The battle between coffee merchants in Shanghai is becoming more and more fierce. Kashijia competes with Starbucks.

In Shanghai today, the smell of coffee is floating in the air. This international metropolis, with a resident population of 25 million, not only has more than 4000 cafes, large and small, but more importantly, chain fast food restaurants and convenience stores have also fully joined the ranks of freshly ground coffee this winter, striving to get a share of the growing coffee consumption market.

Behind the competitive layout is the rapid expansion of China's coffee market. Coffee ranks first among the three largest drinks in the world, and it is also the second largest trading commodity in the world after oil. According to statistics, at present, global coffee bean sales are about 8 million tons per year, and maintain an annual growth rate of 2%. China accounts for about 11% of the market sales. At present, the average annual coffee consumption in China is only 4 cups, and even in Beijing, Shanghai and Guangzhou, it is only 20 cups, which is a far cry from the average annual consumption of 200 cups in neighboring Japan and 140 cups in South Korea.

Interestingly, China's coffee consumption is growing at an annual rate of 15%. It will enter a period of rapid growth in the next 10 years, and the consumption of China's coffee market is expected to reach 300 billion yuan in 2020. This obvious area of high growth has naturally become a promising investment direction for many businesses. In Shanghai, where coffee consumption is 10 percentage points ahead of the country, coffee merchants are fighting fiercely.

A coffee life of the post-80s generation in Shanghai

Every Saturday morning, Xiao Wang, who lives in the southwest corner of Shanghai, travels diagonally across more than half of Shanghai to the French training center by way of BMW (Bus+Metro+Walk). As it takes nearly two hours to travel one way, he is used to buying a cup of coffee along the last kilometer.

Post-80s Xiao Wang has been used to drinking instant coffee since he was a child. when he switched to freshly ground coffee when he was in college, he took exchange students from Taiwan to the City God Temple, and the other person inadvertently said, "I didn't expect that there are Starbucks on the mainland." Since his sense of smell came into contact with freshly ground coffee, Xiao Wang can no longer stand the artificial aroma of instant coffee. Drinking coffee has been a daily compulsory course for him for more than a decade.

Xiao Wang, who went to French class, was used to buying Starbucks at first, because it was in the office building opposite Faber. As he goes there every week, he simply applies for a star-sharing card. Before long, he upgraded to a gold card member, and his name was printed on the golden card, and every time he took it out for consumption, Xiao Wang felt that this was a spiritual encouragement from Starbucks to loyal consumers. One day, Xiao Wang inadvertently calculated his spending record through Starbucks App. He spent more than a thousand in half a year, which made him think it was time to save some money.

At the beginning of winter last year, the former Starbucks was closed for renovation, and Xiao Wang had to go to Costa Coffee, a farther away, to buy coffee. He found that the coffee in this family is not as sweet as Starbucks and is served in small cups, which are sold in medium cups. But the coffee of Ka Shijia is not cheap either. Xiao Wang can't help but feel sorry for his wallet when he drinks too much. He tried to find the location of McCaf é through Dianping, but either it didn't go the way, or the nearest McDonald's [Weibo] restaurant served only freshly brewed coffee, a coffee made with coffee powder through a drip coffee machine, which was much better than instant coffee or other regular coffee in fast-food restaurants, but Wang thought the taste was too light.

One day, a French student who also loves coffee told Wang that KFC [Weibo] (KFC) has launched freshly ground coffee, which is cheaper than its competitor McCoffee. Xiao Wang tasted American style and latte on his way to school and found that it tasted really good.

After learning that Xiao Wang likes coffee, his Belgian French teacher recommended him to try City Caf é at the 7-Eleven convenience store near Faber, which is cost-effective and half-price for the second cup. In Europe, the charge for coffee eaten by Tang is different from that for take-away coffee. One Europe can also drink coffee that tastes quite good, while Starbucks, which costs 20 or 30 yuan a cup, is considered expensive by the Belgian.

Of course, it seems that the most cost-effective Family Mart coffee for Xiao Wang is to make a difference with the neighboring 7-Eleven. Recently, a 4-yuan cup of American coffee has been launched, but consumers need to help themselves (press the coffee machine button, add milk and sugar and cover the cup). In fact, Xiao Wang has a capsule coffee machine at home, but each capsule costs 5 yuan, and the coffee brewed is only a small cup, which can not solve his coffee addiction at all, and he doesn't bother to clean up every day.

When the decoration of Starbucks is over, Xiao Wang will visit you less often than before. Less than a kilometer from the subway station to the classroom, he has many choices of take-away coffee. A year ago, the coffee cup in his hand was often green on a white background, and he was at a loss in the face of the warm greetings of the "green aprons".

