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With the rise of coffee culture in China, well-known coffee brands at home and abroad have entered the market, intensifying market competition. Domestic consumers' requirements for coffee quality and taste are constantly improving, and the competition between brands is mainly reflected in product quality, taste innovation, service experience and brand image. In addition to traditional coffee chains, online coffee brands are also emerging in the market, increasing the competitive pressure in the market. At the same time, the growth potential of the coffee market has attracted more investors and entrepreneurs, resulting in more fierce competition in the market.
Luckin Coffee is a leading enterprise in China's coffee industry, and at present, Luckin Coffee's positive competitor is Cudi Coffee, which is menacing, established less than a year ago, and has more than 5,000 stores, taking a rapid store expansion and low-price marketing strategy. In April 2023, Cudi took the lead in launching 8.8/9.9 yuan coupons; In June, Luckin launched a 9.9 yuan in-store coupon with the marketing strategy of "9.9 coffee per week", which received an enthusiastic response among customers and drove the growth of the number of consumers in the store.
At this point, the 9.9 low-price strategy, the "price war" of China's coffee market has begun. Against this backdrop, Jingying Wang, Chairman and CEO of Starbucks China, said, "Starbucks has no intention of participating in the price war. Since Starbucks pioneered a high-end coffee experience in China 25 years ago, our goal has always been to be the best and number one in this market. ”
Starbucks, which advocates not participating in the price war, seems to have been swept up by the "9.9 yuan wind" recently, and has been quietly reducing prices. According to media reports, a number of loyal Starbucks consumers said that they were given a lot of "39.9 two cups" and "49.9 two cups" coupons in their Starbucks card bags. On many e-commerce platforms, Starbucks has also launched discounts such as "106 yuan, 103 yuan/5 cups", and grouping. One consumer said, "The average cup is less than 20 yuan, which is definitely not far from 9.9, but it has dropped a lot compared with Starbucks' previous pricing." ”
A cup of coffee is less than 10 yuan, can coffee brands make money? Can franchisees make money? Some insiders revealed that the coffee market is one of the few high-quality consumer markets that has shown growth in recent years, and the purpose of the 9.9 yuan promotion is to harvest traffic and cultivate users' consumption habits. Different brands have different supply chain capabilities, resulting in different profitability and questionable sustainability of cash-burning subsidies. At present, throughout 2023, the coffee market may have been competing at the price of 9.9 yuan.
According to the statistics of the Prospective Industry Research Institute, in the upstream field, coffee processors generally have two ways to purchase coffee beans, one is to purchase directly from the planting base, and the other is to purchase from green bean traders. On the mainland, Yunnan Province is the country's largest coffee-growing province, while the traders of green beans are mainly global players, including Japan's UCC, France's Louis Dreyfus Company and Japan's Mitsui & Co. Group.
Among the coffee machine manufacturers, the large-scale and professional coffee machine market is occupied by foreign companies, such as De'Longhi (Italy), Nespresso (Switzerland), Philips Home Appliances, Schaerer (Switzerland), illy (Italy), etc.; Domestic coffee machine manufacturers are mainly home coffee machines, and the representative enterprises include Guangdong Midea Kafei, Xiaoxiong Electric, etc.
In the midstream, according to the type of participants in the finished coffee market segment, the representative brands of coffee cooked beans are Uncle Bean's Coffee, illy, etc.; Hanging ear coffee brands include UCC, Sumida River Coffee, etc.; Capsule coffee brands include L'or, Blendy, Nespresso, etc.; Coffee liquid brands include Yongpu, Colin, Jiyin, etc.; In the instant coffee market, the representative brands mainly include Sandian Coffee, Nescafe, G7 Coffee, etc.; The main freeze-dried coffee brands are Maxwell House, Mocona Coffee, etc.; The representative brands of the ready-to-drink coffee market include Benason, Nongfu Spring Tanbai, Nestle, etc.; The representative brands of the freshly ground coffee market mainly include Starbucks, Luckin Coffee, Costa, %Arabica Coffee, etc.
In the downstream circulation market, the distribution channels can be divided into chain coffee shops, chain convenience stores, fast food restaurants, e-commerce platforms and takeaway platforms. Among them, chain coffee shops and convenience stores are the main consumption channels of freshly ground coffee; Ready-to-drink coffee and instant coffee are sold through supermarkets, convenience stores, e-commerce platforms and other channels; McCafe and K Coffee are mainly sold in McDonald's stores and KFC stores.
