Luxury Brands Wake Up to the Booming Chinese Coffee Market
Starbucks has been embroiled in controversies from inappropriate staff manners to price hikes. Whether it will retain the lead in the Chinese coffee shop market remains a heated discussion. Meanwhile, domestic chains such as Luckin, Seesaw, and Manner have seen rapid development and gained financial injections from investors.
Due to the sector’s rapid expansion, everyone now wants a piece from the action — including “outsiders.” China Post opened its first coffee house named “Post Coffee” on Valentine’s Day. A few days later, Goubuli, a long-established food firm from Tianjin, formally established a company named Gao Leya Coffee Food (Tianjin) Co., Ltd.
As the industry has become more competitive and sophisticated, leading high-end players are also diving in like Blue Bottle Coffee, which opened its first store in the mainland last month. Given such developments, how did this vast market come into being? And how have luxury brands leveraged this opportunity?
Not just Starbucks
In 1999, Starbucks opened its first Chinese store in Beijing. With the goal of building its brick-and-mortar outlets as “The Third Place”(Starbucks is a third place between home and the workplace where people can relax), the company ran at a heavy loss for nine years in China. After much time and effort, it has managed to establish a high-end and professional image in China, and retain its leading position in the country’s premium coffee trade.
While the mainstream had remained untouched until Starbucks’ Beijing debut, the brand Luckin played a significant role in warming up the coffee sector and making the drink a habit around the country. Since 2018, Luckin has focused on its store expansion and consumer subsidies. Declaring its intention to “educate the market with 1 billion CNY” ($157 million), the retailer has successfully become the number one alternative to Starbucks.
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