Coffee, literally a word that is "foreign," is becoming more and more common in China.
This drink, which was originally inseparable from the high-end café with clean windows and the business people in straight suits, is now gradually entering the lives of ordinary people.
According to statistics, the total number of coffee shops in Shanghai has exceeded 7,000, ranking first in the world, and even three times more than new York.
Together with coffee, it has also changed from a variety of Western-style desserts to extremely grounded oil cakes, meat sandwich buns and buns.
The Chinese coffee market in 2021 is much richer than when Nescafé first arrived in China in the 1980s, and consumer choices are much more.
So compared with the history of coffee drinking in overseas countries for one or two hundred years, how has China grown into today's blossoming coffee brands and coffee products in just over thirty years?
As one of the most popular beverages in the world, coffee entered Europe as early as the 17th century, but entered China at the end of the 19th century and the beginning of the 20th century.
In the 1940s, Shanghai opened a number of unique cafes, but coffee did not spread from the upper class, until Nestlé entered the Chinese market with instant coffee in 1989, and coffee culture re-took root in China.
Whether it is the drinks enjoyed by the "upper class" before the founding of the country, or the foreign products that the high-ranking intellectuals after the founding of the country know, coffee is far away from ordinary people. So that for a long time, coffee was named "petty bourgeoisie".
In China, where tea culture has a long history, coffee brings ordinary people not only strangeness but also curiosity. In European and American film and television dramas, coffee, as a daily necessity that often appears, has slowly become a cultural symbol, attracting a new generation of young people to try, and because of the attempt, they like the unique flavor of coffee different from tea.
In Europe and the United States, where coffee has a longer history of drinking coffee, coffee already has a mature supply chain system and product classification. Although China's coffee consumption growth rate is growing rapidly at a rate of 15% per year (according to the London International Coffee Organisation, the global average growth rate is only 2%), China's coffee penetration rate is still very low.
In 2020, the per capita coffee consumption in mainland China is 9 cups / year, while Japan is 280 cups / year, the United States is 329 cups / year, and South Korea is 367 cups / year, and the per capita consumption of mainland China is much lower than the average per capita coffee consumption of major countries.
And unlike the overseas coffee market with a wide variety of freshly ground coffee as the main form of consumption, the domestic coffee market instant coffee accounts for more than 68%.
In the domestic coffee market, coffee can be roughly divided into three major categories: instant, freshly ground and ready-to-drink.
Before the emergence of domestic coffee brands, Nestlé, as the first coffee brand to enter the Chinese market, led the way in two major categories of instant coffee and ready-to-drink coffee, and freshly ground coffee was monopolized by Starbucks, which entered China in 1999.
A large part of the reason for this situation comes from different consumption habits and the lower price of instant coffee.
From nestlé's average of 1 yuan / bar of "1 + 2", and about 30 yuan a cup of Starbucks, the Chinese people slowly came into contact with coffee, an exotic drink. These two also represent affordable and fast instant coffee and high-end freshly ground coffee, respectively, shaping the first two coffee categories in the Chinese market.
China's coffee market has been in a period of rapid growth in recent years, from 2014 from 20 billion market size to 100 billion market size in 2021, with a year-on-year growth rate of 30%. It is estimated that by 2025, China's coffee consumption market will reach a scale of 1 trillion yuan.
The rapid expansion of the coffee market stems from consumers who have developed the habit of drinking coffee and the coffee culture that is gradually being accepted.
At present, in China's first- and second-tier cities, a considerable number of consumers have formed the habit of drinking coffee every day, including returned international students and white-collar workers who are busy at work. This part of the consumer not only has a high degree of recognition of coffee culture, but also has a strong spending power.
Nestlé and Starbucks are not enough to perfectly meet everyone's coffee consumption needs, and instant coffee and freshly ground coffee, which represents the third space, need to be filled with new categories.
Freeze-dried coffee powder: the finest in instant coffee
Instant coffee is convenient and cheap, but it is a little bad, the taste is not good.
This is related to the characteristics of coffee. Fresh grinding is always the best way to maintain the flavor of coffee, and the longer the beans are left in place, the more the aroma and ingredients that are unique to coffee are lost.
Instant coffee, on the other hand, is extracted from caffeine solution by high temperature drying technology. Under normal circumstances, instant coffee is to first brew coffee beans in the pot, through continuous extraction to obtain espresso liquid, and then use the spray drying method to evaporate the water in the coffee liquid, and finally obtain the powder plus vegetable fat powder, flavor and some additives, it has become the most common small "three-in-one" instant coffee.
At high temperatures, the aromatic substances and nutrients contained in coffee beans have been volatilized in large quantities, and there is nothing left in the taste and aroma, and the taste is naturally not much better.
Freeze-dried coffee powder is essentially a kind of instant coffee, but its production method is not the same high-temperature drying technology as ordinary instant coffee, but freeze drying method.
