Costa ambition to re-invest in the Chinese market British coffee culture once again attack!

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Costa Coffee has paid an additional 35 million pounds to invest in the Chinese market for its stake in its joint venture in China, the Daily Telegraph reported on Tuesday. Whitbread, the parent company of Costa, as a group company with coffee industry chain and Premier Inn hotel business, will complete the purchase of 49% of the shares held by Yueda in the past 10 years from 252 costa in South China for RMB 310 million.

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It is reported that the Chinese market returned to its current sales growth as of March this year, and Whitbread estimated the loss budget for this period, which is expected to expand from 408 stores to 700 stores by 2022 to reap profits of 1200-15 million pounds.

The 50 per cent stake in BHG, a joint venture in North China, remains unchanged.

Earlier this year, Dominic Paul, CEO of Costa Coffee, told the Telegraph that the Chinese market has great potential for the company's development and expects the current low coffee consumption to grow.

The Costa brand operates at home for years, but in the fiscal year last year, the company spent £1.6 million to close 37 sluggish stores in China, and five other concept stores have tried it out, initially showing success.

After Starbucks, Costa is the second largest coffee chain in China. But Costa will have to work hard to catch up with Starbucks' 2800 stores in China. It is reported that Starbucks plans to have 5000 stores in China by 2021.

Investments like Costa are also in response to the current economic downturn in the UK. At present, excluding sales in stores that have been open for less than a year, Costa's domestic sales performance in the UK has increased, but the growth rate has declined significantly in recent years. Sales grew by just 2 per cent in the fiscal year to March 2nd, still higher than Nero coffee, but down sharply from 6.8 per cent in 2013.

When Costa entered the Chinese market in 2003, Simon French, an analyst at Cenkos, previously said that he had long believed that the development of Costa in the Chinese market was too slow, and that wholly-owned ownership might lead to accelerated development, which led to the strong rise of coffee culture.

Morgan Stanley says full ownership means that Costa can fully expand its vending machine business in China without Yueda taking a position. But at the same time, Whitbread's goal of 700 stores is ambitious, with at least 80 new stores a year, according to calculations.

Whitbread said it would implement it once it received approval from the Chinese government, and the company would report its half-yearly results on October 24.

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