Survey Report on Chain Coffee Shops in China's Major Cities

Report Type: Survey Report

Industry Segment: Food & Tobacco \Philipinoid Alcoholic Beverages

Survey Location: Beijing, Shanghai, Guangzhou, Tianjin, Shenyang, Jinan, Nanjing, Fuzhou, Xiamen, Shenzhen, Hangzhou, Qingdao, Dalian, Chengdu, Wuhan, Xi'an, Kunming, Chongqing, Zhengzhou, Harbin

Time of survey: 2001

Survey method: Media monitoring

Number of samples: 1,000 kinds of media

Sample situation: Newspapers, magazines, TV, radio, movie theaters, outdoor ads, and the Internet, etc.

Survey organization: International Advertising Magazine

Report Source: China Business Network Report Content: Coffee is the manifest consumption of the high class in China Coffee drinkers are more in pursuit of fashion, seeking for newness and uniqueness, preferring the lifestyles and brands of the developed countries, and are more concerned about enjoyment, such as attaching importance to the atmosphere of the store and enjoying a romantic life. Coffee drinking is still a special lifestyle in Mainland China. Further analyzing the relationship between the proportion of coffee drinkers and demographic characteristics, we find that only 8.1% of urban residents drink instant coffee at elementary school level, 27.7% at junior high school level, 24.2% at senior high school level, 27.8% at secondary/technical school level, 32.5% at college level, and the proportion of those with college level or above who drink instant coffee rises to the highest point of 35.8%, regardless of whether they are heavy, medium or heavy coffee drinkers.

In addition, monthly household income and the proportion of instant coffee drinkers are also directly proportional. Only 7.9% of residents with a monthly household income of less than RMB1999 have the habit of drinking instant coffee, but when it comes to households with a monthly income of more than RMB8,000, the proportion of consumers drinking instant coffee is as high as 42.5%.

There is a significant positive correlation between education level, monthly household income, and the frequency of instant coffee consumption, implying that coffee, a beverage imported from the West, is a lifestyle that symbolizes the dominant class in mainland China. So even though a cup of coffee at Starbucks in Shanghai costs 22 RMB, people still rush to drink it, which seems to be not only a kind of enjoyment of life, but also a kind of conspicuous

consumption. It can be predicted that with the economic prosperity of the mainland, the pursuit of this kind of conspicuous consumption of the public will be more and more, whether it is the boss, or staff, and even including students, more and more people will go into the coffee shop.

Shanghai has the highest percentage of instant coffee drinkers Although Shanghai is not the highest income city on the mainland, according to a survey conducted by CMDB (China Market Data Bank) in 2000 on instant coffee products, Shanghai has the highest percentage of instant coffee drinkers in the country. While 24.7% of the population in the 20 major cities in mainland China drank instant coffee in the past year, Shanghai's consumption rate was as high as 42.7% (see Figure 1). In addition, 5.2% of Shanghai residents are heavy consumers who drink instant coffee every day, and 21.5% are medium consumers who drink instant coffee at least once a week, which are significantly higher than those in other cities. It's easy to see that it's no coincidence that the Starbucks coffee shop chain has been able to make a success of its presence in Shanghai.

According to the same survey, in addition to Shanghai, Kunming, Xiamen, Hangzhou, and Tianjin are among the regions where 30% or more of the population drank instant coffee in the past year, while Nanjing, Dalian, Shenzhen, Fuzhou, Guangzhou, Xi'an, Zhengzhou, Qingdao, Wuhan, and Beijing are among those with 20% or more. The survey shows that areas with a higher rate of instant coffee consumption, where local residents are more receptive to coffee, are good locations for coffee shop chains to enter. We believe that Chongqing, Harbin, Shenyang and Chengdu are the four areas where the proportion of people drinking instant coffee is the lowest, and it will be more difficult to open the coffee market in these four cities, with other cities being the focus of the attack.

Market segregation of Taiwan's coffee shop chains The survey shows that Taiwan's coffee shop chains have moved towards a segmented market segregation, which is an important reference for the mainland's coffee market. According to the 2000 EICP survey data, the past three months have been to the top five chain coffee shop in the order of real pot (7.1%), Yi is the coffee IS

CAFé (4.3%), Starbucks Starbucks (3.8%), Dante (3.7%) and Seattle (2.8%). Those on the list range from American/European styles, to those taking the Japanese route, to nationally-created brands.

Comparing Starbucks, Dainty's, and True Pot, the three brands of coffee shop chains, each with their own distinctive service styles and price points, can be used to analyze how the coffee shop chains can come out of different market segments. Zenabe is a high-priced Japanese coffee chain that specializes in Japanese "black coffee" series and fancy coffee series, with the price of a cup of coffee ranging from NT$100 to NT$200. Starbucks specializes in Americano, espresso, and coffee with a lot of milk, starting at NT$50 for a coffee of the day and NT$100 for a latte or cappuccino. Dainty Coffee, on the other hand, specializes in affordable coffee, with a big sign on the door that reads "35 Yuan Coffee". The sign at the entrance is a big "35 yuan coffee". 35 yuan to drink good professional coffee is its most attractive feature.

The price point and the way of service do form a market segmentation. The age distribution of consumers of the three brands is very different. Starbucks' most important customer group is 25-29 years old, accounting for 29.4%, while Dainty Coffee is mainly 30-34 years old, the real pot of coffee has a wider distribution of age groups, especially the middle-aged and older consumers also have a certain proportion. If analyzed by occupation, Starbucks' main customer groups are mainly students and professional technicians, Dainty Coffee has the largest consumer population of service workers (24.5%), and Real Pot Coffee is dominated by self-employed people (26.0%). This is related to their service style and price point.

Students and tech professionals in their 20s and 30s will go to Starbucks and stand in line, order a coffee of the day or a latte, and don't care to wait a little longer for a professional cup of coffee. A cup of coffee of the day can spend a leisurely afternoon in the beautifully decorated coffee shop. Affairs workers in their thirties will drink a 35-dollar coffee or dine at Dainty, and then sprint back to work with a coffee pick-me-up. The middle-aged and strong-aged bosses will choose a Japanese high-priced coffee shop like Zenabe, which has waiters to take seats and orders, and is commensurate with the status of a boss.

In summary, we believe that the instant coffee market in mainland China has great potential and a promising future; this development trend of market segregation and personnel diversion in Taiwan's coffee market reflects the direction of development of China's coffee market; with the development of China's economy and the improvement of the standard of living in mainland China, the chain of coffee shops is about to enter the streets and alleys, and will be enjoyed by all classes.