China Food

The hundred year history of Chinese coffee tells a story of milk tea

has been added with milk, coconut milk, fruit and alcoholic coffee in China’s consumer market, which must be told as a milk tea story.
As soon as Yeyun latte, a joint product with coconut tree and coconut milk, went online, Ruixing won the total sales of 660000 cups that day and rushed to hot search.
From the raw coconut latte out of stock in the whole network last year to the hot coconut cloud latte this year, Ruixing seems to have verified that coffee has finally ushered in its own highlight in the Chinese consumer market dominated by tea culture for a long time.
So, from entering China more than 100 years ago to now, what kind of development story has coffee told in China’s consumer market?
In the 6th century, an Ethiopian shepherd found that his goats often couldn’t sleep at night and “danced”. After observing for some time, he found that the phenomenon of “Dancing” of goats occurred only after eating a red berry.
Then, the curious shepherd picked the red fruit and took it to the local mosque to find the answer.
In this way, coffee has entered the human diet.
Although the authenticity of the shepherd’s story cannot be verified, it is a universally recognized fact that coffee originated in Ethiopia.
A Yemeni named Omar contributed to the popularity of coffee.
Yemen is located at the southernmost tip of the Arabian Peninsula and only across the Mande Strait from Africa. In the 13th century, Omar, who made a mistake, was exiled to Africa. After the end of his exile, he picked some coffee fruits from all over Africa, brought them back to Yemen and began planting.
Since then, coffee has been spreading northward from Yemen. In the 15th century, coffee spread all over the Arabian Peninsula, followed the expansion of the Ottoman Empire of Turkey across Asia and Europe, and entered the Islamic area of Europe, Egypt and other places.
At the same time, the Ottoman Empire was expanding. Under the support of the developed shipbuilding industry, China sent Zheng He to the Western Pacific and Indian Ocean to explore a broader world.
At this time, coffee did not enter China’s consumer market, but Zheng He’s expedition to the West inadvertently promoted the reform of coffee drinking mode.
In the 15th century Arabs, the method of drinking coffee has always been simple and rough, smashing dried beans, boiling and drinking soup. At this time, on Zheng He’s westward voyage, the crew drank tea not only by grinding tea cakes into powder for brewing, but also by using exquisite teapots and cups.
While amazed, the Arabs learned the Chinese way of cooking and drinking tea, forming a modern way of drinking coffee that continues to this day. From the 16th century, the name of “Arabian wine” gradually spread to Europe, America and Asia, and finally became a daily drink.
Coffee first appeared in China in the form of Chinese in the chronicles of the four continents compiled by Lin Zexu. However, coffee entered mainland China as a consumer product around 1836.
At that time, in the bustling trading port of Guangzhou, European business travelers could not find cafes. A Dane with business acumen opened the first coffee shop in Chinese Mainland near ShiSanHang, Guangzhou.
Only at that time, the expensive and bitter coffee only served the foreigners in the city and the dignitaries in China. Ordinary people rarely have access to it.
Coffee entered China as a crop in 1904.
That year, in zhukula village, Binchuan County, Dali City, Yunnan Province, a landlord surnamed Zhang forced to sell 74 women in the village. In order to be important, the villagers looked everywhere for someone who could help them fight a lawsuit despite the influence of landlord Zhang. At this time, a French Catholic Godfather named Tian de Neng was willing to help the villagers file a lawsuit, but the condition was that the villagers would be religious from now on.
Finally, Tian denang helped the villagers win the lawsuit. The villagers also fulfilled their commitment to worship the Catholic Church. At the same time, they also contributed to the construction of a church for Tian denang in zhukula village.
It was on the side of this church that the coffee loving Frenchman Tian denang planted China’s first coffee tree.
Thus, from consumption to production, coffee officially “settled” in China.

Coffee can be divided into three stages to open up China’s consumer market step by step.
The first stage starts with the introduction of “1 + 2” instant coffee by Nestle coffee in China in 1989.
As the mass consumer market is still in the Enlightenment period of coffee, the remarkable feature of this stage is that the functionality of the product is significantly transferred to the taste. From the current perspective, people at that time were not so much consuming coffee as tasting sweet coffee drinks with refreshing function.
Nestle quickly launched the market of instant coffee in China. The research and development of freeze-drying technology is the precondition, which ensures the possibility of large-scale production, transportation and storage of coffee. At the same time, it also benefited from Nestle’s series of precision marketing activities for “young people at that time”.
