to South Korea. As the single market with the largest per capita coffee consumption in Asia, Koreans have ushered in the most expensive moment of coffee: a number of coffee brands led by Starbucks have adjusted prices in the Korean market, and it is reported that the price of some Korean Starbucks stores will rise by about 2 yuan. It is worth noting that this wave of price increases has surprised some Korean consumers, because the last time there was a price increase in the Korean coffee market was 8 years ago.
In the East Asian market, the rising price of coffee raw materials has made Starbucks "unable to hold on"
On January 7, Sun Jin, a coffee distributor in Beijing, told Tiger Sniff that most of the first-line brands have completed their 2022 orders in the second half of 2021, "The coffee inventory of brands such as Nestlé is very sufficient, and there will be no shortage of coffee beans." But according to Sun Jin, in 2022, the whole industry is likely to generally adjust prices, because the overall price of key raw materials such as coffee beans and sugar and paper is rising, and in order to cope with the new cycle of rising costs, the whole industry will make adaptive changes.
It is worth noting that some of the origins of coffee beans have been tasted by the wind of price increases. Recent data from Ethiopia, Africa's largest producer of Arabica coffee beans, showed that the country's total coffee exports far exceeded expectations. According to statistics from the relevant departments in the country, the price of some exported coffee beans has reached the highest point in nearly a decade.
The International Coffee Organization conducted a year-on-year study in November 2021 and found that the global coffee price index has risen by more than 7% compared with the same period in 2020, and due to the reduction in production caused by natural factors in Brazil in 2021, coffee alternatives in Africa and Asia have "ridden the wind and waves" to significantly increase coffee exports.
From the price of coffee futures, we can also see the inevitable tide of price increases: the Arabica coffee bean quotation of the Intercontinental Exchange in New York has reached about 4 times that of the spring of 2020. Coffee futures analyst Zhao Chengcheng told Tiger Sniff that from the perspective of production capacity, the global coffee bean production in 2021 is the lowest state in more than 8 years, affected by factors such as futures and large orders, this capacity shortage will not be "immediately" reflected to the terminal store, but from the second half of 2022 to 2023, C-end consumers are likely to feel a more obvious "sense of price increase".
Robusta ushered in the golden age?
Brazil has become the "sad place" of the coffee people in 2021.
To date, Brazil is the world's largest coffee producer. But in 2021, Brazil experienced the worst drought of the century (it is reported that this drought state is one of the worst in Brazilian history in the 20th century), followed by frost disasters. Dual natural factors have led to a significant reduction in Brazilian coffee bean production, and some local natural science research institutions have calculated that the actual coffee bean production capacity in Brazil in 2021 is the lowest in the past 12 years.
Rising sea and air freight prices have further fermented the impact of brazil's coffee bean production. The head of domestic second-line coffee brand procurement told Tiger Sniff in October this year that some Brazilian supplies have made domestic brands "prohibitive". "A large part of Brazilian coffee beans are supplied to the field of instant coffee, as a commodity bean, the cost performance is very critical, the production reduction and sea freight price have been greatly improved, so that some brands can only replace the supplier."
Analyst Zhao Chengcheng believes that the reduction in production caused by natural disasters is actually a superficial factor. "Brazil's production capacity fluctuates every year, and mechanisms such as futures and coffee insurance exist to avoid commercial losses caused by natural factors, and if it is purely a natural disaster, the impact on the coffee industry is still within the acceptable range." However, the pressure brought about by the combined effect of factors such as the ongoing epidemic and maritime prices has put the entire industry under obvious pressure. ”
It is worth noting that as a key producer of Arabica coffee beans, when Brazil's production is reduced, some coffee buyers have set their sights on Vietnam. As the world's second largest coffee producer, Vietnam is famous for its Robusta coffee beans. It is reported that Robusta is known for its stronger disease tolerance and higher yield, and because it is generally regarded as a coffee bean with "heavier bitterness and higher caffeine content" in terms of taste and efficacy, Robusta has been "slightly inferior" in the "boutique" competition with Arabica for many years.
Due to the "leaf rust infestation" of Arabica coffee trees in Vietnam in the 20th century, resulting in the delay in recovery of local Arabica production, as one of the results, the more disease-resistant Robusta coffee trees became popular, and Vietnam became a veritable "Country of Robusta". When the supply of Arabica coffee beans in Brazil is insufficient in 2021, the Vietnamese-made Robusta coffee beans usher in spring. According to statistics, Vietnam's Robusta coffee bean exports reached a peak in 10 years.
Robusta coffee beans are seen as one of the key variables in the coffee market in 2022
Robusta's challenge to Arabica has come to light. In fact, in Brazil, this phenomenon has gradually become clear in 2021: in some Brazilian production areas, due to the greater impact of the disaster on Arabica coffee beans, part of the supply has been replaced by local Robusta coffee beans. Under normal circumstances, the proportion of Arabica coffee beans in The mixed coffee powder exported by Brazil is generally at least 50% to 80%, but the proportion of Robusta coffee beans in some exported coffee powders this year has exceeded 40%.
The rise of Robusta could have a qualitative impact on the world coffee industry.
Barista Skulla once told Tiger Sniff during New Year's Day that Robusta's strong rise will have a profound impact on the world coffee market. "Today's world coffee market, in a sense, is based on Arabica coffee beans, so many years of mainstream culture, mainstream market, especially the Chinese market for Arabica's high esteem, consumers have a deep understanding of Arabica, but in 2022 the coffee circle may enter the Robusta era."
Skulla points to two direct effects that Robusta could have: a more bitter taste, which means the emergence of new flavoring cultures and techniques on the market; and higher caffeine content, which may have a qualitative change in consumers' drinking habits in the long run.
