Coffee consumption is surging a new wave

Reporter Wang Jinchen

"Let's go, go get some coffee!" This is an "agreement"
that Ms.
Wu, who works at a technology company in Beijing, fulfills every day with her colleagues.
Coffee drinking has become a part of life, and coffee consumption has become part of daily expenses, which is not only common in first- and second-tier cities, but also gradually radiates to third- and fourth-tier cities
.
With the further popularization of coffee consumption, the expansion of consumer groups, and the rapid development of China's coffee market, new enterprises are constantly emerging to promote product category diversification, brand localization and online and offline integration of marketing, reflecting that China's coffee consumption is surging a new wave
of daily and rigid consumption.

Local brands are rising, and the market size continues to grow

Coffee, a mysterious power originating from the African plateau, has fascinated countless people, and even "addicted" black happy water, is expanding
rapidly in China, one of the world's most powerful economies.

Throughout the development of China's coffee market, it has gone through the change from new experience, social experience, diversified consumption scenarios, to today's quality consumption stage, realizing the transformation from the primary demand of products to the demand of self-value satisfaction
.

In the past, for a long time, coffee was almost the world of foreign brands, and Nestlé and Maxwell still occupied a large share in the instant coffee market; Coffee chains such as Starbucks have a large fan base in freshly ground coffee; Fast food chains such as McDonald's and KFC and convenience stores have also launched coffee products
.

In the past two years, local coffee brands have risen rapidly, such as Manner, seesaw, Santong and a half and a series of domestic brands, and now new brands have emerged in the coffee track, innovation is endless, and the competition in the entire industry is becoming more and more fierce
.

According to Frost & Sullivan's data, China's coffee market will develop rapidly from 2013 to 2018, with a CAGR of 29.
54%, and is expected to continue to grow at a compound growth rate of 25.
99%, and the coffee market size is expected to reach 180.
6 billion yuan
in 2023.

Size of China's coffee market (Data source: Internet public information, compiled by Tianyancha Research Institute)

In China's coffee market, instant is still the mainstream, and the proportion of freshly ground is increasing
.
Freshly ground coffee in major countries such as the United States and Japan accounts for the main body of the market, while China's mainland market is still dominated by instant dissolution
.
With the gradual penetration of coffee culture and the development of supply-side chain coffee brands, the proportion of freshly ground coffee in the mainland market continues to increase, rising by 21.
5pcts from 2017 to 2020, and freshly ground coffee will contribute to the main increment
of China's coffee market in the future.

Tianyan inspection data shows that up to now, there are more than 170,000 coffee-related enterprises in China, of which more than 23,000 are newly registered related enterprises in 2021, and the growth rate of newly registered related enterprises has reached 18.
9%; From the perspective of geographical distribution, the number of related enterprises in Guangdong, Yunnan and Jiangsu ranks first, with more than 34,000, more than 16,000 and more than 11,000 respectively; from the perspective of establishment time, 42.
2% of related enterprises were established within 1-5 years, 18.
8% of enterprises established within 1 year, and 10.
9%
of enterprises established more than 10 years.

Top 10 regional distribution of coffee-related enterprises (data source: Tianyancha)

The supply and demand ends have been iteratively upgraded, and the coffee market has entered the fast lane of development

From instant coffee to freshly ground coffee, the continuous enrichment of product categories, and then to the "iterative upgrading" of consumers themselves, the deepening of the understanding of coffee, coupled with the continuous efforts of both ends of supply, China's coffee market has gradually entered the fast lane
of development.

(1) The demand side is constantly iteratively upgraded

1.
Category education is initially mature

Nestlé enlightened Chinese its understanding of coffee with the phrase "tastes great", and many Chinese trendy Chinese families at that time had a large can of granular Nescafe instant coffee, and then accompanied by a coffee companion, there were guests to make a cup of fashionable coffee, very face
.

Freshly ground coffee, represented by Starbucks, equates its brand image with high-end and Western life to create emotional resonance and identity, and carries out the transmission of coffee culture between generations from the business scene and office in the context of the pursuit of Western fashion as the trend in China at that time
.

