Abstract:In recent years, coffee culture has become prevalent in China, and coffee has become a fashion and is warmly sought after by consumers. In 2023, China's economy will show a number of "gradual improvement" trends, with online and offline demand boosting, China's coffee industry making great progress, local coffee brands rising, and the whole industry chain track accelerating and upgrading again, and China is becoming a leading force in global coffee consumption. In order to seize the coffee market, major coffee brands are actively expanding the number of stores. According to statistics, the number of cafes in China has exceeded 130,000 in MAT2023.
1. Definitions and Classification
A café, also known as a café, usually refers to a place that specializes in selling coffee and other beverages. According to the business area and the complexity of the project, it can be divided into compound cafes and specialty cafes. Café complexes are usually large in size and offer a wide variety of items, including a variety of drinks and food, and some also have different consumption areas such as private rooms and booths. Specialty cafes, on the other hand, focus on a particular specialty, such as traditional coffee shops, which usually serve traditional coffees such as espresso, latte, cappuccino, etc. According to the target customer and environment, it can be divided into club-type café and in-house café. This type of café is generally an internal environment and outsiders are not allowed to enter, so it is more of a service condition than a commercial environment. According to the division of functions and characteristics, it can be divided into leisure, literary and artistic, business, etc. For example, casual cafes usually provide a relaxed and pleasant environment and music, which are suitable for friends gatherings or family dinners, cultural cafes focus on artistic atmosphere and cultural connotations, and often attract literary and artistic young people to come to taste, while business cafes pay more attention to providing professional business services and conference facilities, which are suitable for business people.
Second, industry policies
1. Competent authorities and regulatory system
The competent authority of the café is the Administration for Market Regulation, which is mainly responsible for the comprehensive supervision and management of the market. Draft relevant laws and regulations for market supervision and management, formulate relevant rules, policies and standards, organize the implementation of the strategy of strengthening the country with quality, food safety strategy and standardization strategy, formulate and organize the implementation of relevant plans, standardize and maintain market order, and create a market environment of honesty and trustworthiness and fair competition. Responsible for organizing and guiding the comprehensive law enforcement work of market regulation. Guide the integration and construction of comprehensive law enforcement teams for local market regulation, and promote the implementation of unified market regulation. Organize the investigation and handling of major cases of violations. Regulate the conduct of administrative law enforcement for market regulation. Responsible for supervising and managing market order. Supervise and manage market transactions, online commodity transactions, and related services in accordance with law. Organize and guide the investigation and handling of violations of laws and regulations in price and charges, unfair competition, illegal direct sales, pyramid schemes, infringement of trademarks, patents, intellectual property rights, and the production and sale of counterfeit and shoddy products. Guide the development of the advertising industry and supervise and manage advertising activities. Guide the investigation and handling of unlicensed production and operation and related unlicensed production and operation activities. Guide the China Consumers Association to carry out consumer rights protection work, etc.
China Food Industry Association is a self-regulatory organization in the café industry, which is mainly responsible for investigating, researching and analyzing the basic situation of food safety in the mainland, timely putting forward opinions and suggestions to the relevant government departments to improve the overall level of food safety, assisting the legislature and administrative organs, formulating and improving food safety policies, laws and regulations, technical standards and law enforcement measures, actively publicizing and implementing the "Food Safety Law" and related laws and regulations, summarizing and promoting the advanced management system to ensure food safety and improve food quality. scientific methods and applied techniques, etc.
2. Industry-related policies
In order to promote the development of the café industry, the mainland has issued a series of industry policies, such as the "Measures for the Recovery and Expansion of Consumption" issued in July 2023, which proposes to advocate healthy catering consumption, oppose food waste, support the holding of food festivals in various places, create special food streets, and carry out catering to promote consumption activities. The policy was issued mainly to expand consumption, which will also promote the increase in café consumption to a certain extent. In addition, local governments have also issued relevant policies, such as the "Three-Year Action Plan for Building a Coffee City in Dali Prefecture (2023-2025)" issued by the Office of the People's Government of Dali Bai Autonomous Prefecture in August 2023, which proposes to support market entities to open cafes and sales stores in key business districts, characteristic pedestrian streets, and scenic spots, and encourage and support chain operations. Cultivate and develop coffee e-commerce live broadcast bases, and coordinate the development of online and offline consumer markets.
Third, the development process
From the perspective of development history, the development process of China's café industry can be divided into five stages. The first stage was from 1980 to 1990, when instant coffee entered the field of vision of Chinese consumers and completed the popularization stage of the market, and coffee was regarded as a refreshing drink. In 1999, Starbucks opened its first store in Beijing, marking the second phase of the industry. The opening of Starbucks has brought a "third place" for Chinese coffee consumers to meet the needs of leisure and entertainment, and to socialize with acquaintances. From 2016 to 2017, the industry entered the third stage, and new retail coffee began to develop, with the integration of "self-pickup + takeaway, online + offline" to broaden the coffee consumption scene. From 2018 to 2019, the industry entered the fourth stage, and as Chinese consumers, especially the new generation of consumers, advanced in their pursuit of coffee quality, small boutique coffee chains were popular. Since 2020, the industry has entered the fifth stage, as Chinese consumers have become more and more aware of coffee, drinking habits have gradually formed, and coffee consumption has become increasingly rational and daily.
Fourth, industry barriers
1. Brand and customer barriers
With the improvement of people's living standards, people pay more attention to the choice of beverages, whether the concept, culture and product quality conveyed by the consumer brand can be recognized by their hearts. Companies that enter the market first tend to accumulate high brand awareness through long-term brand building and marketing, which leads consumers to prioritize these well-known brands when choosing coffee shops. For new entrants, it forms a high brand and customer barrier.
2. Marketing channel barriers
The construction of marketing channels plays a vital role in the sustainable development of enterprises in the coffee shop industry. At present, large enterprises in the industry have basically completed the layout of sales outlets across the country, and have invested a lot of resources and accumulated rich practical experience in market forecasting, promotion programs and personnel training. The development, construction and maintenance of the marketing network is a complex and difficult process, which cannot be achieved overnight, therefore, new entrants will face high barriers to marketing channels.
3. Barriers to large-scale operation
Large-scale production capacity makes the industry leader have many advantages. First of all, enterprises with large-scale production capacity are more likely to be recognized by upstream suppliers and downstream sales channels in the industrial chain, and gradually form a long-term strategic cooperative relationship of mutual benefit between upstream and downstream. Secondly, the long-term stable procurement demand brought by large-scale production can provide enterprises with strong bargaining power, improve product quality while reducing procurement and production costs, and form a competitive advantage in many aspects. However, new entrants in the café industry cannot form synergies in terms of scale, cost, and efficiency in the short term, and it is difficult to occupy an advantageous position in the fierce market competition.
Fifth, the industrial chain
1. Analysis of the industry chain
From the perspective of the industrial chain of the café industry, the upstream mainly includes raw materials and equipment, the raw materials refer to coffee beans, and the equipment mainly includes coffee machines, grinders, etc., the midstream refers to the café industry, and the downstream refers to the end consumers. The industrial chain of the café industry is shown in the following figure:
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