In Yunnan, some Chinese coffee bean growers also see the key points behind this trend change. Due to the closer distance to Vietnam and other production areas, some growers in Yunnan have already felt the "excitement" of Vietnamese coffee producers. Some local practitioners told Tiger Sniff that the export volume of Robusta coffee beans in Vietnam will hit a record in 2021, which is a "complicated situation" for Yunnan origins. "In a sense, Yunnan needs to further strengthen its competitive advantage."
It is reported that there have been Vietnamese coffee circle practitioners began to go to the European and American markets to promote the Vietnamese-made Robusta coffee beans on a large scale. In Vietnam, the "decline" of the Brazilian production area is regarded as a "rare opportunity" in Vietnam, and even in some propaganda, the Vietnamese Robusta has been described as a "high-end product". People familiar with the matter told Tiger Sniff that in fact, in the past decade or so, Most of the Vietnamese-produced Robusta has been used for inexpensive blended coffee and instant coffee.
China Coffee Circuit: A More Brutal 2022
Outside the mountains of Yunnan, the "abacus" of China's coffee rivers and lakes also crackled in this winter.
The founder of a coffee brand who did not want to be named told Tiger Sniff that 2022 will be a year of "deciding the winner". "Some chain coffee brands may face a reshuffle."
It is reported that in the coffee circle, people have almost formed a consensus, in the Chinese market, except for Starbucks and Luckin has evolved to an "unshakable" scale, starting from the third place throne, everything is "or unknowable". "Not only the number of stores, but also the brand's mental cognition, when it comes to drinking coffee, now the first impression of consumers is not Starbucks or Luckin, so who is the third choice?"
The rental dividend disappears and is seen as a chargehead of this more brutal war. In Shanghai, some stores have found themselves facing a "dilemma" of 2.5 times the rent in 2022. In some airports and high-speed rail "points", fierce point competition, almost let people "no time to breathe".
Some brand leaders bluntly said that "extreme pressure" is extremely high, because these points will not give new "rent subsidies" under the epidemic factor, which is completely different from 2020, if the brand can't stand to want to quit the lease, it also needs to pay "liquidated damages". "The situation in 2020 is very different from now, for the property owners, they have also borne losses in the past few years, and some property owners have reached an unsustainable state, and this rent pressure has finally been transferred to our brands."
In such a situation, the rise of raw materials such as coffee beans has almost brought a fatal blow to the brand. At the end of 2021, the person in charge of product development of a certain line of coffee brands told Tiger Sniff that the average comprehensive cost will rise by at least 23% to 27% in 2022. "If you count the continued high labor costs, the cost pressure of most brands has risen by nearly 30%."
It is interesting to note that in such a situation, most brands do not dare to raise prices with great fanfare.
"Many coffee brands in 2020 to 2021 large-scale expansion points, is still in the process of cultivating the user's mind, such a situation to rush to raise prices, the adverse impact on the brand is great." And so many alternatives, once we increase the price, if others can resist the cost pressure and do not increase the price, then the other party will win. A person familiar with the matter revealed that the coffee circle has realized that 2022 may be a year of "suffering", and the final competition is the financial resources behind it, as well as the fighting spirit of "the leftover is king". The person regrets that those brands that get hot money in time from 2020 to 2021 "seize the opportunity".
Some brands have begun to face the cost pressure.
In Shanghai, a well-known coffee chain upstart has begun to try to "sell light food" and try to increase the "depth of payment" and increase the unit price of customers through the model of meal + coffee. In Beijing, since October 2021, a number of coffee brands have begun to focus on grabbing the "point" of the hall on the first floor of the office building, and trying to develop a "new" store model: borrowing the flow of commuters to sell low-priced coffee + fast food. This model has even become a craze and is seen as the direction of the future evolution of "small shop high ping effect".
After a well-known light food chain brand was rumored to be planning to "sell its business in China", some people related to the coffee brand immediately contacted it and tried to take over. It is reported that many coffee brands are seeking to find a new "money classic" as soon as possible in addition to coffee.
"The rise in the price of coffee beans has led to the gradual erosion of coffee gross profits, on the one hand, coffee brands need to update the story to tell investors, on the other hand, they need to take precautions to transform early." Zhao Chengcheng believes that at present, in China, pure coffee chain stores, only Starbucks and Luckin two models "went through", and all the other stores are still in the "to be tested" stage, "From the current point of view, for new brands, it is not easy to only sell coffee to support the scale of thousands of stores." ”
Aggressive "cross-border offensives" such as tea drinks have added pressure to the coffee circle.
In 2021, head brands such as Neixue and Xicha have entered the coffee field, and even some coffee products have sold more than similar products of pure coffee brands. In the field of raw materials and talents, the newly emerging tea upstarts are "competing head-on" with coffee brands. In Beijing and Shanghai, brands such as Baristas and Tea Drinkers, Manner and Xicha have directly competed for talents, and even for key talents such as store managers, brands have staged a "salary increase war".
Some industry researchers have told Tiger Sniff that the competition for coffee and tea will only become more intense in 2022, "the purchasing power of consumers has not increased significantly, and brands are competing for consumers' attention and consumption power at the same time." ”
Right now, for coffee practitioners, how to survive the winter and plan ahead for 2022 is crucial. In the situation that the rising cost of raw materials has been nailed down, stores can only deepen their cultivation in the direction of refined operation and cost reduction and efficiency increase. This means that the era of extensive coffee ends prematurely, and even if billions of yuan are raised, in the fierce competition in 2022, the money will need to be used carefully. After all, in a fierce track of ups and downs, "cutting down on food and clothing and doing great things" is the only way to survive and win the war.