China Food

“Li Ning” also sells coffee? Giant cross-border faces three major problems

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selling coffee, Li Ning’s new growth curve?
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The coffee track is never short of new players. This time, Li Ning is carrying the national tide flag.
Tianyancha app shows that Li Ning Sports (Shanghai) Co., Ltd. applied to register the trademark of “Ning coffee”. “Li Ning coffee” has become a hot topic in the venture capital circle today.
According to AI media consulting data, the scale of China’s coffee market in 2021 is about 381.7 billion yuan. Moreover, the domestic coffee market is expected to maintain a growth rate of 27.2%, and the scale of China’s market will reach 100 billion yuan in 2025.  
In the face of such a huge incremental market, traditional giants can’t sit still. In recent years, in addition to Li Ning, from Goubuli, Tongrentang, Wangwang, postal service to PetroChina and Sinopec, coffee business has been established one after another.
In the view of the outside world, traditional giants have inherent advantages such as network channel resources, store cost and flow, which also facilitate them to quickly obtain the advantage of store scale. However, the disadvantages are also extremely obvious, because the core of coffee, tea and catering is “people”. If the brand wants to make coffee well, it needs to improve the brand management concept and the quality of the product itself, so as to break the stereotyped inherent impression of consumers on traditional brands.
How to cross the border? To become giants, we need to think twice.
Coffee, Li Ning’s new growth curve?
The end of the universe seems to be “coffee”. In the past two years, more and more cross-border enterprises have joined the coffee industry. This time, Li Ning came to cross-border.
 
Tianyancha app shows that Li Ning Sports (Shanghai) Co., Ltd. applied for the registration of the trademark of “Ning coffee”, which is internationally classified as catering and accommodation, and the current trademark status is awaiting substantive review. Consumers may not go to Li Ning’s store for another cup of coffee, but for Li Ning’s clothes.
 
Why does Li Ning make coffee? “More exploratory layout.” For Li Ning’s cross-border behavior this time, a brand marketing professional guessed. In his opinion, with reference to the above examples of cross-border predecessors, Li Ning’s entry into the coffee track is indisputable. Even from broken clothes to coffee, it is also in line with Li Ning’s development strategy.
 
“Today’s coffee is essentially a ‘flow’ business, a ‘young people’s’ business.” He believes that from “Li Ning” to “Li Ning in China”, Li Ning returns to glory from the bottom of the valley with the help of cross-border, national tide and youth. However, it is not enough to rely on a “national tide” card to firmly grasp young people. In the face of fierce competition in the clothing industry, once Li Ning loses the favor of young people, he will fall back to the bottom of the valley.
At the same time, it is difficult for Li Ning to make new breakthroughs in the clothing base camp. How to maintain high quality and sustainable development is also perplexing it. “The temperament has been set.” Previously, some analysts commented.
 
At this time, for Li Ning, it is a wiser decision to open up a new track to compete with friends and businessmen for young people’s eyeballs and wallets. Like those cross-border predecessors, Li Ning also focused on coffee. All kinds of players poured into the coffee track one after another. They all focused on the coffee market, which is expected to become the next traffic entrance of the current consumer market.
 
Over the past year, although the new consumer industry has been cold, the story of coffee has always been hot. According to AI media consulting data, the scale of China’s coffee market in 2021 is about 381.7 billion yuan. With the change of public diet concept, China’s coffee market is entering a stage of rapid development, which is expected to maintain a growth rate of 27.2%, and the scale of China’s market will reach 100 billion yuan in 2025.
 
Moreover, compared with other industries, the entry threshold of coffee is not high, the mode is not complex, and the gross profit margin is very high. Coupled with the trillion market, even listed companies and industry giants are also excited.
 
Traditional giants like Li Ning have obvious advantages in selling coffee across borders. Li Ning has the inherent advantages of network channel resources, store cost and flow, and it is also convenient for it to quickly obtain the advantage of store scale.  
 
