Why is coffee getting sweeter?

In the coffee brand's new menu this fall, flavor addition has become a common theme: Luckin moved out of the apple velvet latte from a year ago, Manner launched two new products, Coconut King American and Passion Fruit Bubble American, and M Stand launched an American series of ice floes including berries, melons, lychees and more
.
A common feature of the major new products is that they are getting sweeter
.
The reason is that the introduction of fruit juice, the increase in fruity flavor and various "special blends" have made beverageized coffee a new choice
for the younger generation.

Coffee beverages have become a new standard

Depending on the origin, climate, and altitude, the coffee beans themselves have a rich flavor map, but in the past, they were more in boutique cafes, corresponding to higher purchase costs
.
New coffee is trying another product route, while maintaining the original price band, introducing a variety of flavor ingredients and innovative processes such as fruits and vegetable milk
.

Coconut milk is the "new Internet celebrity" of flavored coffee, and it can be found in large and small coffee chain stores
.
According to Luckin's Q2 2022 financial report, Coconut Cloud Latte has sold more than 24 million cups
since its launch in April this year to the end of the second quarter.

Along with the raw coconut latte, there is also Luckin's supplier Fino
.
The coconut-based plant-based milk supply chain company has so far rolled out to more than 130,000 coffee and tea stores
across the country, including Luckin.

A coconut-based vegetable milk entrepreneur said that in 2021, Fino achieved sales of 700 million yuan, and suppliers have natural obstacles to developing the C-end market, generally low brand awareness on the C-end, and it is difficult to make marketable products
.
Dexin Foods, which also supplies Luckin, has taken the lead in attacking
the IPO.
According to Dexin's prospectus, it supplies many types of products downstream, including a variety of beverage syrup, flavored syrup, beverage ingredients and other ready-made beverage ingredient series
.

Coffee itself is addictive, but as an imported product, most domestic consumers do not buy it, and "bitterness" is a common taste cognition
.
In the past, all kinds of flavored coffees were more often on the few specialty menus of boutique cafes
.

Li Peng, a supplier of coffee raw materials, believes that compared with milk tea, coffee is "not delicious and not good-looking" for many people, and milk has solved some of the problems of good taste in the past, and coconut milk itself has a higher fat content, which will make the coffee taste fuller
.
Similar juice thick pulp is not only more palatable, but also makes the coffee more distinct and looks better
.

Especially for new users who have not drunk coffee, the market education effect of flavor blessing is obvious
.
Incubated by Michelle in 2017, the affordable coffee chain brand Lucky Coffee mainly focuses on the sinking market, and after the menu iteration, it gradually moves closer to the flavor, including coconut latte, iced lime coffee, osmanthus wine brewed latte and other flavored coffees
.

Specialty drinks are the focus of
Brew Coffee's product innovation.
When it opened its first offline store at the end of 2020, it tried to launch five or six specialty drinks, and now including two series, nitrogen and creative flavors, specialty coffee now accounts for about 50% of the store's menu
.

"Nitrogen Ice Coconut American" is one of the special products of Shicui, unlike the common nitrogen coffee, Shicui injects nitrogen into coconut green and coffee liquid, "Nitrogen coffee is essentially black coffee, and it is still difficult
for the public to choose.
" ”

There are many types of ingredients for flavored coffee, and compared with the limited options of plant milk such as coconut milk and oat milk, there are more types of raw materials added to the fruity flavor, and the juice alone can be further divided into four categories
: pure juice, jam, minced fruit, and frozen juice.
Depending on the type of use, the cost, taste, and storage conditions are significantly different
.

Li Peng said that the most widely used juice in fruit juice is concentrated juice, which can be guaranteed to the greatest extent
compared with fresh fruit.
"Fresh fruit is a crop, the taste stability is low, and there is no guarantee that each fruit will taste exactly the same
.
"

Easy transportation and storage is another significant advantage of
fruit juice concentrate.
According to an interview with industry experts by Jiuqian Consulting in October last year, before thick coconut milk, Fino used frozen coconut products to focus on the catering channel in 2020, but the market response was mediocre
.
An important reason for hitting the wall is that frozen coconuts require cold chain transportation and frozen preservation, which increases the overall cost of
use of the store.

Although the offline catering industry has been generally cold in the past period, the momentum of coffee chaining is strong
.
According to industry statistics, in the first half of this year, the top ten coffee brands in terms of store size have maintained an expansion posture
.
In addition, the growth rate of coffee chain brands with a scale of 300-500 reached 295.
97%.

The prosperity of chain brands is leading coffee flavor innovation to a new level
.

Limited upstream options Formulations are at the core

Similar to fruit tea, flavored coffee also exhibits strong seasonal characteristics
.
Cao Yuzhi, founder of Crooked Coffee from Ningbo, Zhejiang Province, said that crooked coffee does not make reverse seasonal fruits because of the high cost, and their regular practice is to buy fruits at the end of the fruit season and process them into the corresponding coffee special fruit pulp
at the factory end.

"Fresh fruit is not only non-standard, but also easy to wear
.
" In Cao Yuzhi's view, compared with the use of fresh fruit and syrup for blending at the store end, the upstream processing method of special blending is more standardized and the cost is lower
.
Cao Yuzhi believes that Starbucks' model cannot be copied, but there are still many opportunities for new brand product innovation, "It is nothing more than reverse customization and making your own formula, which is the core
.
" ”

Coffee flavor raw materials such as fruit juice and fresh fruit have an early application basis in the tea market, and promote the listing process
of raw material suppliers such as Tianye Co.
, Ltd.
and Baoli Food.
The early development of tea chains such as Mixue Ice City and Heytea has also paved the way
for coffee flavor innovation in advance.

In Fan Ruoyu's view, from the perspective of supply chain, tea brands have done the standardization of the upstream, part of the supply chain resources can be reused in coffee, for those parts that cannot be reused, it can be promoted synchronously with smaller factories, and the degree of cooperation will be higher
.

Compared with tea, the high gross margin level of coffee does reserve enough "special" space
for various brands.
But for coffee brands, the upstream supply chain currently has little
room to choose from.

"Large companies like to do standardization and scale, but coffee special juice is still relatively rudimentary
.
" Li Peng said that the three largest suppliers of special juice in China are fresh and fresh, dexin food, and new juice; in the past, the main customers were restaurants, milk tea shops, and more processing plants
with production capacity but smaller volume.

Similar to the upstream boom of tea, the chaining of coffee will also promote the development of
upstream supply chains.
Compared with the competitive tea market in the Red Sea, although coffee seems to have great potential, it will not impress upstream factories
much in the short term.

Cao Yuzhi believes that compared with tea, the upstream supply chain of coffee is now facing two problems, "small factories lack processing technology, large factories have corresponding technology, but need downstream business volume, otherwise it will not be done
.
" ”

In Cao Yuzhi's view, a clear difference between coffee and tea is that the order of capital entry is different
.
"Tea capital is late-stage, coffee capital is
early-stage.
The entry of capital is accompanied by more fierce competition in the market, and supply chain, resistance to blows and financing ability are the key, otherwise they will be eliminated
.
”

China Food News(November 07, 2022 07th Edition)

(Editor: Luo Chen)