Coffee review

Push it step by step! Starbucks does not roll the price volume market!

Published: 2024-06-25 Author:
Last Updated: 2024/06/25, ▲ click to follow | Daily boutique coffee culture magazine coffee workshop coffee market competition in the past year is fierce, chain coffee brands are expanding stores, bringing their brand influence from high-line cities to sunken cities, according to GeeQData brand data, coffee brands in the county market stores total

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In the fierce competition in the coffee market over the past year, coffee chains have been expanding their stores, bringing their brand influence from high-line cities to sinking cities. According to GeeQData brand data, there are a total of about 5454 coffee brands in the county market, of which 3700 were born in the past year.

Among them, the number of stores has been occupied by Lucky for several years in a row, and the number of stores has soared in more than a year, and the total number of stores has approached Starbucks, which ranked second in store size. The "step-by-step pressure" of local coffee brands has made the "noble" Starbucks realize that changes should be made in order to maintain its position in China for many years.

Wang Jingying, chairman and CEO of Starbucks China, said at the Starbucks earnings conference yesterday that Starbucks had covered 857 of China's nearly 3000 cities above county level and would then accelerate the sinking of stores. It also means that Starbucks participates in the coffee competition in sunken cities, competing with local coffee brands for coffee market share in sunken cities.

But the CEO has also repeatedly said that Starbucks has no intention of participating in a price war and will focus on achieving high-quality, profitable and sustainable growth.

However, in recent years, the low-cost coffee discount war is cruel and fierce, which has killed many chain coffee chains with less than 100 stores in the industry, and even some popular new consumer coffee brands are on the verge of collapse. On the other hand, the "coffee and tea drinking" strategy of local coffee brands is very effective, pulling down the prices of American style and latte to attract the rigid demand group of coffee "low unit price and high repurchase" to form user stickiness. After that, by virtue of the drainage money, users are attracted to try drinks with high unit price, so as to achieve the goal of making a profit.

Starbucks model is different from local coffee, most stores take "third Space" as the selling point, the unit price of basic drinks is also much higher than Lucky, Cuddy and so on. In the outside world, Starbucks, which insists on its own style, "survives" in the discount war of local brands, and may lose to local coffee brands in the coffee market in sunken cities with low consumption levels.

In reality, however, this is not the case. the telecommuting habits formed during the epidemic and the rise of self-media channels such as Douyin have made many white-collar workers working and studying in high-line cities choose to return home. When they return to their relatively sinking cities or hometown, their consumption habits remain unchanged, so there are a large number of high-net-worth people in third-to fifth-tier cities today, and their average monthly coffee consumption is no lower than that of the middle class in the north, Shanghai, Guangzhou and Shenzhen.

Chain coffee brands are targeting the middle class in the sinking city, choosing to expand the number of stores in the county, as is Starbucks, and quite surprisingly, the profit performance of Starbucks stores in the county is better than that of new stores in the high-line market.

Take Starbucks' newly opened stores in Guanyun County, Jiangsu Province as an example, the new products that consumers in the north, Shanghai, Guangzhou and Shenzhen have accepted and triggered a craze to try are "not very popular" in sunken cities. what's more, users in the sunken city favor high-profile Starbucks product lines such as Frappuccino, and the sales of such products are significantly higher than those of some stores in Beijing, Shanghai and other places.

According to the official data released by Starbucks in the past, Frappuccino products are one of the representatives of its high-margin products, and the popularity of such products has brought strong profit performance to Starbucks stores in the county.

But for Starbucks, the challenge in a sinking city has only just begun. Most of the consumer groups in the county can support 8 stores in one lucky city, while Starbucks can only support 1 or 2 stores, so Starbucks has no advantage in expanding speed. In addition, price-sensitive users may reduce the frequency or even stop buying Starbucks after the first experience.

In response to this situation, analysts said bluntly, "Starbucks needs to become more local and more in line with the latest trends," and this is what Starbucks is trying. Before the opening of stores in Guanyun County, Starbucks specially launched promotional videos and targeted local new store activities on platforms such as Douyin and Starbucks. On Mini Program, Starbucks has been able to "personalize" the Mini Program home page in some sinking markets.

In addition, Starbucks launched 12 new coffee drinks during the first quarter of fiscal 2024, and Starbucks is speeding up product innovation to make the brand more in line with current trends.

2024 may be a crucial year for every coffee brand, whether in high-end cities or in the sinking market, the competition of the coffee track is likely to be fierce, but the market position of each coffee brand may be reordered in the future competition.

Picture from: Internet

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