Production | Huxiao Commercial Consumption Group
Author | Miao Zhengqing
Title | Visual China
The coffee is hot.
In July, coffee supply in Shanghai, Beijing and other places recovered rapidly. come from Starbucks According to the information of, since June 29, more than 800 Starbucks in Shanghai have officially resumed their meal. The relevant personnel of Ruixing told Hu Xiang that up to now, almost all the stores in Shanghai have returned to work, and in Focus buildings near all the stores in Shanghai, Ruixing's "Ruixing Festival advertisements" are all over the elevators.
The rapid recovery of supply has brought a wave of coffee consumption fever. Zhao Ming, who runs a coffee shop in Shanghai, told Hu Xiao that since July, the customer flow and sales in the shop have been rising almost every day. "The growth is not explosive, but it is rising steadily." In the circle of coffee bosses in Shanghai, everyone's anxiety has gradually eased since April to May. Although some bosses are still unable to sleep due to cash flow pressure, coffee consumption in core office areas, squares, supermarkets and other locations is making everyone "restore confidence".
Coffee fever extends from the consumer end to the capital world.
In the second quarter, the financing boom in the coffee circle revived: in June, Joy Tea's strategic investment in minority coffee and Coffee Wing obtained a new round of financing of 100 million yuan. According to incomplete statistics, there were no less than 12 investment and financing cases around coffee brands, coffee supply chain and upstream coffee raw materials in the whole second quarter. In the whole catering and even consumption circle, capital in the second quarter was extremely cautious, which was even called "consumption winter" and "capital ebb" by some circles, and coffee showed an unusual heat.
Coffee fever even appears on the trade side. According to the information from Kunming Customs, in the first half of 2022, the export volume of coffee beans in Yunnan Province will increase by 230% year-on-year to 18000 tons. Zhang Zhi, who is engaged in coffee trade, told Hu Xiang that the demand for coffee beans in Yunnan has increased significantly worldwide due to the reduction of production in coffee producing areas such as Brazil.
However, from the perspective of consumption and investment, the new coffee craze has seen significant changes, and "caution" is a common feature of consumers and investors.
"From the perspective of investment, capital no longer seeks to incubate national brands, and regional brands, coffee upstream and downstream suppliers, catering digital service providers, and intelligent equipment providers have become the investment direction; on the consumer side, from the perspective of the status of Shanghai and Beijing and other cities, consumers have begun to focus on caffeine intake, and cost-effective coffee has the fastest recovery speed." Zhao Chengcheng, a coffee analyst, told Hu Xiang that this round of "coffee craze" does not mean the return of coffee in spring. Influenced by factors such as weak consumption and repeated epidemic, behind the surface of the craze is the "pain of arms breaking" of the coffee circle.
"Repurchase rate+addiction" behind the recovery
An investor who did not want to be named told Huxiao that some coffee brands that expanded rapidly from 2018 to 2019 began to optimize their positions in the first half of 2022. Some stores that are not profitable or have a long return on investment cycle are closed or changed.
"Since April to May 2022, coffee brands have paid more attention to cash flow in stores than to coverage." The above investors said that in core coffee consumption cities such as Shanghai, the repurchase rate and higher "addiction" have become the key directions of the coffee circle.
Under this strategy, SKUs with lower price and higher caffeine content began to appear in the "menu" in a larger proportion. The core population of these products are white-collar workers who have just returned to work and migrant workers who have been affected by the "staff optimization tide".
Compared with the history of coffee consumption in North America, it is easy to see the commonness: under the economic crisis in 2008, many chain coffee brands in North America cut off SKUs with higher unit prices, and replaced them with cheaper "just in need products" - coffee drinks designed to refresh white-collar workers on the way to work.
However, the details slightly different from those in North America are that in the Chinese market, the brand is increasing the investment of "sugar". A person in charge of brand new product research and development told Huxiao that "higher caffeine+heavier sweetness" is the common feature of some new products in the market from June to July. This kind of product "more directly" solves the "caffeine and calorie demands" of migrant workers. "The core reason for the difference with the North American market is the difference in coffee culture. Compared with North American consumers, Chinese consumers prefer slightly sweet coffee."
The key behind these new products is the consumer mentality after returning to work.
Zhao Chengcheng believes that the trend of "employee optimization" in Shanghai and Beijing in 2022 is increasing the demand for "coffee drinks on demand". "In the face of internal optimization pressure, employees will spend more time in the cycle, which will lead to increased demand for corresponding coffee drinks." From the end of June to the beginning of July, Meituan and other Internet companies just entered the "salary adjustment+reporting" cycle. In the eyes of analysts, such a special cycle will lead to increased demand for coffee around the headquarters.
It is worth noting that many researchers in the field of food and beverage pointed out to Hu Xiang that in the "employee optimization" cycle, migrant workers tend to increase their sugar intake due to increased pressure. The result of this phenomenon is that the sugar content of coffee changes subtly.
More caffeine+sweeter coffee is making some coffee brands obtain "higher" repurchase rate. In June this year, the CEO of a coffee chain brand told Huxiao that the epidemic and weak consumption had cooled the expansion of stores. Instead, the coffee circle was studying "refined store operation" - it is the common understanding of coffee brands to stabilize and basically revitalize under uncertainty. The common choice of coffee brands is to improve the repurchase rate. "It is not realistic to pursue high customer price under weak consumption. We can only restore the cash flow of stores to a stable state through higher repurchase rate."
