Although public opinion is now focusing on its action of “closing stores” in some regions, Costa (Chinese Name: Costa), a coffee chain backed by Coca Cola, is also making secret moves and vigorously exploring new battlefields outside the stores. Recently, according to media reports, Costa has closed some stores in Beijing, Qingdao, Jiangsu, Zhejiang and Shanghai, accounting for about 10% of all stores in China. In response to this, Costa China said today that it would close some stores due to changes in store passenger flow and economic operation, but did not disclose the number and proportion of stores to be closed. The company also said it would continue to expand and cover different consumption scenarios in the Chinese market, build an omni channel coffee brand, and talked about the synergy with Coca Cola system. Now, let’s have a look.
Start a new joining plan
Costa China said that the closure is the continuation of the company’s store optimization work all the time. Closing some stores does not mean that it will slow down the pace of expansion in China, and it will continue to develop new stores. According to its introduction, Costa currently has more than 400 stores in China, and the market distribution in the north and South regions is relatively average. According to public information, Costa China’s north and South markets are respectively operated by Costa coffee (Shanghai) Co., Ltd. and Hualian Costa (Beijing) Catering Management Co., Ltd. “We will accelerate the layout of diversified channels in the Chinese market, and actively explore store forms suitable for different consumption scenarios.” Costa China said.
In fact, the opening of more types of stores, especially smaller and more flexible takeaway or self-service stores, has become the choice of coffee chains such as Starbucks and Tim Hortons to improve their penetration in China. With the “old rivals” speeding up the enclosure and the “rising stars”, Costa China also said to the small food generation today: “we are really trying to explore new markets more quickly through new cooperation modes (such as city joining)
It has been revealed that the above-mentioned franchise plan and negotiation have been opened. The first batch of stores will be launched in major cities in Zhejiang, Jiangsu, Fujian and other regions and other special channels (such as transportation hubs, hospitals, etc.) next year, and will be gradually promoted throughout the country.
Left: Costa desktop coffee machine, right: Costa self-service coffee machine
This means that Costa China still values store expansion.
Xiaoshidai learned from the company that its current open franchise model intends to “walk on two legs”. Specifically, it plans to open a certain number of standard retail stores to each city, and at the same time, it also plans to open an unlimited number of “Costa coffee · express selection”. According to the company, “Costa coffee · express selection” is equipped with a self-service coffee machine, aiming at the scene of taking out coffee.
The company also stressed that, in order to ensure the quality of coffee, currently does not accept individual single shop to join.
“Omni channel coffee brand”
Since its acquisition by Coca Cola, Costa, which is famous for its coffee chain, is speeding up its transformation to an “Omni channel coffee brand”, focusing more on the business outside the coffee shop. This is also the direction that coke CEO Zhan kunjie disclosed at that time. Xiaoshidai introduced that at the investor communication meeting held for the acquisition of Costa in 2018, Zhan kunjie proposed that Costa could combine with Coca Cola’s global business to win all four parts of coffee business. According to Coca Cola’s division at that time, among the four parts of the coffee market, the largest market scale was outdoor coffee business, in which coffee shops accounted for only about 20%, and the remaining 80% were other outdoor instant consumption channels, representing most of the outdoor consumption channels. The second is non ready to drink category, which is mainly consumed at home; the last is instant coffee, in which Coca Cola accounts for about 15%.
Zhan kunjie also said that in terms of coffee shops, the focus is not on owning the largest number of stores, but on having the right number of stores where you want to create profitable brands and create synergy in the four coffee segments.
Competitive advantage in China
在户外即时消费渠道上，COSTA于去年8月将旗下的“快选自助咖啡机（Costa Express）引进中国市场。“目前，我们正在布局咖世家快选自助咖啡机在中国的投放。” COSTA中国称。
In addition, the desktop coffee machine, which belongs to the “Costa coffee · quick selection” project together with the self-service coffee machine, has been stationed in many bakeries and Wanda cinemas in major cities across the country, and will continue to layout other consumption scenarios in the future.
”China’s coffee market has a huge potential. Consumer categories and consumption patterns are diversified, and opportunities and challenges coexist. “Costa China said that it is confident in China’s coffee market and will continue to invest and develop in China for a long time in the future.
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