"spoilers" emerge one after another.

The personal experience of the post-80s Xiao Wang seems to have condensed the changes in the coffee market in Shanghai.

Many years ago, it was a foreign thing for Chinese people to send instant coffee. In the seven years from 2004 to 2011, sales of instant coffee in China increased fivefold. TorstenStocker, a retail partner in Greater China at A.T.Kearney, a US-based management consulting firm, said of the Chinese concept of coffee: "five years ago, for most Chinese, coffee was Nestl é three in one."

But the culture of freshly ground coffee has formed in big cities such as Beijing and Shanghai, while Chinese consumers seem to skip the stage of drinking filtered coffee and jump directly from instant coffee to freshly ground coffee. In Shanghai, which has always liked the taste of petty bourgeoisie, more and more coffee drinkers have become accustomed to making cafes or bringing a cup of freshly ground coffee with them.

The bond between the city of Shanghai and coffee can be traced back to the opening of the port in 1843, when coffee sprang up in the concession, and many fashionable Shanghainese went to try it. With the popularity of western food in Shanghai, coffee is gradually accepted by most Shanghainese. In the early 1930s, cafes sprang up in Shanghai and gradually became a way of life for some citizens in Shanghai.

The current situation of the Shanghai coffee market is that Starbucks is the largest coffee chain brand (more than 300 stores); UBC coffee, Enoch coffee, real pot coffee, cross-strait coffee and Diou coffee that once swept Shencheng are becoming less and less attractive to young people, turning to middle-aged and elderly business people. In recent years, foreign brands such as Ka Shijia, Pacific Coffee Coffee, Coffee Bean and other foreign brands at the same price as Starbucks have caught up and attracted many fashionable coffee lovers.

The "high-end" pattern of the Shanghai coffee market was broken by the emergence of McCoffee in 2009.

McDonald's founded McCoffee in Australia in 1993, but did not expand globally until 14 years later. Over the next two years, the coffee business accounted for 5% of McDonald's total sales, up from 3%. Thanks to the global financial turmoil triggered by the United States, Starbucks, which costs an average of $4 a cup, makes many daily consumers unable to afford it, and McDonald's sniffed out the business opportunity. In May 2009, McDonald's spent $100 million on McCoffee, launching its biggest marketing campaign since breakfast was sold in 1970.

Chinese who have been drinking Starbucks for 10 years are also the target group of McCoffee. It is reported that wheat coffee, which also uses Arabica coffee beans, uses a steam coffee machine to grind coffee beans on the spot and sell a variety of coffee, tea and pastries. The average price of this so-called "instant grinder" McCoffee is only half that of Starbucks.

According to the Shanghai Business Daily, there are about 100 wheat coffee in Shanghai at present. According to Dianping, this scale was second only to Starbucks and Shangdao Coffee (more than 110stores) in Shanghai in October 2014. McDonald's China told Xinmin Weekly that by the end of 2014, there were more than 800 McCoffees and more than 4000 baristas in the country. It is reported that the baristas of McCoffee are specially recruited and need to receive advanced training from time to time.

McDonald's old rival KFC also began testing freshly ground coffee products in Shanghai in 2009. But it wasn't until November 2014 that KFC officially launched the freshly ground Coffee series to enter the market in an all-round way.

He Yong, vice president of brand planning for KFC, explained the reason for "sharpening the sword every five years": "KFC quietly tried different coffee beans, coffee machines and different processes, and launched at least four series of coffee products. The most 'tangled' choice is to make a decision between a flower-drawn series with a beautiful appearance and a fresh-grinding series with a balanced flavor. After a number of consumer tests, including concept testing and blind taste testing, KFC selected similar restaurants from Beijing and Shanghai in May 2013 and tested the two product lines synchronously. The currently ground coffee series has won the favor of consumers. "

The freshly ground coffee series launched by KFC also uses 100% Arabica coffee beans. The reporter learned that Starbucks and McCoffee only use Arabica coffee beans. Compared with Robusta, another mainstream commercial coffee bean, Arabica has lower caffeine content and acidity and more aromatic taste, so it is the first choice for freshly ground coffee, and Robusta is suitable for instant coffee. KFC believes that the pricing of the freshly ground coffee launched this time is very advantageous, and the price from 10 yuan is more "close to the people" than similar domestic coffee products.

