Blue Bottle Coffee: A Case of Bad Timing?

"Blue Bottle Coffee's Second Mainland China Store Confirmed!"

After a period of relative quiet following its initial buzz, Blue Bottle Coffee recently announced to media that its second mainland China store will continue to be located in Shanghai! Unlike the first store, Blue Bottle Coffee has chosen not to open in a building with historical significance, but rather selected street-facing first and second floor locations at Jing'an Kerry Centre, a prime Shanghai location. The interior is currently under renovation, with an opening date yet to be determined.

Preparations for Blue Bottle Coffee's second mainland store actually began in early March of this year. At that time, internet users had already shared photos showing the first and second floors of Kerry Centre being cordoned off for renovations. Unfortunately, at the end of March, Shanghai entered into months of pandemic control measures, which affected the preparation timeline. This led many netizens to lament that Blue Bottle Coffee had chosen an unfortunate timing...

One factor is that the mainland coffee market is currently engaged in price wars, while Blue Bottle Coffee's pricing doesn't align with mainstream consumer expectations. Another factor was the impact of pandemic control measures on business operations. From a pricing perspective, Blue Bottle Coffee might seem to have little advantage entering the market now. However, the pandemic control measures actually gave Blue Bottle Coffee an opportunity to demonstrate its strengths.

Brand Positioning and Quality Assurance

The reason Blue Bottle Coffee's pricing is higher than many chain coffee establishments goes beyond brand recognition—it also offers a unique product experience. Although there are many independent specialty coffee shops today, the quality of each establishment varies, preventing consumers from consistently accessing stable specialty coffee.

Blue Bottle Coffee, while positioned as a chain, insists on using freshly roasted coffee beans and maintaining consistent quality for every cup, creating a strong "contrast effect" for consumers. This ensures that when people discuss chain coffee versus specialty coffee, Blue Bottle Coffee immediately comes to mind. Despite higher prices compared to many chain and independent coffee shops, this doesn't affect consumer trust in the brand, as more people are pursuing the brand effect of coffee.

During the pandemic control period, Blue Bottle Coffee's brand persistence actually led to better performance, enhancing consumer affinity for the brand. Before establishing its first store, Blue Bottle Coffee had already built a roasting facility, ensuring every cup of coffee maintains optimal quality.

Pandemic Response and Market Adaptation

After the government permitted eligible factories and businesses to apply for the first batch of resumptions, Blue Bottle Coffee's Shanghai roasting facility resumed closed-loop production on May 1st, while the Yutong store launched community group buying services on May 3rd.

Compared to other coffee shops that also resumed operations, Blue Bottle Coffee had a significant advantage in fresh coffee bean roasting, presenting an excellent promotional opportunity. After experiencing the pandemic's impact, more consumers倾向于 brewing coffee at home rather than consuming in-store. peripherals (coffee beans, brewing equipment, etc.) will likely become the future consumption mainstream.

Although Blue Bottle Coffee stores couldn't immediately resume dine-in services after Shanghai announced the reopening of some areas, many consumers were willing to order takeout. The store only resumed dine-in services on July 1st. Unlike the opening period, there were no long queues outside the store. Customers visiting now come more specifically for the coffee, and baristas have more time for face-to-face interaction with customers, better demonstrating the brand's value.

Market Potential and Future Outlook

It appears that Blue Bottle Coffee's choice to enter the mainland market at this time might be fortunate. Currently, domestic consumers have significant room for growth in accepting coffee culture. Many people are now being introduced to coffee through local brands. As consumers further understand coffee, the demand for specialty coffee will increase.

According to CITIC Securities Research Department forecasts, specialty coffee represents 25%-30% of market space potential, while existing independent specialty coffee shops and brands are insufficient to saturate this market. Under this projection, Blue Bottle Coffee, which emphasizes coffee quality, has opportunities to establish itself firmly in the domestic coffee market and accelerate store expansion.

Now that Blue Bottle Coffee's second store has been confirmed, it's evident that the brand is pursuing the niche minimalist + specialty route favored by increasing numbers of young people, deliberately avoiding joining the domestic coffee brands' "low-price war."

Image source: Internet

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