China Food

It’s hotter than freeze-drying, and new species are running out of the trillion coffee track?

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from cold chain to normal temperature, the change of technology and the construction of supply chain have opened a new market for the landing of coffee liquor in China. How can the 10 billion expectation of coffee liquor be realized in the future?
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Text: Maggie Zhang

Source: foodaily daily food (ID: foodaily)

 
“Providing coffee service in the store will be an innovative attempt of Li Ning for the retail terminal consumption experience.”
 
Tianyancha app shows that recently, Li Ning Sports (Shanghai) Co., Ltd. applied to register the trademark of “Ning coffee”. Netizens joked: “the gymnastics prince who doesn’t drink coffee is not a good sneaker” and “shoe flavored coffee?”
 
Source: Baidu
 
In fact, it is not just Li Ning, who sells shoes, who chooses to join the coffee track. From Tongrentang, who sells medicine, Goubuli, who sells steamed stuffed buns, to traditional giants China Post, PetroChina and Sinopec, more and more players from all walks of life come to rub the “heat” of coffee is no longer new.
 
The reason why brands cross-border rush to eat is nothing more than to focus on the rigid demand and high growth potential of the coffee track. From the consumer side, the upsurge of hoarding coffee caused by the Shanghai epidemic has actually reflected the high “addiction” of young people in first and second tier cities to coffee, which is an essential part of their daily life and work.
 
According to the consulting data, the scale of China’s coffee market will reach about 1.7 billion yuan in 2025, and the domestic coffee market is expected to maintain the growth trend of about 1.7 billion yuan in 2021. This means that there is still a huge market space for coffee in China.
 
This humble berry from the Ethiopian plateau in Africa has completely stirred up China’s new consumer market five centuries later. After the entire capital market bet 17 billion yuan on it last year, it is certain that the war in China’s coffee market will intensify in the future.
 
In the more subdivided convenient coffee track, the competition over coffee categories has already sounded a new horn for rising stars, and the protagonist is coffee liquid.
 
Kun Cheng, the person in charge of tmall coffee, judged that coffee liquor has increased by more than 300% on tmall platform in recent years. It is expected that it will quickly become a 10 billion market in the future.
 
Hotter than freeze-drying? New coffee species are on the rise!
 
Homogenization after hot, frozen and dried coffee trapped in inner roll
 
As we all know, the rise of domestic high-quality instant coffee began in 18-19 years, and the popularity of this track is accompanied by the new concept of freeze-dried coffee.
 
In August 2018, tmall went online for three and a half times. On the double 11 of that year, tmall ranked second in sales of the same category, second only to Nestle, and became a new star in the coffee market. Its popular product, cold extraction and instant, also brought fire to the concept of “freeze-dried coffee”, which not only attracted many followers, but also changed the concept of Chinese consumers that instant coffee is equal to “three in one”.
 
Since then, freeze-dried coffee has ushered in the high light of the market, stirring the traditional instant coffee track and rapidly setting off a wave of innovation. International coffee giants and domestic cutting-edge coffee brands have given upgraded selling points and experience to the traditional instant coffee around the concept of freeze-drying, from packaging to taste to scene and so on.
 
With the increase of entrants, the packaging creativity falling into the same topic, the increasingly high marketing cost, the questioned cost performance, and the inner volume of freeze-dried coffee are obvious. Under the upgrading wave of high-quality instant coffee led by freeze-dried coffee, more and more forms of convenient coffee products are exposed to the public, and coffee liquid is one of them.
 
Leapt to the category with the highest efficiency of tmall, and coffee liquor has become a new position for food grabbing!
 
Photo source: tmall’s insight into the online coffee trend in 2022. You can watch the live replay at the end of the article
 
According to the data of tmall, the growth peak of freeze-dried instant coffee was about 19 years. By 2020, the growth of coffee liquid on tmall platform has begun to show signs.
 
Kun Cheng, the relevant person in charge of tmall coffee, said that coffee liquor has become the new category with the highest innovation efficiency of tmall at present, with an increase of more than 300% every year. The sales volume of coffee liquor in 2021 has reached 100 million, about 17 times that in 2019. It has become the second largest category in Taobao tmall coffee industry. It is expected that this category will reach 10 billion market in the future.
 