Luckin, the birth of the English name "luckin coffee" completely disrupted China's freshly ground coffee market, the logo of the small blue cup, buy 10 get 10 free wool have made the previous dripping "coffee" not stained, drink their first cup of coffee, no matter how the subsequent development feels unexpected, but Luckin with the help of the Internet, to a certain extent popularized coffee knowledge and culture, for the education of China's coffee market is also its own contribution
.

2.
Consumption upgrading drives new demand for coffee

As an optional consumer good, economic growth, the increase in disposable income of residents, and the increase in the proportion of the middle class are the basic plates
that cannot be separated from the rise of the coffee industry.
To a certain extent, consumption upgrading represents the upgrading of residents' life concepts and the yearning
for a better life.
The attributes and characteristics of coffee just meet the new consumption needs of the people, such as: decompression, the physiological needs of weight loss, the spiritual needs of delicate and pleasing oneself and a wide range of social needs
.

3.
Structural changes in consumer preferences caused by intergenerational changes in the population

The change in consumption concept between generations is related
to the environment in which they grow.
The post-90s and post-00s generation grew up in the Internet era, they pursue individuality and quality, have a higher preference for "self-pleasing" consumption, and have a higher
acceptance of new things.

(2) The types of supply-side products are becoming increasingly rich

1.
The rise of the Internet coffee model

The "marriage" of coffee and the Internet has added more possibilities
for the development of the coffee industry.

Prices are downward Small shop model rents and decoration costs are reduced, ensuring profit margins and lower prices
.
Most of the typical Internet cafes are located in key business districts and office buildings, focusing on take-out, and the space and labor are basically the ultimate "cost performance", so that the product price has a large room
for decline.

Diversified consumption scenarios Office buildings, gas stations, university campuses, airports, stations and other places have become the second growth curve of the coffee market, due to the particularity of its geographical location and the characteristics of the personnel structure, whether it is a rapid response to the needs of white-collar workers or the price priority of students, coffee can be better satisfied
.

Another factor that cannot be ignored: takeaway
.
Internet coffee makes takeaway and self-pickup effectively expand the service radius of a single store and enhance the imagination
of service scenarios.
To a certain extent, takeaway breaks the limitations of space and time, allowing consumers who love coffee to enjoy delicious coffee
anytime, anywhere.

Convenience and speed become the theme of consumption The rapid development of SaaS enterprises and the wide application of mini programs have effectively realized online order and offline self-pickup, stimulating the convenience demand
in fast-paced life.
The consumption form of click-and-go is also suitable for migrant workers at work, for many "lazy star people", it has long been impossible, and now the convenient consumption method is simply their savior
.
Place an order on the way to work and pick it up at the store, so that migrant workers can drink delicious coffee without delaying their work time, killing two birds with one stone
.

Cross-border players emerge endlessly Michelle Ice City established LuckyCup Lucky Coffee and launched a new product "Coconut Ice Extract", which was simultaneously launched in stores across the country; CoCo Tea Drinks established a new coffee brand CoCo cafe; The newly launched coffee brand "Yuanyang Coffee" focuses on new Chinese coffee, and the first batch of 5 stores are concentrated in Changsha Wuyi Business District, and many cross-border players such as Post Coffee and Li Ning's NING COFFEE have entered the coffee market
.

List of coffee crossover players (incomplete statistics, as of November 9) Data source: Internet public information, compiled by Tianyancha Research Institute

2.
Synergistic development of freshly ground coffee and instant coffee

Fine instant coffee began to counterattack In the past memories of many people, coffee is synonymous with bitterness, because the quality of coffee beans is poor, and the high temperature process of spray drying is easy to lose aromatic substances and insufficient aroma
.
With the advancement of technology, boutique instant coffee represented by capsule coffee began to occupy the minds of users
.
High-quality instant coffee, select high-quality coffee beans, using freeze-drying technology and coffee liquid concentration technology, so that the taste and aroma are closer to freshly ground coffee, and the fusion speed is fast and the storage is convenient; Some boutique instant brands also offer hanging ear coffee
.

