Coffee Brand-Costa Coffee challenges Starbucks

CostaCoffee, the UK's largest coffee chain, officially opened its 100th store in China at Terminal T3 of Beijing Capital International Airport, a prime location that was once Starbucks' most profitable store in northern China.

This is not the first time Costa has competed head-on with Starbucks. Since Costa entered China in 2008, the competition has been aimed at Starbucks, which has been in the Chinese market for 12 years. The slogan of its Asia-Pacific president is "go home if you can't kill Starbucks." Over the past four years, it has been adopting a very radical expansion strategy, adopting the "close" tactics with Starbucks in terms of location selection. Within three years, the number of stores opened has reached 25% of the number of Starbucks stores in 12 years. It is 2.5 times faster than Starbucks in the same period. At the same time, the company, which accounts for only 10% of Starbucks' stores in the world, plans to develop 2500 stores in China in 2018, reaching a 1/3 market share in China.

In the absolutely strong situation of Starbucks in the Chinese coffee market, why should Costa set such a radical market target? Why can it compete with Starbucks?

First of all, the potential capacity of China's coffee market is still quite large, which is the basis for the rapid growth of Costa. According to the Beijing Coffee Industry Association, China's coffee consumption is growing at an annual rate of about 15%, much higher than the 2% worldwide. According to the average level of the international coffee consumption market, the consumption of coffee in mainland China is about 1 trillion yuan, but at present, the annual sales of coffee is only 70 billion yuan, and the market is just on the eve of the blowout.

So, what is the competitive advantage of Costa? How to compete with Starbucks, the industry leader?

First of all, in view of China's vast market, choose local partners with channel advantages to quickly lay out the network.

"Channel is king" is also the core of the operation of chain coffee shops, and the choice of store location is the highlight, which determines the passenger flow and consumption level. However, many high-quality business areas in first-and second-tier cities have been occupied by Starbucks. On the one hand, Costa has to pay a high price to open a store in the intimate location of Starbucks, but the cost of hand-to-hand combat is too high. At the same time, Costa is also actively looking to open stores in other commercial real estate.

Costa has found a local partner with strong strength and channel advantage-Hualian and Yueda to set up a joint venture in the north and south regions of China. In the northern region, relying on Hualian's industry name and channel advantages, Costa has won the rapid entry rights of many large supermarkets, department stores and many other shopping centers, and the storefront network has been rolled out quickly, which saves costs than individual stores. By contrast, Starbucks' partners Meida, Meixin and Unification lack such channel resources.

Second, attach importance to local autonomy and improve the efficiency of decision-making.

Compared with the complicated decision-making process of Starbucks headquarters, Costa dares to delegate power, simplify the decision-making process and improve the speed in the Chinese market. In order to enhance the understanding and response speed of the local market, Costa gives Chinese partners a high degree of participation and decision-making power, while adopting global unified design requirements, training system, operation management and other standards to control the quality of decision-making, ensuring speed and flexibility and strict quality control at the initial stage of expansion.

Third, grasp Chinese consumers' understanding of coffee consumption, so as to find out the selling points that can be different from Starbucks.

China can be said to be a country with no coffee history, and consumers' preference and appreciation ability for coffee word-of-mouth is in its infancy. If the selling point of Costa is just "coffee tastes good", I'm afraid most consumers don't have the ability to tell it apart, so what's the difference?

Costa's consumer research shows that most consumers' reasons for choosing cafes have little to do with coffee. More things other than coffee dominate consumers' choice of cafes, including environment, brand, service, and even things like a stirring bar. Therefore, to be a cafe in the Chinese market, the selling point is not coffee, but the cafe atmosphere and consumer experience.

As a result, Costa locates its selling points in different "cafe environments and experiences". This covers products, store services, atmosphere, design and many other aspects, and the competition with Starbucks can also give Costa more room to play by the individual competition of coffee products and the comprehensive project competition for coffee experience.

For example, in the storefront atmosphere, Starbucks has a strong business color, while Costa has found a different way to create a sense of "personal space" in terms of color matching, spatial layout and item display, which is different from the business clubhouse. For example, Costa found that Chinese consumers prefer to use electronic products for social contact at all times, so they have more power outlets next to their seats. Unlike the "global chain standardization" advocated by coffee chains such as Starbucks, the style of COSTA in different countries and regions will be based on local tastes and aesthetics, even in COSTA stores in Beijing and Shanghai.

China Coffee Trading Network: www.gafei.com