Source: otech consulting
 
From the perspective of brand port, Yu Tianchuan, the main coffee liquid, has performed well since last year. In August 2021, it surpassed the three and a half meals in the anti Tu list for many years. Yongpu, the same main coffee liquid, also performed extraordinary. In 2021, it received more than 50 million a + round financing, and the whole a series financing was more than 100 million yuan.
 
Source: solution consulting
 
At present, a number of cutting-edge coffee brands growing up on tmall platform have sold more than 100 million single products, and more players are pouring into the coffee liquor market. The data show that the number of coffee liquor merchants has increased 20 times compared with 2020. Obviously, coffee liquor is becoming a new position for brands to enter the instant coffee track after freeze-dried coffee.
 
“Abandon” freeze-dried coffee, young people prefer to embrace coffee liquid?
 
“Seizing the young group is equivalent to seizing the future of Chinese coffee.”
 
According to cbndata data, China’s coffee consumers show a younger trend. In the statistics of coffee user portraits, consumers aged 20-35 contribute nearly 80% of coffee consumption, of which women are relatively more, and consumers are concentrated in first and second tier cities.
 
Among the young people who love tasting, coffee liquid has become the most popular category of high-quality instant coffee. According to the 2022 trend white paper released by tmall on April 15, the proportion of people under the age of 30 in coffee liquor is the highest among all coffee categories.
 
Photo source: tmall’s insight into the online coffee trend in 2022. You can watch the live replay at the end of the article
 
It seems that coffee liquor is really popular. As a new species of instant coffee track, how did coffee liquor develop? What kind of market gap has it filled? Can coffee juice surpass freeze-drying to become a new opportunity for the coffee industry? Where will coffee liquor go in the future?
 
What’s the reason for the coffee liquid in the fire?
 
What is the difference between freeze-dried coffee and coffee liquid in terms of technology?
 
First of all, we need to understand that the deep processing of coffee mainly includes five steps: baking, grinding, extraction, concentration and drying. Different products will be produced in different processing stages. Therefore, in the field of portable coffee, different segments such as ear coffee, coffee liquid and powdered instant coffee have been derived in the market for different processing stages.
 
Coffee liquid is the liquid coffee extracted from ground coffee powder. In fact, freeze-dried coffee is the reprocessing of cold or hot extracted coffee solution, which is finally formed after concentration and drying. Due to the freeze-drying method, the taste is closer to the freshly ground coffee, so it is different from the traditional instant coffee.
 
 
Make coffee more logical
 
Coffee liquor, which is better in solubility, has more room for expansion in consumption scenarios. The characteristic that coffee liquid can be dissolved in a variety of liquids not only meets the characteristics that Chinese consumers prefer coffee drinks, but also fits the young people’s consumption habits of pursuing individuality and freshness, making drinking coffee more interesting.
 
 
In China, coffee liquor has long been “more than coffee”. Search the notes related to “coffee liquor matching” in xiaohongshu, and “home-made”, “self-made by migrant workers” and “necessary for student party” have become the most high-frequency content. The meaning of coffee liquid is being broadened. Compared with pure coffee, consumers are eager to create a leisure drink suitable for a variety of scenes.
 
It can be said that under the background of consumption upgrading and the popularity of beauty economy, coffee liquor uses richer scene contacts, which greatly reduces the consumer education threshold of high-quality coffee.
 
 
Take yongpu as an example. Yongpu’s normal temperature coffee solution can be dissolved in water, milk and bubble water. Compared with powdered instant coffee, it can have a cup of fruity bubble coffee without stirring, which once again reduces the threshold for more ways to play coffee.
 
Yu Tianchuan, who also attaches importance to coffee liquid, makes coffee more exquisite. The matching combination of Sprite, lemon, ice cream, even pudding and marshmallow has been broken through again and again.
 
 
Therefore, for new brands without the burden of orthodox coffee, getting rid of the serious style of traditional coffee, coffee drinks may be an important way for them to open up a larger market. “We can make a more popular coffee beverage market, and from the perspective of beverages, flavoring must be an important trend.” The iron sheet of yongpu coffee once said so.
 