This method is to use the principle of ice crystal sublimation, the concentrated coffee liquid is quick-frozen, and then broken into granules in a vacuum freeze-dried, evaporation of the water in the coffee, when the water vapor is pumped out, granular freeze-dried coffee powder is formed.
Freeze-dried coffee powder can retain the aroma of coffee beans to a greater extent and reduce the loss of various aromatic substances, so the taste is much better than ordinary instant coffee. But in contrast, the cost will be higher.
Founded in 2014, Santo is based on its original "cold extraction, intelligent freeze-drying" super extraction technology, making freeze-dried coffee powder with a high export sense than ordinary instant coffee.
Santo defines his product as super instant coffee, because this can of coffee powder in the iconic small jar is very soluble, not only soluble in traditional hot water, but also dissolved in ice water, milk, oat milk at full temperature.
This gives consumers a better option to consume coffee, and while meeting portability requirements, they can also enjoy freeze-dried coffee powder with good flavor retention.
Hanging Ear Coffee: An upgrade to instant coffee
Ear-hanging coffee is actually equivalent to a simplified version of freshly ground coffee hand-brewed drip filter.
Each cup of ear-hanging coffee is a separate ear-hanging bag, and the packaging of the ear-hanging bag is filter paper, which is pre-ground into the right size of coffee powder from fresh coffee beans. However, unlike the coffee powder of instant coffee, the coffee powder of hanging ear coffee can not all be integrated into water, but after brewing, the coffee residue left after filtering will remain in the ear bag.
Compared with freshly ground coffee, hanging ear coffee is easier to preserve and carry; compared with instant coffee, hanging ear coffee has a richer flavor retention, better taste, and more troublesome.
This new category originated in Japan and was promoted in China through Sumidagawa coffee.
Sumida Chuan Coffee was founded in 2015, the founder went to Japan to study, after returning to China to create the Sumida Chuan brand, the popular in Japan "drip filter bagged coffee" introduced to China, and redefined as "hanging ear coffee", thus officially proposing and promoting the category of hanging ear coffee in China.
The pain point hit by this category is that freshly ground coffee is not convenient enough, and the taste of instant coffee is not good enough. In the face of those who have become "addicted" to coffee, daily drinking coffee has certain requirements for price, portability, and flavor, and hanging ear coffee has become a good choice for them.
The founder of Sumida Chuan proposed that he hoped that his brand's hanging ear coffee could become a "ration coffee" for domestic coffee consumers.
In addition to SumidaGawa, many domestic and foreign brands have also launched ear-hanging coffee, such as Xinlu, Starbucks, and UCC. The shape of hanging ear coffee has also developed a variety of packaging forms such as flying saucer type and side hanging type.
The sinking of fine freshly ground coffee
In the mature coffee markets overseas, coffee has been integrated into the daily life of locals in various forms and has become a habit of their lives. However, China still belongs to the early stage of the development of the coffee market, and the form of coffee consumption is not diversified.
For a long time in China, when you wanted to enjoy a cup of high-quality specialty coffee, there was only one independent boutique café except for Starbucks.
The degree of chaining of offline coffee shops in China is not high, compared with 78% of the stores in the United States freshly ground coffee stores are from chain brands, and the number of coffee chains in China is only about 20%.
The degree of chaining is not high, it is difficult to form a perfect supply chain, and it is impossible to obtain more bargaining power in rent and raw material costs by virtue of scale effect, and the product price can only be maintained at a higher price.
In fact, this has formed a threshold, a cup of specialty coffee of thirty or forty yuan at any time, it is difficult to attract a large number of new consumers, commercial, high-end drinking scenes are limited, only sinking can really make coffee get the widest range of users.
At this point, Luckin, which has successfully lowered the price of fine freshly ground coffee, can be said to have single-handedly educated the entire Chinese coffee market.
Domestic Internet coffee brand Luckin, established in 2017, officially opened stores in Beijing and Shanghai in January 2018, and successfully opened a bell on the NASDAQ on May 17, 2019. Although there was a financial fraud incident in the middle, Luckin has gradually come out of the trough after the delisting and reorganization.
In just two or three years, Luckin has had 5259 stores in China, and Starbucks has entered China for twenty years, and the number of stores so far has only exceeded 5,000.
Such a radical store opening speed can be said to be that Luckin has completed the expansion of other brands for 10 years in one year. This is accompanied by large-scale burn subsidies to attract new ones. In 2018 alone, Luckin spent 13.06 million yuan on subsidizing new users.
Under the discount of the coupon, a cup of Luckin coffee generally ranges from 15-25 yuan, which is similar to the price of a cup of milk tea, and it is much cheaper than the competitor Starbucks, and the difference can be almost one-third.
Affordable coffee coupled with occasional activities can obviously attract more new users, not to mention that Luckin's taste is also very good. In just two or three months, new users who are attracted can develop coffee drinking habits and transform into consumers in the Chinese coffee market.