Although Nestle faces an uncultivated blue ocean market in China without coffee consumption habits, the task of educating users has a long way to go.
Fortunately, Nestle is rich and powerful. It has carried out saturation attacks by using advertising channels such as TV, newspaper, carriage and outdoor. It has simply engraved the advertising language of “Nestle, it tastes great” and the steps of brewing coffee into the minds of the public. In the Chinese consumer market deeply affected by the tea drinking culture, it has popularized “not bitter” coffee to the Chinese people.
In the following decades, instant coffee has occupied an absolute dominant position in China’s coffee consumption market. Nestle has always been a leader.
According to Euromonitor International, instant coffee accounted for 97.6% of China’s coffee consumption market in 2013. Although this year, Starbucks has entered the Chinese market for 14 years.
Even now, in the turbulent coffee revolution, instant coffee still retains its dominant position. Euromonitor International predicts that by 2022, the market share of instant coffee will still be 91.6%.
The second stage of the change of coffee in China’s consumer market is marked by the entry of Starbucks, which represents high-quality freshly ground coffee, into the Chinese market in 1999.
At this time, coffee shoulders the social function. Under the third space narrative of Starbucks, it represents a dignified lifestyle.
Ten years later, from instant to instant grinding, the acceptance of coffee in China’s consumer market has been completed from 0 to 1 under the education of Nestle.
In fact, before Starbucks, the desktop boutique freshly ground coffee shop represented by carving time and Shangdao coffee has begun to explore the lifestyle in the Chinese market. However, the latter two more bound coffee with Western food, which was submerged in the limelight of Starbucks after its popularity.
Although the desktop cafe is easily surpassed by Starbucks, it is also due to a Taiwanese named sun Dawei who helped Starbucks open up its own new world in China.
Before introducing Starbucks to Chinese Mainland, sun Dawei had a successful precedent of introducing McDonald’s to Taiwan.
Even so, Schultz, the founder of Starbucks, is not optimistic about the business mentioned by sun Dawei.
It was promised that Starbucks, which had opened more than 1000 stores in North America at that time, had a plan for global expansion, and sun Dawei’s plan did not require Starbucks to bear any prior investment and subsequent risks as long as Starbucks had the agency right in northern China.
In this way, when Starbucks was not optimistic and no Starbucks executives were present, sun Dawei still opened his first Starbucks in Beijing International Trade CBD in 1999.
Since then, with the of Starbucks, in addition to the expansion of spreading plates, there have been losses for nine years.
The core reason is that at that time, China’s average wage level of around 1000 yuan could not afford the consumption unit price of more than 20 yuan at Starbucks. The story of the third space was still facing a blank market without an audience.
Being able to bear the perennial losses patiently is Starbucks’ firm determination on China’s economic take-off and the expansion of the middle class and white-collar workers.
Good things are left to the patient.
With the dividend of the times brought by China’s rapid economic development, Starbucks has been pushed to the “altar” of coffee consumption by consumers and has become the standard for the life of small bourgeoisie with a tone. Starbucks has also completed the evolution of the number of stores from 1 to 5000. In this process, Starbucks officials describe the speed of expansion in China as follows: every 15 hours, a Starbucks store opens in China.
The key years reflected in Starbucks’ financial report are: in 2008, Starbucks achieved its first profit in the Chinese market; In 2012, the number of consumption in China reached 50% of that in the United States for the first time; In 2017, China surpassed the United States to become the largest market for Starbucks.
Looking back, in fact, there are all kinds of cafes on the urban territory of Nuo University in China, but Starbucks at that time had no rival.
Is Starbucks coffee so good that people don’t want to go into other cafes?
However, at that time, consumers were no longer sensitive to coffee of more than 20 yuan, and enjoyed the feeling of consuming at Starbucks very much: put an apple computer on a bench, gently stir the cappuccino, furuibai or other products in hand while tapping the keyboard from time to time in the soothing background music and noisy voice.
This kind of feeling in the third space and drinking a cup of boiled water can obtain stable Starbucks emotional value.
In the spirit of the company, Abbott Kund even used the word “coffee religion” to describe Starbucks. He believes that some people with roughly the same life style and social identity form a community, forming Starbucks’s “coffee religion”. Consumers don’t care what they can buy at Starbucks, but what it looks like to spend at Starbucks.
But all this suddenly changed.