What has coffee liquor experienced from niche to popular?
 
Start with cold coffee extract
 
In 2016, when Starbucks began to promote cold extract coffee, tin began to think about how to concentrate cold extract coffee into bags. A year later, yongpu invested in an entrepreneurial factory in Qingdao and made cross investment through stock exchange, so as to ensure rapid process adjustment and long-term cooperation in the future.
 
In 2017, when ear hanging and instant are still the mainstream, tin and this Qingdao coffee processing factory jointly developed the first portable cold extract coffee liquid, creating a category of “coffee liquid” in China.
 
However, the transportation cost of cold chain coffee liquor is high and the use scenario is limited. Therefore, the necessity and urgency of developing normal temperature coffee liquor are reflected.
 
Curve to overcome the problem of normal temperature
 
The room temperature espresso we know today is a coffee production technology applied in Japan in 2002. Because of its easy dissolution and high quality, many local coffee brands in Japan like to make and sell all kinds of iced coffee in hot summer. According to the survey of Fuji economy, a Japanese market analysis company, the scale of capsule espresso in the Japanese market is expected to reach 2.75 billion yen (about 180 million yuan) in 2020.
 
In the past, domestic brands and businesses could only look for Japanese normal temperature coffee solution factories for production, and the high transportation cost restricted the development of coffee solution market. Moreover, the foreign supply chain system is greatly affected by uncontrollable factors. For most early consumer brands, it is difficult to put into operation and build packaging plants and baking plants independently.
 
“Although Japanese production still has advantages in technology, it also has certain limitations,” Tiepi said. This is mainly reflected in the cost control and the speed of product innovation. “15% tariff can not be saved, and its flexibility.”
 
In addition, he also said, “including the uncertain factors of shipping, last year we were transporting a batch of goods to Shanghai. As a result, we encountered a typhoon, and then it had to return, which put our whole product at risk of out of stock.”
 
Platform support and multi-party cooperation to achieve a breakthrough in local normal temperature coffee liquor
 
At that time, the coffee liquor market was still in a very small stage in China, and the construction of supply chain system was the key to strive for a bigger cake.
 
At this time, the help of a more powerful platform is very important. Tmall and other platforms are inclined to the resources of coffee liquor, which has also become a major breakthrough in the popularity of coffee liquor in the domestic market.
 
Damin food (Zhangzhou) Co., Ltd. started by making tea and plant extraction. According to Zou Feng, general manager of domestic sales of Damin food, the company has been in contact with tmall since 2019. After nearly a year of repeated communication and contact with coffee brands, the company finally decided to join the coffee juice track. In the first half of 2021, with the joint efforts of tmall platform, coffee brands and merchants, the first normal temperature factory in China was put into operation.
 
The platform uses its own advantages to guide consumers, connect and integrate merchants and factories, promote the upgrading of the supply chain, officially bring the category of coffee liquid to the public view, and boost the surge in sales.
 
In the first half of 2021, yongpu started the cooperation of Damin food in the R & D and upgrading of normal temperature coffee solution products, and officially launched the first batch of domestic coffee solution on the double 11 that year. Among them, the first coconut flavor product has become a star product in the store. The data performance is also very bright. In 2021, the sales volume of yongpu e-commerce platform tripled compared with last year, from 100 million to 300 million, and achieved the first achievement in tmall coffee liquid category in the 618 promotion of that year.
 
 
How to realize the 10 billion expectation of coffee liquid?
 
From cold storage to normal temperature, coupled with the opening of the local supply chain system, it has opened a new market for the landing of coffee liquid. Over the past two years, there have been brand layout of coffee liquor as a sub circuit. Yukotagawa, seesaw, Colin, Jiyin and even coffee giants including Nestle have successively entered this sub circuit and launched coffee liquid products,
 
Both coffee liquor brands and platforms such as tmall are optimistic about the future of coffee liquor. From tmall’s insight, “coffee liquor may grow rapidly to 10 billion in the next few years”. So where is the opportunity space for coffee juice in the future? How to realize the 10 billion expectation of coffee liquid?
 