According to the data of brand strength, influence, sales, attention, consumer preferences, etc., the top 10 hottest coffee brands in China in 2024 are summarized as follows (Note: the company is ranked in no particular order):
On the whole, the leading brands in China's coffee industry mainly include Luckin Coffee, Starbucks China, Cudi Coffee, Manner Coffee, etc.
Luckin Coffee
Luckin Coffee is the leading local chain freshly ground coffee brand in China, and the only 10,000-store coffee brand in China. The development of Luckin from its inception to the present can be divided into three stages: "Founding and Rising", "Listing and Thunder", and "Reform and Rebirth". Founded in 2017, Luckin Coffee completed the establishment of the brand and listed on the NASDAQ in less than two years, becoming the world's fastest IPO company. In June 2023, the number of Luckin's chain stores exceeded 10,000.
On the evening of February 23, Luckin Coffee announced its financial results for the fourth quarter and full year of 2023. According to the financial report, the total net income in 2023 will be 24.903 billion yuan, a year-on-year increase of 87.3%. In 2023, Luckin Coffee's operating profit under U.S. GAAP will be RMB3.026 billion, doubling from 2022.
Luckin Coffee will open 8,034 net new stores in 2023, with a year-on-year increase of 97.8% compared to the end of 2022. As of the end of 2023, Luckin Coffee has 16,218 domestic stores, including 10,598 self-operated stores and 5,620 affiliated stores. Luckin Coffee will also deploy overseas markets in 2023, with a total of 30 stores in Singapore during the reporting period. At the same time, Luckin Coffee launched 102 new products throughout the year, with more than 2 billion products sold and more than 1.9 billion ready-made drinks. By the end of 2023, Luckin Coffee has 8 SKUs with sales exceeding 100 million.
On April 20, Luckin Coffee (Jiangsu) Roasting Base, with a total investment of 120 million US dollars and an annual production capacity of over 30,000 tons, was opened and put into operation in Kunshan, Suzhou. This is Luckin Coffee's largest productive investment to date, helping to build a high-quality supply chain system with intelligent advantages. Located in Kunshan Comprehensive Bonded Zone, Luckin Coffee (Jiangsu) Roasting Base is an intelligent coffee roasting production base covering green bean storage, distribution, roasting, packaging and sales, with an estimated annual output value of 1.5 billion yuan and an annual roasting production and processing of 30,000 tons of coffee beans, accounting for nearly 20% of the national coffee roasting capacity.
Luckin Coffee is a subsidiary of Luckin Coffee (China) Co., Ltd. According to Qichamao, Luckin Coffee (China) Co., Ltd. was established on March 28, 2018. The registered capital is US$122,500,000, and the legal representative is Guo Jinyi. The business scope includes: catering services; food sales; Internet sales of publications; retail of publications; construction of construction projects; Construction engineering design. (For projects subject to approval in accordance with the law, business activities can only be carried out after approval by relevant departments, and specific business projects are subject to the approval documents or licenses of relevant departments) General projects: enterprise headquarters management; retail of arts and crafts and collectibles (except ivory and its products), etc.
According to the equity penetration chart of Qichamao, Luckin Coffee (China) Co., Ltd. has a total of 55 foreign investment enterprises, of which 45 are in existence, 5 are in business and 5 are in the state of cancellation, including Luckin Coffee (Guangzhou) Co., Ltd., Luckin Coffee Food (Tianjin) Co., Ltd., Luckin Coffee (Nanjing) Co., Ltd., Luckin Coffee (Changsha) Co., Ltd., Luckin Coffee (Shenyang) Co., Ltd., Luckin Coffee Business Management (Xiamen) Co., Ltd., etc. The layout of the company's investment enterprises is mainly in Xiamen, Guangzhou, Tianjin, Nanjing, Changsha, etc.
Starbucks China
Starbucks was founded in 1971 in Seattle, Washington. With the acquisition of the company by Howard Schultz in 1987, Starbucks has grown into a world-renowned coffee chain in a decade, selling specialty freshly brewed coffee, as well as in-store and out-of-store retail bags of coffee beans, hot and cold coffee beverages, pastries, coffee machines, coffee cups and more.
On January 31, Starbucks announced its results for the first quarter of fiscal 2024. Starbucks China's net income for the first quarter was US$735 million, up 20% year-over-year, excluding the impact of foreign exchange changes. In the first quarter, there were 169 net new stores in the Chinese market, and 28 new county-level markets were entered, bringing the total number of stores to 6,975. Up to now, the number of Starbucks stores in the Chinese mainland market has exceeded 7,000, and 2024 is also the 25th anniversary of Starbucks entering the Chinese market. According to the financial report, the number of stores in the United States and China accounts for 61% of Starbucks' global store numbers.
