Rapid Rise! Intense Competition Among Coffee Brands like Starbucks, Luckin, and Manner

The Growth of Coffee Culture in China

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With the popularization of coffee culture and the improvement of consumption levels, consumers' acceptance and awareness of coffee continue to increase. More and more people are developing a taste for coffee. According to earlier statistics, China currently has approximately 300 million coffee consumers. In this context, many well-known enterprises are actively entering the coffee industry.

Today's coffee market is becoming increasingly hot. In 2021, China's coffee market was approximately 381.7 billion yuan. According to iMedia Consulting, by 2025, China's coffee market will reach 1 trillion yuan, equivalent to three times its current size. It's worth noting that as early as 2020, the overall size of China's coffee market was only 86.1 billion yuan. While chain coffee has always had the largest share, the market potential for chain coffee in China is far from saturated.

The Rise of Luckin Coffee

After going through financial scandals, internal team conflicts, and the departure of founding team led by Lu Zhengyao, Luckin took two years to "come back from the dead" and return to profitability. Besides its remarkable performance growth, Luckin is also expanding its store numbers aggressively. In the last quarter of 2021, it successfully surpassed Starbucks, becoming the largest coffee chain brand in China with over 7,000 stores.

As of the third quarter of 2022, Luckin Coffee had a total of 7,846 stores nationwide, achieving revenue of 3.895 billion yuan, a year-on-year increase of 65.71%. The monthly average number of transacting customers increased by 70.5%, reaching 25.1 million. In the first three quarters of 2022, Luckin Coffee introduced 92 new products. Hit products such as Thick Milk Latte, Raw Coconut Latte, and Coconut Cloud Latte have continued to attract consumer attention. However, the battle for the throne of the coffee market is far from over.

Starbucks' China Strategy and Emerging Brands

Starbucks closed all its franchised stores in China in 2018 and now operates stores through self-operated models for standardized refined management. The adoption of a fully self-operated model indicates Starbucks' high regard for the Chinese market and lays a solid foundation for building a high-level "self-operated + franchise" system in the future. According to Starbucks' plan, the total number of its stores in mainland China will exceed 9,000 by 2025.

In recent years, emerging domestic chain brands such as Manner, M Stand, and NOWWA Coffee have also been rising rapidly. In June of this year, NOWWA Coffee, which had more than 1,500 stores, announced the opening of 100 stores simultaneously. In November, it announced the opening of another 120 stores at once. With capital backing, Manner Coffee has also gained prominence, having completed four rounds of financing in just half a year, and its valuation has now reached the tens of billions level.

In addition, international chain brands positioned between Starbucks and Luckin, such as Tims Tianhao Coffee and %Arabica, have successively entered the Chinese market...

Investment and Future Prospects

Companies such as Sequoia Capital, Black Ant Capital, IDG, Tencent, Meituan, and ByteDance have seen the opportunities in the coffee market and have invested heavily in China's coffee industry. A few years ago, many people thought coffee had little future in China. Today, just a few short years later, coffee has become a new trend in investors' eyes - one could even say it has boundless prospects.

However, the current chain operation rate of coffee shops in China is still less than 13%, which is relatively low compared to the US market. If cross-industry giants like Li-Ning and China Post also enter the chain coffee business, they will undoubtedly become a formidable force in China's chain coffee sector.

Whether it's the professional players accelerating their布局, the emerging chain brands of recent years, or the cross-industry players disrupting the market, all are proving that China's coffee industry chain is rapidly rising, and competition is becoming increasingly fierce.

Image source: Internet

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