Since 2017, China’s coffee market has expanded rapidly, and high-quality instant coffee, freshly ground coffee, convenience store coffee, fast-food coffee and tea shop coffee have emerged one after another, telling consumers a new story of their own coffee.
Ruixing opened its first store in Beijing Galaxy SOHO in 2017. This is just another coffee brand in the coffee entrepreneurship tide that has sprung up in the Chinese market.
At that time, people enjoyed Ruixing’s coffee with money. Unexpectedly, the little blue cup in hand was pushing the coffee into the third stage in China’s consumer market.
The first sign of change was the financial report of Starbucks in 2018: the same store sales growth of Starbucks in China fell for the first time in nearly 10 years.
However, in the course of its development in China, Starbucks has encountered pressure, but it has not encountered the word “opponent”. Costa, which entered the Chinese market in 2006, is not afraid, let alone a local “newborn”?
Especially in Ruixing’s less than five-year development process, it is also accompanied by the dog blood plot of financial fraud and forced delisting.
But Ruixing is the Jedi counterattack, reborn from the mud. In the Q4 and annual financial report of 2021 released by Ruixing, Ruixing not only surpassed Starbucks for the first time with 6024 total stores, but also sounded the prelude to profitability.
In 2021, there were 300 million coffee consumers in China. Many people’s first cup of freshly ground coffee is the money burning “treat” from Ruixing, and then formed a consumption habit.
Originally thought it would become “tears of the times”, but it reversed the “prelude of the times”. People loved it. Ruixing’s successful experience was summarized as: product innovation ability, private domain operation ability, marketing ability to seize young people
In essence, Ruixing is seizing the opportunity of coffee as an energy drink in the young consumer market under the trend of healthy diet. Above the opportunity, Ruixing’s efforts are to ensure that coffee has better taste, healthier products, more convenient purchase and cheaper price.
In addition to Ruixing, manner, m stand, nowwa, seesaw and other local new coffee brands, blue bottle coffee, an American boutique coffee brand backed by Nestle, as well as new tea brands from across the border, and even time-honored catering brands such as Tianjin Goubuli steamed stuffed bun and Tongrentang, have surrounded the current young people through the new wave of coffee.
According to tianyancha data, the number of newly registered coffee related enterprises in 2021 was 25500, with an average of 70 registered every day. From 2022 to the end of February, the number of newly registered coffee related enterprises in China has reached 2224, with an average of 43 established every day.
The swarming coffee forces are all attracted by a magic data: AI media consulting data predicts that the scale of China’s coffee market will be 381.7 billion yuan in 2021, while by 2025, the scale of China’s coffee market is expected to reach 1 trillion yuan.
In order to reach this magic trillion market, Nestle has explored that Chinese people are willing to accept non bitter coffee flavor drinks. Starbucks has targeted the middle class and bet on China’s national fortune, while Ruixing has made a coffee business of “upgrading Nestle’s products and degrading Starbucks’ experience”.
Latecomers are also telling their own coffee story.

But do Chinese people really like coffee?
This question, from Nestle, Starbucks to Ruixing, and then countless entrants, did not give a clear and definite answer to this question.
Because a reality faced by coffee brands in the Chinese market is that up to 95% of Chinese consumers cannot accept black coffee without milk and sugar.
The only certainty is that they are all trying to make Chinese consumers love drinking coffee, so as to get closer to the theoretical trillion market step by step.
Nestle’s “2 + 1”, which initially opened up China’s coffee consumption market, needs to add fat powder and sugar to the coffee powder.
Starbucks, which originally wanted to sell espresso, has made two product innovation attempts in the North American and European markets with coffee consumption habits. One is to add milk and water into the espresso to make it latte and American style; First, the milkshake formula of the acquired company was improved into xingbingle.
The corresponding categories of these two improved products in Starbucks are traditional coffee products and special drinks, accounting for 60% of Starbucks’ revenue. In the first week of its full listing in the North American market, xingbingle sold 200000 cups, which contributed 11% of the company’s sales that year. In the Chinese market, xingbingle has always been the flagship product of Starbucks.
The core reason for Ruixing’s complete emergence is also due to the innovative products that break the boundary of coffee, such as raw coconut latte, velvet latte and thick milk latte. Just like the raw coconut latte called yyds, it not only uses coconut milk instead of ordinary milk, but also needs to add cream and other things to the formula of raw coconut; Another popular velvet latte has a silky taste by adding cream, condensed milk, sugar, etc. in a specific proportion to raw milk.