In September 2022, Starbucks China released its 2025 Strategic Vision. Starbucks China said it will have a total of 9,000 stores in China by 2025, and to achieve the above store opening goal, Starbucks China said that in the next three years, the company plans to open 3,000 new stores at an average rate of one new store every nine hours, covering 300 cities in China.
Starbucks China is a coffee brand owned by Starbucks Enterprise Management (China) Co., Ltd. According to Qichamao, Starbucks Enterprise Management (China) Co., Ltd. was established on March 31, 2005. The registered capital is 7 million US dollars, and the legal representative is Liu Wenjuan. The business scope includes: entrusted by Starbucks Group and Starbucks Group invested enterprises, to provide them with business decision-making and management consulting, business information consulting, financial management consulting, catering management, procurement consulting, quality control and management consulting, marketing services, market analysis, staff training and management, beverage and food research and development and technical support, store planning, site selection and design consulting, commercial consumption points management, points exchange services and related services, coffee processing equipment and related parts and accessories, gift bags, tableware, Clothing (except for rough diamonds, loose diamonds), handicrafts (except ivory and its products, cultural relics), building decoration materials (except steel, cement), furniture, office supplies and daily groceries, and coffee shops and catering related to the import and export, wholesale, commission agency (except auction), food sales, food import and export and commission agency (except auction), and provide related supporting business.
Cudi Coffee
Founded in 2022, COTTI COFFEE is a chain coffee brand, created by Lu Zhengyao, Qian Zhiya, the founders of Luckin Coffee, and the original core team of Luckin Coffee, and affiliated to Coolin Coffee (Tianjin) Co., Ltd., with coffee, drinks, ice cream, hot dogs and other products as the main products for sales. As of February 2024, Cudi Coffee has 7,000 stores worldwide.
On April 19, Cudi Coffee launched more than 20 new tea drinks, continuing the low-price strategy of 9.9 yuan. ON APRIL 29, COTTI COFFEE ANNOUNCED THAT THE CURRENT STORE SUBSIDY POLICY WILL BE EXTENDED TO DECEMBER 31, 2026, COVERING EXISTING STORES AND NEW STORES IN THE FUTURE, DIFFERENT STORES CAN RECEIVE DIFFERENT AMOUNTS OF SUBSIDIES ACCORDING TO DIFFERENT FACTORS SUCH AS RENT AND COMPETITION, AND THE MAXIMUM SINGLE CUP CAN BE SUBSIDIZED TO 14 YUAN. On the same day, Cudi Coffee announced that its global supply chain base in Anhui Province had been officially put into operation.
According to Qichamao, Cudi Coffee (Tianjin) Co., Ltd. was established on May 19, 2022. The registered capital is 10,000 yuan, and the legal representative is Qian Zhiya. The business scope includes: licensed items: catering services; food sales; Internet sales of food; food waste disposal; Internet sales of publications; retail of publications; Inspection and testing services. (For projects subject to approval in accordance with the law, business activities can only be carried out after approval by relevant departments, and specific business projects are subject to the approval documents or licenses of relevant departments).
Manner Coffee
MANNER COFFEE was established in 2015 in Jing'an District, Shanghai, the brand belongs to Shanghai Inhe Industrial Co., Ltd., the main products are latte, espresso, espresso. On December 31, 2023, Manner announced that the number of directly operated stores nationwide has exceeded 1,200, making it one of the largest specialty coffee chain brands in China.
According to Jihai data, as of June 30, 2023, 35% of Manner's stores are located at a distance of "500 meters from existing stores". In comparison, Starbucks has only 27% of crypto stores under the same standard, and Luckin Coffee has only 25% of crypto stores.
According to Qichamao, Shanghai Inhe Industrial Co., Ltd. was established on October 15, 2015. The registered capital is 4,031,465 yuan, and the legal representative is Han Yulong. The business scope includes: catering services, food, edible agricultural products, food additives, wholesale and retail, online retail, commission agency (except auction), import and export and related supporting services, hotel management, marketing planning, conference services, etc.
Three and a half coffees
By building and developing the consumption scene of specialty coffee, it is committed to the popularization of specialty coffee, mainly providing users with surging hanging ear coffee, hand-poured coffee series, cold brew coffee series, hand-cranked coffee grinder and other products; At the same time, it provides a variety of coffee utensils and coffee cultural exchanges in different brewing forms and scenes, and cooperates with studios around the world such as Paris, Sydney, and Tokyo in cultural and creative projects such as home, fragrance, and care; IT OWNS THE SATURNBIRD COFFEE BRAND.