Private domain is one of the methods to solve the repurchase rate. From April to June, almost all coffee brands in Shanghai and Beijing were making efforts in private domain, and some teams even rebuilt the entire private domain team. However, the key challenge for coffee brands is that efficient private domain play is failing under the epidemic.
"Different scenarios and paths lead to different effects of private domains." Chai Dong, a catering entrepreneur, told Hu Xiu that with limited public domain options, users had to solve their needs through private domain links. After the resumption of work and the gradual recovery of the canteen, a large number of users will return to the public domain side, and the demand of the private domain side will decline significantly.
But new opportunities also lie ahead of brands. For deep users of the brand, the private domain is becoming an efficient "re purchase rate booster". Since the customer service of the brand can directly communicate with consumers, some promotional activities are being pushed to deep users more quickly. Liu Lin is a member of the financial circle working in Shanghai. After she was drawn into the private domain group of a coffee brand in May, she gradually got used to the coffee consumption mode based on WeChat group. After returning to work, she did not quit the group. "I used to drink 1~2 drinks a day, but now I have about 2~3 drinks. Coupons from private groups often become an incentive for me to place orders."
Is the opportunity of a super city saturated?
Zhang Zhi found that the demand for coffee beans from new first tier and second tier cities is growing significantly.
"The demand for coffee beans in provincial capitals such as Wuhan, Changsha, Hefei and Shijiazhuang, as well as in economically developed cities such as Suzhou, has increased significantly." Zhang Zhi found that from a regional perspective, coffee consumption is showing three trends: "from coast to inland, from east to west, and from big cities to small towns.".
By the beginning of 2022, the coffee market in Shanghai, Beijing, Shenzhen and other places is gradually becoming "Red Sea" after the point war and expansion tide. In some office buildings and squares with high passenger flow, there will be 5-10 coffee shops within a radius of 1km. Before the repeated outbreaks in Shanghai in 2022, the new domestic coffee forces have turned their eyes to "new regions" outside Shanghai and other places.
A person engaged in commercial property in Taiyuan said that after March 2021, many coffee brands began to send people to Taiyuan frequently to "see shops". From the second half of 2021 to the first half of 2022, some office buildings and supermarkets in Taiyuan are suitable for coffee shops to rent quickly. In 2022, there will be a wave of "young people returning to Taiyuan" from super cities, and coffee consumption will have a small climax.
A market person who heads a nationwide coffee chain told Huxiao that from June to now, there has been no "retaliatory consumption" of coffee in Shanghai and Beijing. "In the same period, the sales of stores did not recover to the level before the epidemic." This means that it will take some time for consumption to fully recover in these coffee gold cities in Shanghai, and the situation of "more brands share the single market" is making business difficult here.
Online coffee is also competing with offline coffee for "coffee consumption power". The data from Tmall shows that since 2022, the sales of high-quality instant coffee and coffee liquid have seen a high growth. Some relevant people believe that the consumption habits of some coffee consumers have changed due to the influence of long-term home office work: lighter coffee consumption forms or home-made coffee models have become growth points.
From this perspective, the challenge for coffee stores in Beijing, Shanghai and other places is to compete for the "shrinking" offline coffee consumption under the fierce competition.
But the coffee market in super cities is not without opportunities.
Since 2021, many brands have begun to try the "coffee+simple meal" model. They have transformed their stores in office buildings into more simple meal capable stores, and enriched SKUs through cup noodles and other products. It is worth noting that these SKUs are generally cost-effective: the unit price of coffee plus simple meals is often controlled at 20~35 yuan - which is regarded as a friendly price belt for white-collar workers.
After returning to work, this "part-time package" is being transformed into more cost-effective. A brand told Huxiao that they were developing a 15 yuan series of "coffee+simple meals", and in order to streamline SKUs, this brand will significantly reduce the amount of boutique SKUs by 25-35 yuan.
"Anyone who can understand the mentality and consumption characteristics of white-collar workers in Shanghai after returning to work will be able to seize the opportunity." An investor who is not optimistic about 2022 coffee investment told Hu Xiang that when studying consumption opportunities in Shanghai after returning to work, priority should be given to "consumption classification".
"Those who are particularly rich still have a high profile of consumption; those whose income depends heavily on their wages are the most affected. On the one hand, they just need to consume, and on the other hand, they pay more attention to cost performance, so those high cost performance products will quickly become popular." The investor believes that, The opportunities and key pain points for coffee brands of different scales are slightly different: for super large chain brands, on the one hand, it is necessary to improve the repurchase rate, on the other hand, it is necessary to optimize human efficiency; For the new coffee power, it is necessary to quickly upgrade in the digital and supply chain links; For small and medium-sized brands and even single stores, it is urgent to find ways to optimize cash flow. "It's hard to have another crazy coffee investment from 2019 to 2021. My advice is: the new coffee forces should be pragmatic and not carry the dream of Starbucks; and from the second half of 2022, they should be careful and save money."
At present, some people in the coffee circle begin to imagine the recovery and beauty of 2023. However, many front-line entrepreneurs and analysts are cautious about this: "Don't rely on 2023, coffee should live in the present."