It is worth noting that KFC did not provide other gimmicks for the coffee series this time. According to he Yong, it is to let consumers drink a cup of pure good coffee. And since 2014, KFC has launched a new restaurant based on "Dining Room", abandoning the traditional fast food style and creating a "home restaurant" with custom hanging pictures, drooping downlights, green partitions and long bars, which seems to be more suitable for consumers to enjoy freshly ground coffee. He Yong revealed that by the end of 2014, KFC had opened more than 370 new concept restaurants across the country. All the new KFC restaurants opened in 2015 will adopt new ideas, and the transformation of old restaurants will be accelerated.

Today, freshly ground coffee is sold in more than 900 KFC stores in Beijing, Shanghai, Guangzhou and Shenzhen. In 2015, KFC is scheduled to launch freshly ground coffee series in 1000 restaurants in no less than 20 cities. It remains to be seen whether it will have an impact on McCoffee or even Starbucks.

In the freshly ground coffee market, there are also family conveniences that come from behind. At present, about 35 per cent of the 1300 stores in mainland China sell freshly ground coffee, Family convenience told Xinmin Weekly. The whole family sells its own brand of coffee, which is mainly produced in Yunnan, with a 12-ounce cup (the equivalent of a Starbucks medium cup), and the price is not much different from that offered by family convenience stores in Taiwan and Japan.

In fact, the coffee beans produced in Yunnan are of high quality and are also Arabica coffee beans, famous for their low consistency and fruity aroma, and have become an important raw material for European coffee drinks in recent years. Big buyers such as Nestl é and Starbucks have invested heavily in Yunnan to ensure the supply of small Arabica coffee beans with mild taste. Because this coffee bean can be used as a mixed ingredient in many kinds of coffee, it is traditionally grown and hand-picked in tropical regions of Latin America and Africa. Yunnan's production in recent years has eased the world's dependence on big Arabica coffee growers such as Brazil and Colombia.

It is reported that each family convenience store with a coffee machine sells an average of 45 to 50 cups of coffee a day, with a record of 180 cups per day, while coffee sales in Shanghai are higher than those in other cities. In order to save money, the whole family is testing the self-service coffee sales model, which is why the whole family can offer 4 yuan a cup of medium American style.

At the same time, convenience stores such as 7-Eleven, Rosen and Heathrow are also selling freshly ground coffee, which can not only attract more white-collar workers, but also boost the income of individual stores. However, it is mainly concentrated in big cities, while Shanghai is still the largest consumer market for freshly ground coffee in the mainland.

What does it mean for China's coffee consumption market to sell coffee in convenience stores? We may want to take a look at Japan, the fourth largest coffee market in the world, and Taiwan (23.4 million people), which has a population close to Shanghai.

Japan's five major convenience store chains (7-Eleven, Rosen, Family, OK convenience Store, Mini Island) have more than 43000 stores selling freshly ground coffee. This does not affect the business of coffee chains such as Starbucks, because consumers value the atmosphere offered by Starbucks more than the coffee itself. The real hit is canned instant coffee, because 30% of consumers who bought canned coffee from convenience stores in the past have switched to freshly ground coffee.

On the other hand, people in Taiwan especially accept freshly ground coffee in convenience stores. In 2007, ground coffee has spread to the top four convenience stores on Baodao-7-Eleven (5000), the whole family (2915), Laierfu (1300) and OK (880). Taiwan 7-Eleven also invited Guilun magnesium to endorse its own brand coffee City Caf é, pushing convenience store coffee to the best part. In 2013 alone, 7-Eleven sold 200m cups of coffee, making the convenience store brand the largest inexpensive coffee shop in Taiwan, accounting for 80 per cent of the local coffee market.

There are significant regional differences in Chinese mainland market, and consumers' acceptance of coffee is different in different places. At present, the main battlefield of convenience store coffee is still in first-tier cities, as for second-tier cities and below are almost negligible, even in Taiyuan, Shanxi Province, which ranks third in China's urban convenience store index, the promotion effect is poor. Domestic convenience stores need time to grind the best part of freshly ground coffee sales.

It has nothing to do with coffee.

Although fast-food giants such as McCoffee want to retain more diners, consumers in China's big cities are still used to spending time with American-branded Starbucks or British branded Kashijia. Many coffee drinkers privately admit that if it is a blind test, different brands of the same kind of coffee may not make a difference, but the first choice for dating is a more stylish cafe, even if it is take-out coffee, whether the Logo on the cup cover is enough and stylish is also an important consideration.

Convenience stores that offer take-away coffee only offer coffee, which poses no threat to coffee chains such as Starbucks that sell in the atmosphere.