Three and a half meals belong to Changsha Three and a Half Coffee Co., Ltd. According to Qichamao, Changsha Sandun and a Half Coffee Co., Ltd. was established on October 16, 2017. The registered capital is 1,099,476 yuan, and the legal representative is Wang Lian. The business scope includes: licensed items: food sales; retail of publications; Internet sales of publications; production of audio-visual products; Internet sales of food; urban distribution and transportation services (excluding dangerous goods); beverage production; Food and beverage service (no fumes, odors, exhaust gases); food production; production of tea products; liquor business; small catering; road cargo transportation (excluding dangerous goods), etc.
Lucky Coffee
Lucky Coffee is a national chain coffee brand based on freshly ground coffee, which belongs to Henan Lucky Coffee Catering Management Co., Ltd., and is a coffee brand wholly owned by Mixue Bingcheng Co., Ltd. As of September 30, 2023, Lucky Coffee has about 2,900 stores, making it the fourth largest freshly ground coffee brand in China in terms of the number of stores, according to CIC's prospectus.
According to Qichamao, Henan Lucky Coffee Catering Management Co., Ltd. was established on September 22, 2017. The registered capital is 10,000,000 RMB, and the legal representative is Du Jing. The business scope includes: catering management; sales of machinery and equipment; sales of agricultural and sideline products; sales of knitted textiles; clothing and apparel wholesale; clothing and apparel retail; luggage sales; sales of daily necessities; technical services, technology development, technical consultation, technology exchange, technology transfer, technology promotion; Machinery and equipment leasing, etc.
Nova coffee
NOWWA, as a specialty coffee chain brand, was founded in June 2019 by the senior management team of Ele.me in Shanghai, the city with the largest number of cafes in the world. In more than 3 years, it has opened more than 1,800 stores, covering more than 100 cities, and has become one of the top three coffee brands in the local market in terms of the number of stores, as well as a representative brand of fruit coffee.
Nova Coffee is a subsidiary of Shanghai Lixing Technology Co., Ltd. According to Qichamao, Shanghai Lixing Technology Co., Ltd. was established on June 10, 2019. The registered capital is 11,726,300 yuan, and the legal representative is Guo Xingjun. The business scope includes: licensed items: food sales; liquor business; Food & Beverage Services. (For projects subject to approval in accordance with the law, business activities can only be carried out after approval by relevant departments, and specific business projects are subject to the approval documents or licenses of relevant departments).
Seasaw Coffee
Founded in 2012, Seesaw focuses on specialty coffee and one-store-one-color design features. On July 21, 2021, Seesaw, a specialty coffee brand, announced that it had completed the A+ round of financing of over 100 million yuan. Among the investors, Heytea invested as a strategic investor, and the old shareholder Hony Baifu followed. This round of funds will be used for store expansion, supply chain construction and digital construction across the country.
Up to now, it has nearly 100 directly-operated stores, mainly distributed in 8 cities: Shanghai, Beijing, Shenzhen, Hangzhou, Nanjing, Suzhou, Chengdu and Chongqing, of which Shanghai has the largest number of stores.
Seesaw Coffee is a brand of Shanghai Xishe Coffee Co., Ltd. According to Qichamao, Shanghai Xishe Coffee Co., Ltd. was established on August 10, 2012. The registered capital is 2,049,958 yuan, and the legal representative is Wu Xiaomei. The business scope includes: Licensed items: catering services [branch operation]. (Projects subject to approval in accordance with the law can only be carried out after approval by relevant departments, and specific business projects are subject to the approval documents or licenses of relevant departments) General items: food sales (only sales of pre-packaged food); Internet sales of food (only pre-packaged food is sold), etc.
Sumida River
Sumida River Coffee is a brand of Hangzhou Yuhuan Trading Co., Ltd., which is a cutting-edge coffee brand in China. In 2009, Mr. Lin Hao, the founder of Sumida River, took the lead in introducing "drip bubble coffee" to China and officially named it "Hanging Ear Coffee", and Sumida River became the "Hanging Ear Coffee Naming".
The main products of Sumida River Coffee are hanging ear coffee and espresso liquid. At present, there are three main series of "earlock 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. According to its founder, Lin Hao, in 2022, the total transaction volume (GMV) of Sumida River exceeded 1 billion, and the number of cups sold in a year exceeded 350 million.
According to Qichamao, Hangzhou Yuhuan Trading Co., Ltd. was established on November 5, 2014. The registered capital is 7,667,274 yuan, and the legal representative is Lin Hao. The business scope includes: licensed items: food sales; food and beverage services; Internet sales of food; food production; beverage production; Internet sales of publications; retail of publications; liquor business; production of wine products; production of tea products; dairy production; urban distribution and transportation services (excluding dangerous goods); performance management; operation of performance venues (for projects subject to approval in accordance with the law, business activities can only be carried out after approval by relevant departments, and specific business projects are subject to the approval results), etc.