In Shanghai, there is a brand called o.p.s, which specializes in coffee special drinks. It gives full play to the “cross-border” collocation of coffee with fruit, alcohol, tea and some ingredients. O. P.S has no long-term fixed products. Since its opening in August 2017, P.S has innovated dozens of coffee drinks with different styles.
There’s always something to go with before coffee is ready to be held by Chinese consumers and drunk into their mouths. In other words, what Chinese consumers are willing to pay for is just the novel taste of various auxiliary materials colliding with each other under the unified coffee tone.
Of course, in the past two years when dozens of coffee enterprises have registered, adding something to coffee may not stand out in the fierce competition. The story of adding something different to the third space of Starbucks can always attract some attention. Like the popular bear claw coffee, ollien Ollie’s Pancake fruit with coffee and so on.
There is no doubt that in the Chinese market, coffee must be diversified, fresh and interesting in order to be deeply popular. Adding milk and sugar has long been unable to meet the needs of young people who grow up in an era of material abundance and have a strong curiosity about new things.
Especially in the sinking market where coffee penetration is very low.
Lucky coffee, the coffee brand of Michelle ice city, has always focused on the county and even the town market, trying to make a coffee version of “Michelle ice city”. However, lucky coffee, which has opened more than 500 stores, still needs to hang the explanation “what is a latte? Coffee with milk is called a latte” in many stores.
It is also doomed that coffee, which is continuously added with milk, coconut milk, fruit and alcohol in China’s consumer market, must be told as a milk tea story.
When making the prediction and analysis of the development prospect of China’s coffee market, China Commercial Industry Research Institute also clearly expressed a view: a single coffee drink can not meet the long-term needs of young groups. Coffee brands need to innovate, push through the old and bring forth the new, and be good at creating coffee products with unique “selling points” in order to continuously “stimulate” their purchase desire.
Looking back on the tea industry, isn’t it the same thing?
The tea with milk and Pearl has already become a kind of rice porridge with milk and milk, and some have already become a kind of rice porridge with milk and pearl. Coffee has long appeared in the menus of tea brands such as Xi tea, Naixue tea, coco and miyue ice city.
The fact that 95% of coffee shops are in a state of long-term loss and Naixue’s tea and other brands have been losing money since they were listed shows that coffee and tea are not easy to do. Together, only when the imagination space of the product becomes larger can it have more opportunities to continue to please the current young people.
Even with a variety of ingredients and entering the narrative mode of milk tea, coffee innovation is becoming more and more difficult.
This has also led to different development directions for the current coffee industry. On the one hand, the brand represented by Ruixing continues to deepen product innovation, expand the boundary of coffee menu and accumulate signature products; On the one hand, Starbucks invited back its founder Schultz to make the value of baristas the focus of future development.
Since the launch of xingbingle in 1994, Starbucks has never had a popular product with the same influence. In contrast, Ruixing and coconut group launched a joint product Yeyun latte a few days ago, with a total sales volume of more than 660000 cups on the first day.
After the raw coconut latte, Ruixing’s new products are almost all popular. This is not because Ruixing has a more sensitive sense of smell, but has established a perfect R & D system. Relying on the digital ability, it digitizes various raw materials and flavors, obtains countless product combinations, quantifies and tracks the popular trend of drinks, and improves the probability of product explosion.
However, Starbucks’s development gene and core consumer group determine that it will avoid ruixingmen’s product edge and continue to enlarge its service value-added advantage over selling products under the condition of facing enemies on all sides.
Compared with Ruixing’s cold coffee machine and products defined by data, Starbucks baristas use human technology and temperature to make smooth milk foam and beautiful flowers. In theory, it seems that they can establish higher technical competition barriers and footnote the quality of coffee.
After all, new products are too easy to imitate. After Ruixing’s raw coconut latte explodes, a beverage brand will launch coconut juice related products. A cup of good coffee presented by a barista with technology is difficult to imitate.
Whether the coffee made manually is better than that made by the coffee machine is not a question of different opinions for the time being. But before Starbucks baristas want to bring more value into play, Starbucks needs to solve three problems: labor cost, technical stability and cup efficiency brought by baristas.
According to the financial report of Starbucks in fiscal year 2021, labor cost is one of the fastest growing cost items in the year. Even so, in the huge Chinese market, Starbucks has given tens of thousands of full-time employees an unprecedented 14 salary. After that, Schultz returned to Starbucks again. The first big move is to use the money saved from stopping repurchase and dividends for employees and stores.