According to a 2013 report by China Business Weekly, Starbucks has used a fully automatic coffee machine, which usually makes a cup of coffee in 30 seconds. Starbucks' main competitor, Kashijia, still uses a semi-automatic coffee machine. This kind of coffee machine puts more emphasis on the handmade experience and skills of the staff, and the taste of the coffee will be more intense. The fully automatic coffee machine not only allows Starbucks to improve the speed of making drinks, but also allows employees to get started quickly after simple training, which meets the needs of rapid expansion.

In response, Starbucks China explained to Xinmin Weekly that Starbucks offers a variety of coffee brewing methods, including French presses, hand brewing methods, coffee machines and so on. "if the equipment in the store allows, customers can choose according to their own needs." Chinese mainland had reached the size of 1500 Starbucks stores by the end of 2014. "We only buy the world's top 3% high-quality Arabica coffee beans from more than 30 countries and regions of the world's three largest coffee producers (Latin America, Africa and Asia-Pacific)."

In 1989, Ray Oldenburg, an American urban sociologist, put forward the concept of "third space"-a place outside the home and office where people want to have a good time in his book The Great GoodPlace. This concept was absorbed by Starbucks boss Howard Schultz and developed into the cornerstone of Starbucks culture. Starbucks has become the "living room" of petty bourgeoisie.

Coffee is no longer the biggest stunt of Starbucks. HowardBehar, a former executive vice president of Starbucks, has published a book called "it's not about Coffee" (It's Not About The Coffee), pointing out that Starbucks has never been a traditional cafe and that coffee is only part of its profit.

Ka Shijia, which can best compete with Starbucks in mainland China, was also born in 1971, but it entered the Chinese market eight years later than Starbucks. WhitBread Group, the parent company of Kashijia, ranks among the top 100 listed companies in the UK. After eight years of hard work, the British brand has more than 300 stores in China (equivalent to the number of Starbucks stores in Shanghai), including more than 95 in Shanghai. Ka Shijia told Xinmin Weekly, "Kashijia has two partners in China. Beijing Hualian Group is responsible for the northern region, and Yueda Group is responsible for East China, South China, central and southwest regions."

It is reported that Kashijia uses a mixture of six kinds of Arabica coffee beans certified by the Tropical Rain Forest Alliance and one kind of Robusta coffee beans, and only 1% of the coffee beans can meet the quality standards of Kashijia. All the purchased coffee beans are produced at the Lambeth roaster in London for use in stores around the world, and China is no exception.

Starbucks is more adept at controlling costs than Cosco. Even if customers sit down for coffee at Starbucks, they now only use paper cups instead of mugs. The reason for this is to reduce the labor cost of washing cups. And in China, wooden mixing bars have been replaced with green plastic, and milk suppliers have changed from imported brands to local brands.

China is the fastest-growing market in the latest five-year Plan released by Starbucks in December 2014, and Starbucks plans to have 3400 stores in China by 2019. This means that Starbucks will double the number of stores in China within five years. It is reported that at present, Starbucks has two business models in China: it is a direct market outside Jiangsu, Zhejiang and Shanghai, which is directly managed by Starbucks Coffee Co., Ltd., and in Jiangsu, Zhejiang and Shanghai, it is managed by Shanghai Unification Starbucks Coffee Co., Ltd. Taiwan Unification Group and Starbucks each account for 50% of the shares.

In "Starbucks: the Legend of Coffee, Business, and Culture" (Starbucked:A Double Tall Tale of Caffeine,Commerce and Culture) published in 2007, American freelance writer Taylor Clark pointed out that Starbucks' most powerful division is the real estate division, because coffee accounts for only 10% of total operating costs, and high rents are the bulk of the expenditure. During the rise of Starbucks, many small places or less developed business centers in the United States even "begged" it to open.

Starbucks' massive expansion in mainland China is a response to a view made by the Wall Street Journal a year ago: "if you want to define the level of cities in China, maybe you can count the number of Starbucks coffee shops." Due to company regulations, Starbucks China does not release the number of stores in major cities. But from the path of Mermaid Logo in Shanghai, it may be possible to infer its location strategy-settling in a large number of business buildings or shopping malls, and the level of consumption around it is in line with Starbucks' level of consumption.

Starbucks entered eastern China in 2000 and opened its first store in Shanghai in May of that year, located in Libao Square on Huaihai Road. In the same year, a total of 9 branches landed in Shanghai, from Huaihai Road, to Nanjing East Road, Nanjing West Road, and then to Jing'an Temple, Zhongshan Park, Xujiahui (12.83,0.11,0.86%). As long as it is a mature business district, Starbucks is located. In the first few years, these central areas have been the focus of Starbucks expansion, and the more the center, the denser, often a corner distance, there will be two Starbucks. In addition to the densely populated downtown area, Starbucks has begun to lay out in Shanghai in recent years from the inner ring to the central ring, the middle ring to the outer ring, and then to the outer ring.

