Shutting down the factory and stopping the production of Maxwell coffee lost to China.

Maxwell, a giant instant coffee, has recently been revealed to have closed its factory and stopped production in China. Maxwell once rose to prominence in the domestic instant coffee market, and even "split the world" with Nestl é in some stores. After the news of its defeat in China, it aroused widespread concern in the industry. Behind Maxwell's shutdown, the entire instant coffee market is no longer what it used to be.

Maxwell Coffee Guangzhou Factory will be closed

Maxwell Coffee, which was once popular all over the country with the slogan of "Didi fragrant, unfinished", is no longer halo. According to media reports, at the end of September, only one security guard went to work at the Maxwell factory in Dongji Industrial Park, Huangpu District, Guangzhou. The security guard said, "the whole company has a holiday for the last two days and will resume normal work on the 23rd, and the whole factory will be closed by the end of December."

Does Maxwell really want to close down factories in China? In response, Jacobs Douwe Egberts, Maxwell's trademark holding company, publicly responded that the Guangzhou plant would no longer produce from 2017, and the Greater China market would be supplied by a production base in Bangkok, Thailand.

Data show that Maxwell first entered China in 1985 and changed its name from "Maxwell" to "Maxwell" in 1997. In 2015, international food giant Mondelez announced that it had completed an earlier coffee deal with Diyi. Mondelez took a stake in its coffee business in a joint venture with the company to form a new coffee company and set up its only factory in China in Guangzhou, but faced closure after just over a year.

Zhu Danpeng, a researcher at the China Food Business Research Institute, told the media that over the past decade, Maxwell has not paid much attention to the Chinese market, and Maxwell Coffee is in a maintenance operation in the Chinese market. Maxwell coffee has not invested much effort, and its market share is getting smaller and smaller. in order to reduce operating costs, it is also necessary to withdraw from the factory at this time.

As for Maxwell's method of relying on imports for products after the closure of the Chinese factory, Zhu Danpeng believes that this is not helpful to its own market operation, only that operating costs have been reduced. However, as Maxwell's strategic position in China has been determined, relying on imports will not change much in product prices. The reduction in operating costs will correspondingly increase Maxwell's investment in marketing.

The market share of instant coffee has declined seriously.

Maxwell once rose to prominence in the domestic instant coffee market, and even "split the world" with Nestl é in some stores. After the news of its defeat in the Chinese market came out, it aroused widespread concern in the industry.

It is understood that Maxwell's market share in China has been declining for many years. On the supermarket shelves, Maxwell coffee is placed in a slightly "corner" position, and most of the instant coffee shelves are still Nestle coffee. According to a data report by Guangfa Securities in 2014, Nestl é is the absolute leader in the instant coffee market, with a share of 73.5%, while Maxwell, which ranks second, is less than 12%.

Behind Maxwell's defeat of the Chinese market, it has something to do with the depression of the whole instant coffee market. Although Nestl é is the leader in the instant coffee market, its performance is also under pressure. According to Nestl é's first-half results, its sales grew by only 2.8% in real terms, with growth and net interest rates lower than expected, and sales growth slowed to its slowest level since 2009.

In the past five years, the market share of instant coffee has fallen from 80.7% in 2009 to 71.8% in 2014, and will continue to decline, according to Mintel, a consultancy. According to forecasts, the market share of instant coffee will fall to 66% by 2019.

Compared with the malaise of instant coffee, the share of ground coffee is expanding, and the whole coffee market has a broad prospect. According to the data in the 2015 Analysis of China's Coffee consumption Market, from 1998 to 2012, China's coffee consumption rose from 199000 bags to 1.1 million bags, an annual growth rate of about 12.8%. China has a total population of about 1.3 billion, and coffee consumption has risen from 9.6g to 47.6g, with an average annual growth rate of about 12.1%. If the growth rate of 12.8% is maintained, China's coffee consumption will reach 2.8 million bags by 2020.