This group of consumers is wider than Starbucks' original consumers, they are not so "business", nor do they pursue a "third space", and their social needs in coffee consumption are less than functional needs. Reflected in the storefront, it is that pick-up and takeaway occupy the main sales channels.
It can be said that Luckin's affordable freshly ground coffee has truly made coffee enter the lives of consumers, "making Luckin a part of people's daily lives".
Shanghai coffee brand Manner also adheres to the concept of "making coffee a part of life", and the stores opened are mainly small stores of less than 20 square meters, and customers buy and go after placing an order.
Small stores mean that costs are reduced, Manner maintains the taste and quality of specialty coffee with the price of arable land, and wins the love of Shanghainese with a cheap price of 15-20 yuan a cup. In the past two years, Manner has become the darling of capital, and the speed of opening stores has greatly accelerated.
According to statistics, there have been nearly 20 financing projects in the coffee circuit in the past six months, and the financing scale is approaching 2 billion yuan. Capital's optimism about the coffee track is largely betting on the future of the coffee market.
Compared with mature overseas markets, China's coffee penetration rate and per capita coffee consumption are far from reaching the average level of the United States, Japan and other countries. This means that the coffee market still has a fairly broad room for growth, and it is predicted that the size of China's coffee market will reach trillion yuan in 2025.
Such a huge market naturally attracts many players who did not belong to the coffee industry.
First of all, there are fast food restaurants, such as McDonald's and KFC.
As Western-style fast food brands, McDonald's and KFC have been offering coffee in stores for a long time than many of today's emerging coffee brands.
Chinese mainland the first mai coffee opened in Shanghai in 2009 and the first K COFFEE opened in 2014.
Both Mai Coffee and K COFFEE have been promoting their own brands of coffee for a long time and sparing no effort based on the existing brand awareness. However, in the early days, because the domestic coffee culture has not yet been popularized, the sound of the two is limited.
But with the further outbreak of the domestic coffee market, Mai Coffee has more than 1600 stores in the Chinese mainland, and it is likely to be a strong competitor in the market in the future.
Secondly, convenience stores are also targeting the coffee business.
Family, Convenience Bee, 7-11, Rosen... These streamlined, unpretentious convenience store coffees aren't as eye-catching as coffee upstarts, but the sales growth is pretty pretty.
Cheap, convenient, is the biggest advantage of convenience store coffee, immediately desirable, a few yuan to a dozen yuan a cup, the taste is reasonable, which makes it an important channel for ordinary office workers to obtain caffeine.
Perhaps the specialty coffees who are busy popularizing coffee knowledge and coffee culture and trying to educate consumers did not expect that the partners after the sinking coffee in convenience stores are not light food or sandwiches, but buns that are so traditional that they have no imagination. These consumers, who can accept buns as coffee companions, may be the average user who represents the largest coffee market in China.
Finally, in addition to fast food restaurants and convenience stores, even tea shops have joined the competition with coffee brands.
In China, where tea culture has a long history, new-style tea drinks are undoubtedly the more popular national drink. At the same time, tea and coffee have a high degree of overlap in function, which is destined to replace tea and coffee with each other, and they are destined to make consumers face the choice of "choosing one of the two".
The new tea pattern was initially determined, and in the fierce competition, a number of chain brands covering low, medium and high prices were fought, in order to maintain the competitiveness of the brand, from Hey tea, Naixue's tea, to Coco, a little bit, and then to Mi xue ice city, tea brands have incorporated coffee into their own menus.
Coffee brands are not to be outdone, and in the reality that Chinese people are more accepting of milk tea, they make coffee more and more like milk tea.
This summer, after the "raw coconut latte" became a fast-selling hit in Luckin, various coffee brands followed the trend and produced similar products. In addition to milk, tea, juice, and sparkling water can all be matched with coffee, and the style innovation is becoming more and more amazing, and the original flavor of coffee is forced to fade.
From the overall performance of China's coffee market, coffee products subdivided into more categories are undoubtedly diversified. However, many new brands have not yet completed the reshuffle, the pattern has not yet been formed, and there are still new opportunities hidden under the areas that have not yet been paid attention to.
Coffee is one of the top three drinks in the world. Unlike tea, which is also one of the three major beverages, coffee is an out-and-out import in China.
At present, consumers in domestic first- and second-tier cities have developed coffee drinking habits. Especially in first-tier cities, according to deloitte's survey data released in April 2021, per capita coffee consumption has reached 326 cups/year.
This figure is close to the level of mature overseas markets, but in third- and fourth-tier cities and counties, the penetration rate of coffee is far from reaching this level.
However, it can be seen that today's coffee brands and coffee shops are trying to make coffee grounded, whether it is lower prices, better coffee quality, or more convenient and fast drinking scenes, are constantly promoting the popularization of coffee.
Perhaps when drinking coffee one day is no different from drinking soy milk in Chinese's heart, the sinking road of coffee can be considered to have come to an end. (First published in this article: Beagle App)