To stabilize the barista, we must put real money into it. However, Starbucks, which plans to open 20000 stores in the next ten years, doesn’t know whether it can hold the soaring cost. You know, a lot of news has been revealed. In Ruixing store, the cup speed is one order in 2 minutes.
Although Ruixing strives for efficiency and Starbucks relies on brand premium, can the stable baristas ensure that every cup of coffee produced is recognized by consumers and keep the story of the third space and the premium of the brand at a high level?
It seems that many professional baristas roast about themselves. No matter who has worked for several years or decades, they can’t guarantee that the coffee they make each time must have the same taste.
In other words, the human factor is always the most unstable factor. Compared with the machine production with the same taste, the advantage of baristas is that they can explore a wider space for taste buds. If they can enjoy it, they will be amazed. If they can’t taste it, they even think it’s better to drink a Nestle “2 + 1”.
If a cup of coffee worth more than ten yuan is good, people will think it is the conscience of the industry, but if it is not good, they will not buy it next time at most; A cup of coffee in 20 or 30 should be good, but bad coffee should be scolded.
But this does not mean that the future of China’s coffee market belongs to Ruixing.
Every time Ruixing’s explosive products come out of the circle, what can drive consumers to taste fresh is the “dominant advantage” brought by Ruixing’s convenient stores.
“Dominant advantage” is a phenomenon mentioned by UNIQLO founder Liu Jing in his book “one win and nine losses”, that is, when brands open stores in a certain area and the number of stores reaches a certain number, sales will rise all at once.
The total sales volume of Ruixing Yeyun latte on the first day can exceed 660000 cups, which is inseparable from the “dominant advantage” brought by the convenience of the store. However, this advantage of Ruixing needs to be based on continuous product innovation in order to give full play to it. Otherwise, the operating cost of the store will drag the brand and make it difficult to reach the breakeven line.
This consumption logic of “only when the product is good, consumers are willing to go to the store” will not only be tired of research and development, but also have not many competitive barriers. In the milk tea industry, a small number of fruits are not enough. In Ruixing, I don’t know what milk can support the next “yyds”.
In such a contrast, Starbucks, which has been “popular” for nearly 30 years, seems too easy to make money.
Of course, Starbucks has its own problems. Ruixing is no less difficult than Starbucks.
When Ruixing automatically tells a coffee story by relying on the core of milk tea, he is doomed to be attacked on three sides:
First, in terms of standard Ruixing’s brands in the same circle, manner, m stand, nowwa and other emerging coffee upstarts are eating Ruixing’s market with the highly overlapping positioning of target users and Ruixing.
Second, from the perspective of milk tea brands such as Xi tea and Naixue tea, their prices have begun to go down, and the products have the ability to replace Ruixing. At the same time, Xi tea shares in boutique coffee brands seesaw and Naixue’s tea launch coffee products, which are also cutting into the hinterland of coffee.
Third, if we want to deeply cultivate and sink the market, Ruixing will not only compete with mixue ice city, yihetang, shuyishaoxiancao and chabaidao to seize the young people in the town, but also have a roadblock that directly competes with Ruixing: the lucky coffee of mixue ice city.
On the whole, Chinese coffee that can’t eat “bitter” has told a transformation story of “milk tea” in the hundred years of evolution. From the perspective of Ruixing, which has the most sample significance, the “milk tea” of coffee has its own way of survival, but there are also great development worries.
No matter how China’s coffee market will evolve in the future, we are happy to see that more and more consumers can accept coffee, and people’s drink choices are becoming richer and richer. Whether coffee acceptance is based on the emotional value of the third space, or mixed into the team of milk tea, or other more novel stories.
After all, trying to define what a good cup of coffee is is actually meaningless. For consumers, it is the most important thing to have a cup of coffee anytime and anywhere when they need it. Whether it’s Starbucks, Ruixing or instant, as long as it meets the current demand, it’s all good coffee.
Only when coffee presents different consumption scenarios and covers more consumer groups, can the coffee market really move towards trillion prosperity.
*The pictures in this article are all from the Internet
reference material:
30 years of Chinese coffee: from 0 to 56.9 billion, it broke out at the right time
Starbucks with words of suffering
The “Sinicization” transformation of coffee first financial weekly
Jay Chou and Schultz’s coffee anxiety tiger sniff
Author: financial new media – Yi Buer; Source: mantis observation (ID: tanglangfin), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);

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