How fancy is the domestic coffee market?
4.95 million cups and 81 million sales, this is Ruixing coffee announced as of April 17, 2022, "coconut cloud latte" first week sales. Although netizens have mixed reviews of this drink, but "dirt to the extreme is the tide" packaging style still make this product broke the social circle, eye-catching countless.
Some industry insiders told Burning Finance that after the launch of the "Raw Coconut Latte" by Rexall, many coffee brands have launched lattes with coconut milk, which is a serious homogenization. The co-branding on the one hand can strengthen the positioning of Ruixing in the hearts of consumers in the "raw coconut series" creator, another important significance is to cope with the increasingly fierce competition in the coffee market environment.
As the industry insiders said, the degree of competition in the domestic coffee market, visible to the naked eye. Offline, both Ruixing, Starbucks and other veteran players, but also Tims, Peet`s, blue bottle coffee and Manne, M Stand and other emerging domestic and international players continue to enter the game. On top of that, convenience stores, fast food restaurants, and even ice-cream seller Zhong Xuegao and gasoline seller Sinopec have joined the coffee track.
The fierce competition is not just offline, but also among some coffee brands that started online.
Starting in 2019, boutique coffee brands such as "Three and a Half", "Yong Pu", "Sumida River", and "Shicui" will be launched. The boutique instant coffee represented by "three and a half", "Sumida River", "time" and so on has gradually become the capital's "favorite". At the same time, more and more traditional coffee brands or catering brands have cut into the boutique instant coffee market segment.
In order to survive in the brutal market environment, "three and a half" on the one hand, began the category expansion.
On March 28, three half of the launch of grain oat milk and 0 sugar new coconut milk two official version of the drinking plant milk and in the Tmall flagship store officially opened. Fuel Finance found that in its Tmall flagship store, in addition to the above two plant milk, also includes different flavors of cold brew tea powder, nougat and other non-coffee products with coffee.
This multi-category sales situation not only exists in the three and a half flagship store. Fuel Finance In the lock fresh coffee liquid brand Sumida River's Tmall flagship store, the same found that, in addition to bagged tea, but also includes instant coffee rice, suckable jelly and other non-coffee categories of the figure.
On the other hand, the major online brands have also begun to force offline, or self-operated stores or stationed in supermarkets and other expansion of offline channels.
Li Xinyi, brand retail industry analyst at eWatch Analytics, said to Burning Finance that boutique instant coffee is a sub-category of coffee category, and is the trend of the future. Although it is still in the early stages of development, but the giants have entered, the biggest challenge for the new coffee brand is the supply chain, and the second is the channel (mainly offline channels).
In the future, the game between the old and new brands will gradually intensify. To stand out in the competition, "three and a half" need more new stories.
Instant "new species"
Recently, the microblogging topic # Shanghai I want to buy coffee ah #, on the hot search list first, and quickly harvested more than 300 million readers. "Not hoarding rice hoarding noodles, just hoarding coffee!" The flirtation followed. In fact, for many young people, coffee has become a necessity to start a day of life and work.
According to the "2020-2025 China Coffee Industry Market Demand and Investment Planning Analysis Report" released by the Prospect Industry Research Institute, China's average annual growth rate of coffee consumption reached 15%, much higher than the world's 2% growth rate, and it is expected that the size of China's coffee market in 2025 will reach 217.1 billion yuan.
"Boutique instant coffee" as a new species in the coffee market began to enter the field of vision of consumers in 2018. 2018 August, "three and a half" on Tmall, and in just a few months, in the instant coffee this traditional brand has been the most popular category. In just a few months, it has a place in the category of instant coffee, which is dominated by traditional brands. Data show that in 2018, double 12, three half-day flagship store sales after Nestle.
By 2019 Double 11, the turnover of this new coffee brand soared to 10 times that of the same period in 2018, becoming the first in the coffee category on Tmall Double 11, and the first national brand to top the coffee sales list. In November of the same year, three and a half times completed the financing of tens of millions of dollars in two successive rounds of A and A+ ****.
Three and a half brand was founded in 2015, when the founder of three and a half brand Wu Jun has been in Changsha for seven years to open a cafe. After experiencing the fierce competition of offline coffee chains and the homogenization of ear coffee, Wu Jun saw the shortcomings of traditional instant coffee. After that, cold extraction flavor, 3 seconds soluble freeze-dried coffee came into being, and quickly became popular among consumers.
With three and a half together in the boutique instant coffee market is also popular "Yong Pu".
Inspired by Starbucks' concept of cold brewing, at the end of 2017, Yong Pu produced the first portable cold brew coffee liquid in China, but the necessity of refrigerated storage became its shortcoming. After a series of product iterations, the emergence of room temperature flash coffee liquids with a shelf life of up to 12 months.
After that, Yong Pu successively launched black tea flash liquid, tea and coffee combination of innovative freeze-dried powder. In just over half a month, the latter's online sales reached more than 20,000 boxes.
