Interface News Reporter | Li Ye
Interface News Editor | Ya Hanxiang
According to the Nikkei newspaper, Sumidagawa Coffee is also considering an initial public offering after receiving multiple investments from venture capital funds. Subsequently, Sumidagawa told Interface News that in the near future, the company will focus on sales and brand promotion related to the Asian Games; The company just completed its Series C financing in March, and the capitalization process is advancing, but it is not a focus in the near future.
Sumidagawa Coffee was established in 2015, the main products are hanging ear coffee and espresso liquid two categories. At present, there are mainly 3 series of "paddle lock fresh coffee", with an average price of 50-60 yuan / box; "Lock fresh coffee liquid" has launched 4 series, with an average price of about 2.4-4 yuan / cup.
Sumidagawa Coffee has obtained three rounds of financing, the most recent of which occurred in March 2023, when the consumption track is slowly recovering. In August 2020, Sumidagawa Coffee received tens of millions of financing. In April 2021, it completed a series B financing of nearly 300 million yuan. In late March 2023, Sumida River Coffee announced the completion of a series C financing of hundreds of millions of yuan, which was jointly led by Yijing Capital and Jiande Holdings, followed by Buji Capital and Qiming Venture Capital.
According to its founder Lin Hao, Sumida River's total turnover (GMV) exceeded 1 billion in 2022, and the number of cups sold in a year exceeded 350 million.
Sumida River is one of the representatives of new consumer brands.
Similar to the growth path of many new consumer brands that have emerged in recent years, "establishing brands→ obtaining sales qualifications→ designing products→ finding foundries to produce →OEM", with the help of such asset-light models, these new consumer brands can be quickly established. After years of development, the relatively mature supply chain, logistics, talent and other infrastructure equipment in the Chinese market have provided conditions for their birth.
This is especially true for the instant coffee circuit. Not only Sumida River, riding the rapid development of China's coffee market, but also the birth of high-quality instant coffee brands such as Santong and Yongpu during the same period. With the blessing of capital, Sumida River has also begun to enter the traffic market to fight - whether it is once looking for the head anchor Li Jiaqi to cooperate, or looking for Xiao Zhan to endorse, Sumida River, which made his fortune on e-commerce platforms such as Douyin, relies on traffic to make the brand sound. During the "Double 11" period in 2020, Sumida River's two major coffee categories, Hanging Ear Coffee and Liquid Coffee, both ranked first in terms of the number of cups sold and the total sales volume.
But after reaching the peak, Sumida River also began to face the dilemma of all new consumer brands.
On the one hand, the consumption track is cold, the traffic dividend is difficult to maintain, and the method of exchanging traffic for sales is not as effective as before. In 2021, Guotai Junan Securities research data shows that in the field of convenience fast food, Li Ziqi, Zihi Pot, Ramen Say, and Mo Xiaoxian fell by 5%-17% year-on-year in the first half of this year; In terms of snacks, Good Shop and Three Squirrels fell by 33% and 14% respectively; Wang Fengfu regretted his performance, with a year-on-year decline of more than 50% in the second quarter and the first half of the year; In addition, the sales growth rate of coffee brands Girlcult, Huashi, Little Odin and Perfect Diary also declined to varying degrees.
On the other hand, the premium for new consumption is no longer recognized by consumers. Under the influence of the epidemic, the momentum of consumption momentum recovery is insufficient, and people are more inclined to choose more cost-effective products - especially for consumer goods such as instant coffee.
The low-priced black coffee that appeared on Douyin once took away the glory of new consumer brands of the past.
In May 2023, among the top ten sales under the coffee category of Douyin Mall, there were 6 instant black coffee products. According to the statistics of the third-party platform "Guoji Feigua", the sales of instant black coffee of the Academy of Agricultural Sciences exceeded 7.5 million in March, and the sales of "0 fat black coffee" of violent unicorns exceeded 5 million.
In such an impact, the heavy loss is the three and a half meals and Yongpu with the price of 10 yuan per cup.
According to data from "Jiuqian Zhongtai", in the first quarter of 2023, the GMV of Tmall's "brewed coffee" category decreased by 7.1% compared with the same period last year, of which the category "instant coffee" with GMV accounting for more than 60% decreased by 4.4%. Among the top 10 brands, the year-on-year GMV growth rate of Santong in the past four quarters has been negative.
According to the statistics of the third-party platform Cicada Cube, in March this year, the number of instant coffee products with a price of less than 10 yuan (unit price of goods, not cup unit price) accounted for 8.74% of the entire market, sales accounted for 37.29% of the entire instant coffee market, and sales increased by 87.52% month-on-month and 23.2% year-on-year. In contrast, the regular boutique instant with a price band of 50-100 yuan showed a decline in sales in March, down 4.46% year-on-year.
Sumida River, which sits between low-priced and specialty instant coffee, currently looks like it's in the safe range.
From the data point of view, Sumida River still maintains a relatively optimistic market share. In the first quarter of 2023, GMV ranked second in the "brewed coffee" category on the Tmall platform, second only to Nestlé, and the growth rate in the past four quarters was positive. But it is also looking for more growth possibilities for itself - such as opening up offline channels and extending the consumption scenarios of the sinking market.
In 2022, Sumida River will begin to significantly focus on traditional offline channels such as large supermarkets, convenience stores, and even hotels. However, offline channels put forward higher requirements for the comprehensive operation capabilities of brands, including product management capabilities, channel laying capabilities, marketing promotion, etc. Sumida River, which has been home since 2015, may not be able to compete with giants such as Nestle, Maxwell and Starbucks instant products operated by Nestlé in a short period of time.
The pressure on sinking markets may be even greater.
Its founder, Lin Hao, has publicly stated that Sumida River wants to provide material and spiritual energy for more sinking urban groups. But for now, it looks like he needs to invest more.
After visiting a supermarket in Xuancheng, Anhui Province, the industry's self-media "Retail Business Finance" found that a large number of Sumida River coffee in the store were discounted, but the production date was the same as the regular-priced products sold in the store, and it was suspected to be slow-selling. After searching, the interface news called a chain supermarket that issued a notice in February 2023 that the store was located in Yuncheng, Shanxi, and the in-store sales staff confirmed that Sumida River was on sale in the store after confirming with the store, and gave feedback that "Nestle sells well".
In lower-tier cities, Sumidagawa may be tackling the problem of how to make consumers more aware of themselves.
But Sumidagawa said he did not plan to participate in a price war and compete head-on with low-priced instant coffee.
In an interview with Bright Company, Lin Hao said that Sumida River is still working on consumer education. In his view, although the industry is very volatile, the current situation of different brands taking turns to educate consumers can further increase the penetration rate of coffee in the Chinese market, and his goal is that the coffee industry can complete the consumption of 70 billion cups in 5-10 years.
According to Lin Hao's statement, Sumida River has two future development points: first, in terms of product layout, Sumida River Award expands coffee categories in subdivisions such as coffee liquid, coffee powder and freeze-dried coffee; The second is to continue to penetrate into more consumption scenarios, including the above-mentioned "special channels" such as hotels, restaurants and hospitals.
From this point of view, Sumida River needs to constantly explore more possibilities for its benign growth than to impact the listing, so that the capital market can maintain a more optimistic judgment on its future situation.