China Food

Coffee brands fall into growth anxiety: who is the next category king?

“ 
explosive products are water storage products with flow, and it is difficult to become explosive products without flow. However, as the flow becomes more and more expensive, coffee brands begin a new round of growth anxiety.
 ”

Tiepi, the founder of yongpu, once said, “Whoever grasps the taste needs of young people grasps the future.”

Leaving behind the old line of designers, the iron sheet of “taking hobbies as a career” survived the dark time of five years, and finally ushered in a turnaround in 2020, when Guochao and new consumer brands rose. In 2020, yongpu rose to the top 5 of instant coffee / coffee beans / powder category, and yutianchuan, who also held the young people’s “taste bud code”, even got a higher position than yongpu.

Data source: magic mirror Market Intelligence

We need to know that in 2019, yutianchuan and yongpu will still be “no one”.

Yongpu and yutianchuan, which are the main coffee makers, are isolated from the three and a half meals of Turpan’s major sales lists and the main cold extract instant coffee powder. Will yongpu and yutianchuan become the next “three and a half meals”?

Next, we will interpret the opportunities and challenges of the online coffee market from four perspectives: changes in product form and consumption trend of the coffee market, potential segmentation track, potential brand growth recovery, and growth anxiety of brands.

From espresso to portable instant coffee

Changes of product form and consumption trend of coffee market

Whether it’s three and a half meals, yongpu or yutianchuan, the carnival of domestic coffee market begins with lucky coffee. Since 2017, “little blue cup, who doesn’t love” has appeared frequently in building elevators, circle of friends and open screen advertisements. This “second choice except Starbucks” has been squeezing the market space of Starbucks with high cost performance and high quality.

With Ruixing’s high-profile entry into the market, the lower coffee price has touched a wider range of consumer groups, and a consumption “education” about coffee has quietly formed. According to the forecast of foresight Industry Research Institute, the market scale of China’s coffee industry will maintain an average compound growth rate of 10% from 2021 to 2026, and will approach 170 billion yuan by 2026.

And caffeine addicts are no longer satisfied with the geographical restrictions of stores, and the demand for a cup of coffee anytime and anywhere, or DIY coffee drinks according to their own taste, is growing wildly in the later stage of the epidemic. According to the market intelligence data of magic mirror, the online instant coffee market has also increased from 4.3 billion yuan in 2019 to 7 billion yuan in 2020, and the market scale and growth rate continue to improve.

Data source: magic mirror Market Intelligence

The coffee market is also from the boutique coffee to the era of portable instant coffee.

And the product form of online portable instant coffee market has also been upgraded with the change of demand.

At present, in the portable coffee market, instant coffee, ear coffee, super instant coffee powder (freeze-dried coffee powder) and liquid coffee are the main forms occupying the top.

Photo source: magic mirror Market Intelligence

With the maturity of coffee technology, after instant coffee, hanging ear coffee has become “popular”. On behalf of the brand, sometimes cuihe yutianchuan directly extracts the ground coffee powder of coffee beans to retain the true flavor of coffee. Through the design of hanging ear, hot water brewing is closer to hand brewing flavor. However, hanging ear coffee is still limited by “hot water” brewing.

Photo product: time extract photo source: Internet

Then the super speed cold extraction coffee powder, represented by three and a half meals, began to sweep the market of coffee powder line. The product was obtained by cold extraction, and its taste was closer to that of freshly ground coffee. It could be brewed in both hot and cold water. With the appearance of “small pot”, Santon and a half also makes packaging a super symbol of the brand, which serves as the contact between the brand and users. The social attribute of the product enables users to “play” by themselves.

Photo product: three and a half meals photo source: Internet

However, with the increasing demand of consumers for the diversity of coffee drinks, the demand of consumers for product solubility is becoming more and more stringent. Whether it’s dissolved in water, milk, bubble water, or yogurt, beer, rum… The solubility of coffee is relatively better. The unpretentious way of drinking coffee makes the coffee drinking scene of Chinese consumers more interesting.

Photo product: yongpu cold coffee extract photo source: Internet

So tin once said: “freeze dried coffee powder is a transitional product, everyone wants to make coffee liquid.”

Everybody wants to make coffee?

Analysis of potential subdivision track

Why do brands want to make liquid coffee? Let’s focus on the data and have a general understanding of the changes in the market pattern of portable coffee on the production line.

Category share change

Taking the five main categories of portable coffee as the research objects, we can see that the market share of instant coffee is squeezed, from 84% (2019-01) to 78% (2020-12), while the market share of liquid coffee (0.2% ~ 4.7%) and ear coffee (0.8% ~ 7.0%) show small-scale growth respectively.

Brand change

In 2020, Nestle’s instant coffee and Maxwell’s instant coffee brands were further squeezed out of the three categories of traditional brands.

