Pacific Coffee Plan China opens 1000 stores to catch up with Starbucks

China Resources Entrepreneurship, which just entered the coffee chain last year, is rapidly enclosing its horses in mainland China.

Yesterday, China Resources's Pacific Coffee Beijing International Trade Store officially opened to the public, its 13th direct store since it opened its first mainland coffee chain in Shanghai in April this year.

"the company plans to expand the number of mainland stores to 50 by the end of this year." Tang Guojiang, CEO of Pacific Coffee, revealed in an interview with the Daily Economic News yesterday that in the future, the development model of direct operation and regional franchise in mainland China may continue to expand at a faster speed. Pacific Coffee's dream is to open 1000 stores in China.

Pacific Coffee was founded in Hong Kong in 1992 and was acquired by Chevalier Pan Asia Holdings Limited (0508.HK) in 2005 for HK $205 million in cash. In 2010, China Resources Venture bought an 80 per cent stake in Pacific Coffee from Chevalier Fanya for HK $327 million in cash and handed it over to its wholly-owned subsidiary, China Resources Wanjia.

Tang Guojiang said he was both excited and cautious about the pace of expansion of Pacific Coffee in the mainland. Starbucks entered mainland China in 1999, after more than a decade, there are only about 400 stores in the mainland. Pacific Coffee has only just broken its 100 stores in Hong Kong after 19 years, but now it has sprinted 50 in less than a year in mainland China.

Tang Guojiang admitted that at present, the expansion of Pacific Coffee is mainly in Beijing, Shanghai, Guangzhou and Shenzhen. Starbucks in these cities is already highly competitive, and the cost of opening stores in the mainland is rising sharply as rent, raw materials and labor costs rise.

However, Tang Guojiang is optimistic that Pacific Coffee, which is backed by China Resources Wanjia, has more convenient government relations, market resources, logistics and distribution advantages than Starbucks, which can help Pacific Coffee rapidly increase its market share in the mainland.

It is understood that as a state-controlled enterprise group directly under the central government, China Resources has a total of more than 3000 retail stores in the mainland. "Pacific Coffee has filled the gap in China Resources's retail industry chain and received great support from shareholders. China Resources's powerful stores, logistics, passenger flow and other resources will be shared with Pacific Coffee." Tang Guojiang said.

Tang Guojiang also told reporters that since they were acquired last year, they have done market research on the mainland market for nearly a year, and some data show that the per capita annual coffee consumption in mainland China is only 0.1 cups. This figure is 4 cups per capita in Hong Kong, 40 times that of the mainland, while the average per capita in Japan is as high as 35 cups per year. "therefore, the coffee culture in the mainland is still in its infancy, and the market is basically dominated by economies of scale, which can be described as a huge market potential."

In addition, the reporter also learned yesterday that Pacific Coffee opened its 106th direct store in Hong Kong yesterday. At present, Pacific Coffee has become the second largest coffee chain in Hong Kong, with more than 120 stores in Hong Kong, Macau, Chinese mainland, Singapore and Malaysia, second only to Starbucks in the United States.

(responsible Editor: Leo)