In the era of mobile payments, Starbucks' keeping pace with the times has also made its users more sticky. Starbucks released its first mobile app in 2009 and integrated its mobile payment function in 2011. After logging in to the account through the membership card number, users can not only query all personal account information, but also directly complete the recharge of the personal credit card to the membership card. When spending at a Starbucks store, the payment can be completed by directly scanning the QR code of the member account in the mobile app at the cashier. Through mobile payment, this can not only prevent customers from losing patience and giving up shopping in long queues, but also drive the sales of more products. Mobile payment takes an average of only 6 seconds, which is nearly 2% less time than swiping a credit card transaction over the counter. People often go out without a wallet, but very few people go out without a mobile phone, and the use of mobile payments can lead to extra spending.

According to statistics, in 2013, brick-and-mortar stores in the United States completed $1.6 billion in sales through smartphones, of which Starbucks accounted for 90%. At present, Starbucks has 13 million App users in the United States, and about 7 million transactions are done through mobile phones each week, accounting for 16% of all transactions. Schultz's digital ambitions don't stop there-Starbucks launched a wireless charging service in some stores in the United States in June 2014 and is now piloting it in the UK, and in December 2014, Starbucks began experimenting with smartphones to place orders and pick them up in stores to avoid queuing. Starbucks also plans to launch mobile order and payment capabilities in 600 stores in the northwestern United States in 2015.

In China, although there is a Starbucks App, it has not yet launched wireless charging services and mobile order / payment functions. Liu Kuang, founder of Shopuanbang Information, said that if Starbucks trains Chinese "Starfans" to become loyal users of mobile payments, Starbucks is likely to become the largest offline mobile payment platform in China. This is a threat to Alipay [Weibo].

There are cafes all over the city

In 2002, the British Association for Economic and Social Research allocated $250000 to Eric Laurie (Eric Laurier) and Chris Ferro (Chris Philo), two professors at the University of Glasgow, to study the social factors behind the rise in the number of frequent caf é s in British society. The result of their three-year research is that the cafe has a comfortable environment, where people can enjoy themselves or invite friends to have a good time.

This conclusion may also apply to today's China. Sales of Chinese coffee chains reached 20 billion yuan in 2013 and are expected to exceed 40 billion yuan by 2017, according to Euromonitor. More and more enterprises see business opportunities from it.

Tianjin GouBuLi Group announced on January 21 that it had won the permanent right to use Gloria Jean's Coffees, Australia's largest coffee chain, in China, and Tianjin Senyongtai Catering Co., Ltd., a wholly owned subsidiary of GouBuLi Group, will be responsible for the operation of the coffee shop, according to the Interface. It is reported that Gloria has 12 stores in Tianjin, Shanghai, Suzhou and other places in China. The first store operated by Senyongtai will open in Tianjin's landmark Jinta on February 9, with similar positioning and pricing to Starbucks and Kashijia.

Goubuli is not the only traditional Chinese catering company involved in the coffee chain business. On November 27th, Xiaonanguo Food Holdings Co., Ltd., which is positioned as a mid-and high-end restaurant, announced that it would pay HK $195 million to acquire a 65% stake in ParknShop (Hong Kong) Co., Ltd.'s China, Hong Kong and Macao business, cross-border coffee and popular Western-style leisure catering business, and plans to open 3-5 new Pokka Caf é brand coffee chains in Chinese mainland this year.

In the past two years, it is pointed out that Korean coffee shops are also expanding rapidly in the Chinese market. According to the "Research report on the Development trend of Korean Coffee shops in China" released by RET Ruiyide China Commercial Real Estate Research Center, Korean coffee shops have opened nearly 600 stores in China in the last two years. According to statistics, Starbucks has expanded the fastest among European and American coffee shop brands in the past two years, opening an average of 77 stores a year; the outstanding brand of Taiwan coffee shop is Shangdao Coffee, which is expanding at an average rate of 59 per year; and among Korean coffee shop brands, coffee accompany you is the most outstanding. 407 stores have opened in China in just two years, and the momentum of expansion even exceeds that of Starbucks. Moreover, Korean coffee shops that have late entered the Chinese market often choose to open stores in the suburbs of first-tier cities and second-and third-tier cities in order to avoid direct competition with Europe, the United States and Taiwan.

Perhaps in the near future, many Chinese people can declare: "I am either in a coffee shop or on my way to a coffee shop."