Benason
Benason is a beverage brand under Weiquan Enterprise, and its products are Benason's coffee and milk tea drinks. Benazon creates a new trend with new bottle types and new packaging, and on the basis of excellent product strength, it puts forward a unique brand proposition of "coffee is a science". Benazon selects Arabica coffee beans, insists on extracting the first coffee essence, refrigerates for 21 days, smooth taste, delicate and long, and achieves pure coffee taste with exquisite craftsmanship.
The full name of Weiquan Enterprise is Hangzhou Weiquan Food Co., Ltd. According to Qichamao, Hangzhou Weiquan Food Co., Ltd. was established on September 30, 2002. The registered capital is RMB 41.7 million, and the legal representative is Teng Yiyong. The business scope includes: licensed items: food production; Fresh milk purchase; Food sales (projects subject to approval in accordance with the law can only be carried out after approval by relevant departments, and specific business projects are subject to the approval results), etc.
With the continuous expansion of China's coffee market and the improvement of consumers' requirements for coffee quality, the coffee industry will usher in more development opportunities. With the popularization of coffee culture in China, consumers' awareness and acceptance of coffee will increase, and the market demand will continue to grow. At the same time, with the continuous advancement of technology and innovation, the coffee industry will also usher in more technological innovations. In addition, the integration of coffee with health, lifestyle and other fields will also promote the diversified development of the coffee industry.
-- China's coffee production remains stable
ACCORDING TO THE GLOBAL COFFEE MARKET AND TRADE RELEASED BY THE U.S. DEPARTMENT OF AGRICULTURE (USDA) AT THE END OF JUNE 2023, CHINA'S COFFEE PRODUCTION IN THE 2022/23 COFFEE YEAR WAS 2,000 THOUSAND BAGS, EACH BAG WAS 60 KG, OR ABOUT 120,000 TONS, THE SAME AS THE PREVIOUS COFFEE YEAR.
-- China's coffee consumption has grown overall
USDA data shows that China's coffee consumption has shown an overall growth trend from 2017 to 2023, with China's coffee consumption reaching 4,200 thousand bags in the 2022/23 coffee year, an increase of 44.83% from 2017/18.
-- Most of the chain coffee shops are located in the new first-tier cities
In the downstream distribution market, the main sales channels of coffee include offline channels such as chain coffee shops, convenience stores, and fast food restaurants, as well as online channels such as e-commerce platforms, WeChat mini programs, and takeaway platforms. In terms of offline channels, chain coffee shops are dominant, and data from Narrow Door Dining Eye shows that as of April 2023, mainland chain coffee shops are mainly distributed in new first-tier cities, accounting for 23.58%.
——Brand matrix of China's coffee industry: divided into three categories
According to the different categories of main coffee products, mainland coffee brands can be divided into three categories: freshly ground coffee brands, instant coffee brands and ready-to-drink coffee brands. There are many participants in the freshly ground coffee track, including foreign brands such as Starbucks, Costa, %Arabica Coffee, etc., and local brands such as Luckin Coffee, Cudi Coffee, M Stand, Manner Coffee, Lucky Coffee, Nova Coffee, Seasaw Coffee, etc.; Instant coffee brands are mainly Nescafe, Sanban and a half coffee, G7 coffee, Sumida River coffee and other brands; The representative brands of ready-to-drink coffee include Nestle, Benason, Nongfu Spring Tanqi, Starbucks Coffee, etc., and freshly ground coffee, ready-to-drink coffee and new power brands compete together.
According to the analysis of the Prospective Industry Research Institute, in the future, with the increase of coffee consumers and the improvement of consumers' requirements for coffee quality, coffee industry participants will pay more attention to the selection of upstream coffee beans and the location of downstream offline stores, so as to promote the industry to build a dynamic closed loop of the whole coffee industry chain. At the same time, the coffee brand will also expand the scope of its stores, forming a systematic linkage between high-tier cities and surrounding locations. In addition, coffee as a kind of food and beverage, brand marketing is the focus, and in the future, a "brand-spokesperson-consumer" tripartite in-depth binding relationship will be established, and the new Chinese coffee is expected to unlock the consumer demand of young people who are keen on national culture.
Prospective Economist APP Information Group
For more research and analysis of this industry, please refer to the "Analysis Report on the Development Prospects and Investment Strategic Planning of the Global and Chinese Coffee Industry" by Qianzhan Industry Research Institute.
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