Tmall data shows that from November 1-3, 2020, the coffee category grew 1900% year-on-year, leading the food freshness, in which the boutique instant coffee was over 5000% growth, and the 3-day sales exceeded the same period in 2019.
Capital is also quick to capture this much sought after product by young people. According to Fuel Finance incomplete statistics, from the beginning of 2019 to the present, three and a half has completed a cumulative six rounds of financing, and there is no lack of investors such as Fengrui Capital, Tiantu Capital and Sequoia Capital and other consumer track star investment institutions. Yongpu similarly completed three rounds of financing within a year from June 2020 onwards. Its most recent financing took place in June 2021, with a financing amount of 50 million RMB completed, according to the information from Tiantu.
At the same time, the trend of boutique instant coffee has also promoted the rise of many emerging instant coffee brands, which are also favored by the capital market.
In addition to three and a half and Yong Pu, with the donut ear coffee to capture the coffee market "time to extract", so far has completed four rounds of financing. At present, the time to extract has launched a boutique freeze-dried instant coffee, small donut filter hanging coffee and coffee beans. Focusing on hanging ear coffee, capsule espresso liquid, bags of coffee and other coffee products, "Sumida River", also in 2021 completed nearly 300 million yuan of B round of financing.
Why is freeze-dried hot?
The fact that boutique instant coffee is hot is no accident.
In 2018, the rise of boutique instant coffee, Ruixing is burning money to subsidize the "invitation" of the country to drink coffee. As a result, users who have cultivated the habit of coffee consumption have higher requirements for coffee quality. Based on this, the traditional instant coffee represented by Nestle, Maxwell can no longer meet the needs of consumers, and because of the ingredients in the creamer and saccharin and other additives, was labeled as "unhealthy".
Compared to traditional instant coffee, boutique instant coffee brands have not only improved the flavor of the coffee in terms of technology, but also the choice of raw materials.
Li Xinyi said to Burning Finance, instant coffee category, although in the past by Nestle, Maxwell and other foreign giants to control, the national brand showed a lack of state, but the majority of three-in-one coffee, taste and reduction are not very good. The rise of national brands has been driven by national trendization. At the same time, the application of freeze-dried powder and cold extraction process improves the taste of instant coffee, responding to the wave of consumer upgrading, and promoting the development of instant coffee to high-end, boutique.
At the same time, cost-effective and convenient is also the reason why boutique instant coffee is popular. 95 girls Luo Xi is a need to rely on coffee every day "life" of the workers, "a day a cup of Star Dad, a month of thousands of expenditures, the mouth in the drink, the heart in the blood. But if you don't drink it, you'll feel like there's something missing." Luo Xi said to Burn Finance, the emergence of boutique instant coffee, a complete solution to her want to drink American and afraid of the contradiction of the wallet dried up.
Xinjia, a post-90s girl, also loves boutique instant, but it's the convenience of the product that she's looking for.
"Business trips, traveling, especially now camping, hot and cold water can make a cup of Americano simply not too convenient." The epidemic swept through, Xinjia and increased the amount of boutique instant coffee stockpiling. "I'm lazy and don't stock up on coffee beans or buy complicated machines. So freeze-dried powder, original liquid and hanging ear are all good choices. But in comparison, hanging ear is still a bit of a hassle, need to boil water and clean the utensils, like to drink ice Americano I will still freeze-dried mainly."
In marketing, the new brands have also come out of the traditional brands and different roads, first of all, fancy packaging successfully attracted the "face control" of young people. Such as Yong Pu's flying saucer type packaging, three and a half small cans ......CBNData report mentioned that the new-style packaging of the coffee heat continues to rise, the consumption scale increased by more than 200%. 2020, the per capita consumption of the new-style packaging of coffee has also increased by more than 80%.
Huang Hai, investor of three and a half times and executive director of Fengrui Capital, previously said that three and a half times can successfully break through because it enjoys the aesthetic dividend. "To be more specific, that is, consumers buy the product, how many percent will spontaneously take pictures to share, so that the product gets free natural traffic." Therefore, in terms of packaging, three and a half abandoned the traditional plastic bag packaging, choose a strong recognition of the "cup", with a variety of colors, to create a brand of super symbols.
Secondly, unlike traditional instant coffee, which emphasizes the efficacy of "refreshing", and unlike boutique coffee, which is obsessed with the story of its origin and the "output" of coffee culture, "Three and a Half" is a lifestyle brand.
The official microblogging site of the three-and-a-half-fourth found that the content of its release does not involve much in the way of discounts and promotions, but is more like an aesthetics of life sharer. The company's website is a great source of information about the company's products and services, and the company's website is a great source of information about the company's products and services, and the company's products and services.
Zhang Yi, CEO of Amedia Consulting, said to Burning Finance that from a global perspective, boutique instant coffee is not a new thing. But the domestic boutique instant coffee, whether it is from the packaging design, promotion, pricing strategy or to build the brand tone, are very consistent with the highly educated, high-income, high consumption of young "three high people" aspire to the lifestyle, and then captured more young consumers.