According to the data, as of March 31, 2022, the number of Li Ning’s sales points in the Chinese market (excluding Li Ning young) totaled 5872. Although the passenger flow of its offline stores has not returned to the previous year, Li Ning still has ultra-high private traffic and brand advantages. In 2020, Li Ning’s marketing expenses (advertising and marketing expenses) were 1.28 billion yuan. Previously, Li Ning Ka point 10:05 Guan Xuan Xiao Zhan was the spokesperson, which raised the heat index to a new level, and the official Xuan obtained 6800w traffic in an hour.
 
However, advantage does not mean victory. Li Ning’s own sports gene seems to be incompatible with coffee, which is also one of its disadvantages. Whether Li Ning can make a success in the field of coffee remains to be tested.
Brand and coffee “fight”, cross-border road is long
In fact, making coffee with traditional brands is not a new thing.
 
On February 14, China Post’s direct coffee store officially opened, which is also the first post office coffee store in China. In addition to coffee, tea and dessert, the store also sells around the post office. On the first day of the opening of the post office coffee, the sales volume of nearly 1000 cups a day has become the first popular local coffee.
 
Coffee brands of PetroChina and Sinopec joined the coffee field earlier than post office coffee.
 
As early as 2018, PetroChina had planned to enter the coffee field and established Kunlun coffee. In order to strengthen the soft power of its own coffee brand, while opening a wide range of stores, PetroChina promoted its coffee in its own gas station and its CNPC convenience store, and labeled all coffee categories as “PetroChina”. Sinopec’s Yijie coffee has opened 21 stores so far, and the coffee produced by gasoline model has been ridiculed as “petroleum coffee” by netizens.
 
Although the traditional brand giants have successively targeted the coffee track and launched their own coffee brands, the brand achievements are not optimistic. During the epidemic period, the hot expansion of Sinopec Yijie coffee stalled, and the supply of “120 yuan +” premium freshly ground coffee of PetroChina was also stopped for a time in the short term.
 
Obviously, giants still encounter many problems in making coffee across borders.
 
First, the general pattern of the coffee market has been determined, and it is difficult for new players to break the game.
 
At present, the domestic coffee market is still dominated by traditional professional coffee brands. In the field of freshly ground coffee deeply cultivated by Internet coffee, Starbucks alone has accounted for more than 50%, while the rest is instant coffee, accounting for almost 90% in the domestic market. Ruixing coffee, which openly challenged Starbucks, is also gaining momentum. In order to quickly occupy the minds of consumers, Ruixing chose the policy of opening stores quickly from the beginning.
 
Secondly, the coffee product itself is inconsistent with the image of the traditional brand.
 
“We just want a good cup of coffee and don’t fix those fancy things.” This is the view of most consumers about all kinds of coffee brands on the market. When it comes to coffee, consumers think more of Starbucks, Ruixing and other professional coffee brands.
 
Compared with PetroChina’s “120 yuan plus” petroleum coffee, a tea drinker complained to the pencil roast, “why don’t I drink Starbucks at this price, and I can buy a Starbucks cup. And will PetroChina’s coffee really taste good?”
 
The analysis will find that PetroChina and Sinopec, as the two largest state-owned energy and oil enterprises in China, have a deep-rooted brand image in the hearts of consumers. Although it is possible to create a burst of money temporarily only through money burning and large-scale marketing, it will never be able to establish a truly valuable brand. Therefore, the first reaction of most consumers when they hear that PetroChina and Sinopec make coffee is not curiosity, but doubt.
 
Therefore, some people in the industry believe that to get out of the coffee track, the top priority is to establish brand barriers, obtain wider user recognition and a larger fixed consumer group. In order to do this, traditional brands need to break through the characteristics of the brand and combine the characteristics of the brand with coffee. This is also the most important problem that cross-border giants need to face.
Whether it is coffee, tea or catering, the core is “people”. If a brand wants to make coffee well, it needs to improve the brand management concept and product quality, and break the stereotyped inherent impression of traditional brands. There is nothing wrong with the behavior of traditional brands that want to cross-border, but how to cross-border? How can we cross the border? These all need to think twice.
作者:韩希言、洛重阳;编辑:呦呦;来源:铅笔道(ID:pencilnews),转载已获得授权。
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