Patent data of coffee-related enterprises from 2012 to 2021 (data source: Tianyancha)

Multiple categories to choose from When experiential consumption (obtaining psychological satisfaction) evolves into everyday consumption, consumers will begin to consider price and convenience
.
For consumers, the pursuit of cost-effectiveness is the eternal theme when choosing to buy products, and different groups of people have different demands
for the price elasticity and convenience of coffee.
Both freshly ground coffee and instant coffee on the market today offer different types of coffee for consumers to choose from
.

Shanghai holds the top position in coffee financing, and the angel wheel dominates

The boom in the coffee market is related
to the boost of venture capital behind it.
After the rise of new consumption after a wave of "random flowers and gradually charming eyes", the coffee track slowly won and was favored
by investors.

Typical investment and financing events of coffee-related enterprises (partial display) Data source: Tianyancha

In terms of financing events, Shanghai, Beijing, Guangdong and Hunan, these four places lead the country in the number of coffee financing events, of which Shanghai ranks first
with 55.
According to data from Meituan's "2022 China Coffee Consumption Insight Report", as of the first half of this year, there were 7,857 cafes in Shanghai, 3.
16 cafes per 10,000 people in Shanghai, and an average of 1.
3 cafes per square kilometer, making it the city
with the largest number of cafes in the world.
At the same time, domestic local high-quality coffee brands such as Manner, Nova Coffee, M Stand, and Seesaw all originated in Shanghai and gradually went nationwide
.

Geographical distribution of coffee-related corporate financing events (data source: Tianyancha)

From the perspective of financing rounds, early investment still occupies the mainstream, seed round, angel round, pre-A round, the sum of the three financing events accounts for more than 50% of the whole, and the "volume" of the coffee market has not stopped
.

Distribution of financing rounds of coffee-related enterprises (data source: Tianyancha)

From the perspective of investment institutions, Meihua Venture Capital, Fengrui Capital, Gaorong Capital, Kuanzhai Capital and Tiantu Investment have made more shots in the coffee market, among which, Meihua Venture Capital ranked first
with 5 investments.

In addition to the primary market, in the secondary market, many catering stocks such as Luckin and Naixue are listed, and the gradual improvement of the exit mechanism has also given more institutions the confidence to participate in the investment and financing
of coffee.

Taking neighbors as a guide, the future of Chinese coffee

Coffee, from the traditional sense of drinks, to the brand building of enterprises, and finally form a coffee culture that the public can participate in and understand, which is the only way
for a product to develop and grow.

Japan, a neighboring country, is an East Asian country, and its development path is worth learning from
.
From the opening of the first café in Tokyo in 1888, from the highly dense vending machine to the canned coffee brought "convenience" consumption mode, to the canned coffee can not meet its demand for quality improvement, to specialty coffee and freshly ground convenience store coffee to drive the further development of the Japanese coffee market, has provided a clearer route
for the development of China's coffee market.

Since 2019, China's per capita GDP has exceeded 10,000 US dollars, which is at the level of the 80s of the 20th century in Japan, when the Japanese economy is in the growth rate shift period, per capita GDP improvement and consumption upgrading make the Japanese people begin to pursue high-quality and personalized consumption methods, coffee imports ushered in rapid growth, and the convenience of self-service vending machines accelerated the penetration of coffee culture, and the coffee market experienced 20-30 years of development to reach its peak
.
China is currently entering the era of consumption upgrading, the Internet and takeaway to improve the convenience of coffee, refer to the development of the Japanese coffee market, with the rise of the economy, China's coffee market will usher in rapid development
.

Tianyancha Research Institute believes that coffee, as an "imported product", has completed the transformation from personalized to popular, and gradually penetrated into people's lifestyles, and the functionality and sociality are becoming more and more prominent
.
The high frequency, high repurchase and high addiction characteristics of coffee are also important reasons why brands are eager to create scale effects, when drinking coffee becomes a rigid need of the Chinese people, then coffee shops may be as
ubiquitous as convenience stores.

Responsible editor: Zhang Jiazhen Review: Peng Zonglu