Efficient and stable, fast production, online and offline complementarity become a new increment
 
Coffee liquor is also gradually becoming a new weapon used by offline coffee stores. Compared with instant coffee, coffee liquor is closer to the quality of freshly ground coffee in stores and a powerful supplement to freshly ground coffee, which also means that there is still a lot of incremental space for coffee liquor from online to offline or from offline to online in the future.
 
As one of the few boutique instant coffee brands in China that put offline stores and online sales in the same important position, Shicui obtained tens of millions of a + round financing in February last year. More than 90% of its offline stores have special coffee, and more than one third of its products are completed by coffee liquid and premix.
 
Fan Ruoyu, its founder, said, “with these products, we will not lose flavor, and our overall production efficiency will be at least more than twice. We can produce a latte in 45 seconds and an innovative product in about 1 minute to 1 minute and 30 seconds.”
 
 
Moreover, the application of prefabricated coffee liquor in offline stores also ensures the consistency of the quality of coffee produced, especially in the case of the surge in coffee demand in a short time, it is difficult to ensure the stability of quality by manual production. “
 
“We have a lot of offline coffee exhibitions throughout the year, including the professional coffee exhibitions just mentioned, including coffee festivals and music festivals. In order to produce quickly, for example, I have to produce 800 to 1000 cups a day in strawberry Music Festival. At this time, coffee liquid is a very good choice for us. At the same time, we also have a lot of CO branded specialty products, and we will give priority to using coffee liquid for this kind of products 。”
 
Penetrating the sinking market will become an important proposition for coffee liquor in the future
 
According to Deloitte’s report in April 2021, in 2020, as the primary penetration place of coffee culture, the penetration rate of coffee in the first and second tier cities has reached 67% with the increasing acceptance of coffee by consumers and the continuous formation of coffee drinking habits.
 
Among consumers who have developed coffee drinking habits, the per capita annual coffee consumption in first tier cities is 326 cups, that in second tier cities is 261 cups, while that in Japan, the United States and South Korea is 280 cups, 329 cups and 367 cups respectively.
 
 
This means that although China’s coffee market still has great development potential, the first and second tier cities are close to saturation. With reference to the development logic of new tea gradually penetrating from the first and second tier cities to a larger sinking market, the instant coffee market will also usher in a wider range of mental education in the future.
 
From the perspective of the future development trend, with the further improvement of the supply chain system in the future, the cost structure of coffee liquor will be more optimized, which will also give cutting-edge brands more space to try to develop more new products to meet the needs of users in different price segments.
 
From the perspective of its own scene and price advantages, the logical characteristics of coffee drinks it meets also help it expand to the sinking market. Tmall data show that young people in strength Town love cross-border coffee best. After all, young people in the town don’t need a bitter drink to refresh themselves and complete the work of 996. On the premise of consumption upgrading, coffee drinks are obviously more friendly to young people in the town.
 
Summary
 
As the coffee category with the highest innovation rate on tmall platform, coffee liquor has become the main product of more and more coffee brands and the first choice for new players. We believe that based on the changes in domestic coffee consumption habits, the scene and flavor experience advantages of coffee liquor itself, coffee liquor is indeed expected to become the potential incremental space of the coffee market in the future.
 
Of course, with the popularity of coffee juice and the increase of entrants to this track, the competition of coffee juice track is bound to fall into more and more problems. But for the players who are currently on this track, they are not afraid of such problems, but jointly expand the cake and strive to achieve the differentiation of their own brands and the in-depth experience of users.
 
In the domestic high-quality instant coffee market where there are still “less monks and more porridge”, let’s wait and see what more fresh stories will be output from the coffee solution.
 
Eggs: tmall Taobao has become an important position for coffee lovers. Tmall coffee will release relevant reports on China’s coffee market trends and product innovation based on tmall Taobao platform, hungry, Ali mother and other databases every year, so as to gain insight into the latest trend of China’s coffee consumption and boost the brand layout and future e-commerce operation strategy.
 
At 15:00 on May 18, foodaily daily food and tmall coffee jointly launched the 2022 online coffee trend insight report, and invited Kun Cheng, a senior operation expert in tmall coffee blending industry, to share it live.
 
Click the picture to view the live playback
Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
Join the community: Cherry (micro signal: 18261804307).
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