(comparison of sales proportion of top 15 brands of instant coffee / coffee beans / powder categories in 2019 and 2020)

However, the sales market share of new packaged portable coffee brands such as three and a half meals (2.8% – 5.4%), yutianchuan (1.8% – 3.7%) and yongpu (0.4% – 1.4%) is relatively popular, and the market share has doubled, with a year-on-year growth of over 100% for two consecutive years.

Data source: magic mirror Market Intelligence

Although Tiepi once said, “everyone wants to make coffee liquid.”. But at present, in addition to Nestle’s instant coffee, the best-selling product in the online market is still the cold extract freeze-dried powder represented by three and a half tons.

But does the brand make cold extract lyophilized powder or coffee liquid? It has a great relationship with technology and cost, which directly affects which segment the brand enters.

It is related to technology and cost

Iron sheet once mentioned in the interview that there are differences between cold extraction freeze-dried powder and coffee liquid in process, and freeze-dried powder is an over processed product of coffee liquid.

Over processing?

Lyophilized powder products have the advantages of transportation and preservation, and the acquisition of lyophilized powder is to vacuum the cold extracted coffee liquid, then cool it to a solid instantly, and then sublimate the solid water to obtain lyophilized powder.

As an intermediate, cold extracted coffee liquid needs to be refrigerated during transportation and storage, which increases the cost of transportation and storage. Therefore, brands prefer to continue processing to obtain freeze-dried powder which is more convenient for transportation and storage.

But at present, yutianchuan and yongpu have a seemingly more perfect solution. They launch normal temperature coffee liquid, which does not need refrigeration. The process is more streamlined and has certain technical barriers. It is difficult to follow the market, which makes the brand have a cognitive advantage in the coffee liquid track.

Since the technology of coffee liquid is simpler than that of freeze-dried powder, is it more advantageous in price?

So we select the top 15 brand’s annual popular products to analyze the price and sales of these products.

(top 15 brand price and sales bubble chart in 2020) price logic: in the flagship store / tmall supermarket channel, the highest selling product of the brand is coffee beans / flour per 8g

We found that the unit price of three and a half tons cold extraction freeze-dried powder is 7.9 yuan, which is the highest among the top 15 brands. The unit price of yongpu cold extraction coffee liquid is 4.6 yuan, and that of yutianchuan normal temperature coffee liquid is 4.1 yuan. The prices of the two kinds of coffee liquid are lower than those of three and a half tons coffee powder.

Photo source: magic mirror Market Intelligence

Therefore, at present, in terms of terminal price performance, the prices of coffee liquors of yutianchuan and yongpu are more advantageous.

The popularity of coffee liquid is also related to the change of young people’s habit of drinking coffee.

It’s about drinking habits

Chinese people are good at “gathering” dietary habits, which affect many categories, such as milk tea, Malatang, malaxiang pot, hot-pot/" 22375 rel="nofollow" target="_self">hot pot, etc. the prominent feature is “Fengjian by people”. Consumers can choose their favorite ingredients by themselves. In the process of consumer participation and selection, the brand not only meets the diverse needs of customers, but also reduces the cost of production .

The same principle applies to the super category of coffee. Businesses want to create a coffee that is suitable for a variety of food scenarios, and the “liquid form” of coffee liquid is obviously more advantageous.

Take yongpu as an example. Yongpu normal temperature coffee liquid can be dissolved in water, milk, or even bubble water. You can have a cup of bubble coffee without stirring. For powdery instant coffee, the dissolution of bubble water is relatively less friendly.

Image source: Internet

Another big coffee maker, yukata Kawa, has proposed more fun ways to drink (eat), such as pudding coffee, ice cream coffee, or milk marshmallow coffee.

Photo source: magic mirror Market Intelligence

Therefore, Tiepi also said in the interview, “the future coffee market is the coffee beverage market.”. This kind of “coffee drink” also has social characteristics like milk tea, and promotes consumers to constantly explore the delicious coffee, which makes it possible for the brand to expand more consumption scenarios.

Although the advantages of liquid coffee are elaborated, we still have to throw out such a question: will the future market of liquid coffee surpass the market of cold extracted freeze-dried powder coffee represented by three and a half tons?

Who is the next “three and a half meals”

Potential brand growth review

According to the magic mirror market intelligence data, we can see that among the high growth brands with Gmv over 50 million in 2020, yongpu and yutianchuan rank second and third, which is the first time that the growth rate of the two brands exceeds three and a half meals, which seems to announce that China’s coffee market is about to enter a more fierce era of brand scuffle, and brand education on the market will transform coffee from “fresh consumption” to truly belong to the public “Diversified consumption”, “emotional consumption” and “habitual consumption”.

Data source: magic mirror Market Intelligence

Let’s see what yongpu and yutianchuan have done right in the past year?