"Three and a half" people need a new story
The rise of new brands and consumer demand, but also let the instant coffee market continues to expand. The 2020-2021 China Coffee Industry Development Research Report shows that in 2020, instant coffee has accounted for as much as 71.3% of the domestic coffee market.
Huge market share, highly capitalized boutique instant coffee track naturally became a new "place" for players to compete to enter the game.
On October 14, 2021, Nestlé Starbucks Global Coffee Alliance announced the launch of Starbucks Starbucks with Star Cup, a super boutique instant coffee customized for Chinese consumers. In addition, KFC, Rexall, Eagle Collection, Fish Eye, Seesaw and other brands have also begun to enter Tmall, online boutique instant products.
With the increase in the number of entrants, the advantage of "three and a half" is gradually weakened. The fuel finance in the Tmall platform to see, three half 3g price of about 7.86 yuan / example, Ruixing coffee 3g price of about 6.58 yuan / example, the eagle set 2.8g price of about 9 yuan / example. In the small red book, many consumers to three half of the "high value and low cost-effective" label, and appeared more than a hundred "three half of the Pingtai" related notes.
As a heavy coffee user who drinks at least two Shots a day, Anna, an 80-year-old girl, said to Burning Finance that a pack of 500g of boutique coffee beans is priced at about 200 yuan, and you can brew about 40 cups for an average of about 5 yuan to get a cup of taste than the "three and a half" of the pure American style. "If you want to save time, a single cup of freshly brewed coffee at a convenience store for 6-12 yuan is also a good choice."
Li Xinyi told Burning Finance that the general problem in the food and beverage industry is that it is difficult to form a competitive barrier through a certain formula, a certain raw material, more to rely on the supply chain capacity and brand power. That is, lower cost, better raw materials, higher level of technology, a wider range of channels, stronger brand awareness.
"'Three and a half' have been able to occupy a place in the market because they have seized the dividends of new crowds, new channels, new media, etc., and have taken a first-mover advantage in categories such as coffee lyophilized powder and cold brew, but there is still a big gap between supply chain capabilities and the international giants, and the core of future development lies in how to seize the opportunity of their own. The core of future development lies in how to seize their first-mover advantage in emerging categories and brand mind advantage, and make up for the supply chain capability in the window period."
In the face of increasing competition, "three and a half" began to fall into anxiety, and have made efforts offline.
In 2019, SanDunHalf opened its first offline Demo store in Changsha, its home base; and on Mid-Autumn Festival in 2021, SanDunHalf opened its first offline concept store called "into_the force" on Anfu Road in Shanghai.
In addition to Three and a Half, Yong Pu is also actively laying out the offline, first entered the Ole', Citysuper, Jiu Guang, Box Ma Fresh Sheng and other supermarket channels, and in October 2021 opened the first offline space in Shanghai, "Cityboring", focusing on boutique coffee and craft beer.
Tokusui opened its offline store in Shenzhen at the end of 2020, and quickly opened five stores in two months. Sumidagawa has flash mobs and the like in Shanghai and Hangzhou.
Wu Jun, founder of Three and a Half Time, has said that Three and a Half Time sees the offline channel as an important carrying channel for brand communication and content, as well as a starting point for future online and offline new retail centered on a membership growth system.
"I hope that by opening up offline stores, to further open up the brand awareness and exposure" may be an important reason for the online boutique instant coffee brands to rush to the offline. However, the coffee offline war is more brutal, in addition to the need to face higher rent and labor costs, most of the OEM to complete the product build brand in the supply chain does not have the advantage.
On the other hand, as mentioned at the beginning of the article, busy expanding the category has also become one of the "three and a half" to seek performance growth. Li Xinyi believes that three half of the logic of category expansion, there are two kernels, one is to coffee as the core to form a series of scene solutions. The second is to apply freeze-dried powder technology to other beverage categories. Li Xinyi further emphasized that, at present, the domestic boutique coffee market is now viewed from the perspective of the scene to expand some solutions is more reasonable.
Zhang Yi similarly believes that in the next five or six years, all kinds of consumer scenarios under the Chinese coffee brand, there will be a very large growth and outbreak of opportunities. For boutique instant coffee brands, it is crucial for them to position their brands and build their lifestyles for the young, fashionable and "three highs" consumer groups.
However, based on the research data of the industry's top companies, YiMagazine estimates that the online sales of freeze-dried instant coffee, coffee concentrate and other "new consumer" coffee products will be around 2 billion yuan in 2021, which is equivalent to Ruixing Coffee's single quarterly revenue level in the third quarter of 2021, and even less than that of the industry report, which shows that Ruixing Coffee's sales will be around 2 billion yuan. The level of income, not to mention a direct comparison with the industry report of hundreds of billions of dollars, trillions of dollars of China's coffee consumption scale.
Obviously, the boutique instant coffee track, which is still a "big fish in a big pond", still needs players to continue to output new stories.
This article was originally published in the