Delivery rhythm and selling point refining

From the social sound volume of micro-blog’s recent roll in micro-blog, jowl and Xiao Hong, the social exposure and brand exposure of tiktok are significantly higher than that of three and half.

Although the flow and price are rising rapidly, from the data point of view, yutianchuan’s marketing investment is still quite bold. However, yutianchuan has neither taken Nestle’s heavy channel route nor strengthened the emotional attribute additional route in marketing. Yutianchuan’s marketing route is more close to the public, and it has made coffee culture landing and popularization in content investment.

Ntiktok relies heavily on the platform of shaking, and two high interactive videos are promoted from two selling points of “refreshing” and “keep fit”. The window products are all hanging coffee, and the jump is linked to Taobao interface.

(left selling point extraction: keep fit and reach young women through fashion and fitness KOL)

(right) selling point extraction: refreshing, reaching the low consumption group through story subject KOL)

For another star product of yutianchuan, the content of normal temperature coffee liquid is displayed through product display and sharing of mixing process.

(selling point extraction: coffee liquid, good to drink but not fat, reaching the people with quality life through health preservation and food KOL)

In terms of explosive products, yutianchuan did not put the flow in a basket.

From the data point of view, yutianchuan’s flow strategy has not only piled up the hanging ear coffee launched in 2017 and the hot bubble cold extract coffee bag launched in 2018, but also boosted the basic sales volume of ambient temperature espresso launched in June 2019. The number one leader of several popular brands and subdivision categories has obtained a large amount of free flow in a period of time, making the brand less growth in the follow-up growth In the autumn of 2020, yutianchuan also won the first round of financing as expected. In March 2021, yutianchuan, with a total sales volume of 300 million cups, won 300 million yuan round B financing from Qiming venture capital and Yijing capital.

In contrast to yutianchuanda’s traffic strategy and three and a half meals of autobiography, yongpu is much more cautious in marketing investment. In order to get more free traffic, yongpu has started co branding cooperation with more than 300 brands since its inception, including illustrators, designers, eclipse, xiaozizi, instant, xiaohongshu, etc To live.

Then, in order to find more growth points, in October 2019, yongpu launched freeze-dried coffee powder against the standard of three and a half meals, and also designed brand symbols on the product packaging, so UFO coffee came out. Then, in August 2020, yongpu launched room temperature flash extraction coffee liquid after cold extraction coffee liquid, and expanded its product category to concentrated drinks such as concentrated black tea and Matcha, with sales of more than 1.34 million cups in four months, Then yongpu’s social voice exceeded three and a half meals for the first time.

Image source: Internet

Growth anxiety under category expansion

Explosive products are water storage with flow, and it is difficult to be explosive products without flow. However, as the flow becomes more and more expensive, coffee brands begin a new round of growth anxiety.

As a result, many brands began to seek new growth momentum and explore category expansion. For example, Santong and chayan Yuese launched a joint gift box earlier, and introduced No. 7 Louis Burton tea (healthy milk tea powder), which will reach caffeine / tea polyphenols addicted users, reach consumers accurately, create a new form of instant small can tea powder, unlock more tea drinking scenes, and promote the offline milk tea economy On the back feeding line, under the market atmosphere of increasing enthusiasm for homemade milk tea, it may inspire and lead a new round of tea market revolution.

Image source: Internet

In addition, some consumers have combined the concept of “black coffee” with weight loss, so some health food brands have also launched instant black coffee, such as seven years and five seasons and idyllism, black coffee combined with whole wheat bread to build a more healthy life scene.

Image source: Internet

For coffee brands such as Santon and a half, the challenges they face are not only process upgrading and track squeezing, but also other food brands’ strong entry through related products, scene consumption and habit of additional products.

Will three and a half meals still dominate the online coffee market?

Magic mirror believes that based on the changes of domestic coffee consumption habits, in the future, the pressure of three and a half meals will come from the coffee liquid track. However, there are still some technical barriers in the domestic coffee liquid market. Once the domestic coffee liquid barrier is broken and the coffee liquid gate is open, it will squeeze the coffee powder market. At that time, whether three and a half meals can maintain the dominant position of new packaged portable coffee is still unclear Unknown.

reference:
Podcast “beiwanglu” Vol.40: is instant the opposite of boutique coffee?
Author: Li xiaogua; source: magic mirror Market Intelligence (ID: mktindex), reprint has been authorized. Joining the community: Cherry (wechat: 15240428449); business cooperation: Amy (wechat: 13701559246). Recommended reading children’s snacks, vinegar drink, cherry fashion trend, female tea brand, new trend of dairy products, high-tech restaurant, vegetable protein drink, NMN, takeout packaging brand, a secret selection column, a week’s hot news, innovation interview, lingting, new Xiu brand, trend insight, packaging outpost fbic 2021

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