The rise of Chinese coffee culture
The tea culture has been in China for more than 2000 years but with the introduction of coffee into China, there has been a large growth in coffee culture among the newer generation of Chinese citizens. In the beginning there was much doubt about whether or not China would adopt coffee as the go-to drink however, Starbucks and other foreign coffee brands may have changed the public opinion over the past two decades. Originally, China’s coffee consumption stood at about 20 cups annually whereas in the U.S coffee consumption stood at 500 cups annually. Chinese coffee consumption grew 17 percent yearly and has started to gain traction in the eyes of the Chinese public. It is forecast that the Chinese coffee market will grow by 30 percent annually.a
Starbucks has been offering coffee to the Chinese public since 1999. Since then, Chinese people have become increasingly interested in coffee culture and even travel abroad to experience the European coffee culture. Now, many Chinese people take drinking coffee as a social activity rather than a status symbol as it was before. It is a large part of their life and has become growing culture for the modern Chinese citizen that has a higher spending power and more exposure to global imports and media. Up until recently, Starbucks was leading the coffee industry in China with rapid expansion and premium prices. There are over 3,200 stores in China and it is said that every 15 hours a new Starbucks shop is opened. With this expansion, China has started the transition from tea culture into coffee culture.
Slogan: 这一杯谁不爱 – This cup, who wouldn’t love it?
Although most of Starbucks’ competitors in China were mostly foreign brands, a new local competitor known as Luckin Coffee (瑞幸咖啡) appeared in November 2017 by Qian Zhiya, the former COO of the ride-sharing company UCAR, with a radically different market strategy to target Chinese consumers. Starbucks’ dominance of opening physical stores was a high barrier of entry for many competitors in China, explaining why there was no “Starbucks of China.” On the other hand, Starbucks did not offer a fully developed delivery service and was heavily priced which made it inconvenient for Chinese consumers. The price of a cup of coffee outside China only makes up 0.1% of a person’s monthly earnings, whereas in China it is around 1%.
Additionally there are not enough coffee shops to accommodate the large Chinese population which causes long waiting times and queues. This was where Luckin Coffee filled the market. They offered a high-quality yet more affordable coffee for the consumers and offered the convenience of delivery at a large scale. They use many promotional tactics such as offering a free cup for new users and having deals such as buy 2 cups get one free or buy 5 cups get 5 cups free. Other strategies include not using cash and having a reward based referral system allowing it to grow its user base rapidly. The startup opened over 500 stores by May 2018 with plans to open hundreds more by the end of the year. Since their market is concentrated around commercial areas it gains constant exposure. Also, the startup hires influential KOLs (key opinion leaders) and foreign baristas to act as their brand ambassadors such as, famous actors Zhang Zhen and Tang Wei.
How to grab the attention of Chinese FITs interested in coffee and attract them to your coffee business?
Although the market trends indicate that coffee consumption is growing, the taste of the coffee still remains adjusted to the Chinese public. Many Chinese FITs prefer the richer authentic taste of European coffees and often visit cafes just to have an experience of the local brew. Furthermore, some of these travelers don’t only want to travel but also want to learn the skills of foreign baristas that they cannot frequently see within China.
A lot of data has been presented, but how does this help your business? One example of how to get Chinese travelers to find your cafe or coffee shop would be through an online platform. To be more specific, in Spain, our platform users can use the STW Apps to engage with the Barista Coffee Experience to find the unique local cafe run by local people. This cross-over partnership are meaningful by one side fulfill our STW mission of “Helping local cultural spots to grow their economy” and on the other side “providing more lifestyle inspiration for authentic Chinese FITs.” Barista is a platform that allows payment through your smartphone in the best coffee local shops in the city in Spain, speeding up purchases, reducing friction, and providing a safer payment method. They try to offer customers the best experience, while contributing to change the world.
Chinese FITs use Barissta as payments are not paid in cash, customers save time in payment and get benefits with each order, similar to our gifts and discounts model of STW. Many of Barissta’s listed stores are listed on STW with plans to increase more locations around Spain and are very easy to access. Listing your European coffee business on both platforms and offering any promotions or discounts will help to bring more traffic to your business. As mentioned in a previous article, Chinese FITs love gifts and discounts as it is not only more financially accommodating but also gives a very welcoming feeling for them.
More about our strategic partners – Barissta
Barissta is hosted on a website rather than an app to be available for any device that is connected to the internet and to alleviate the inconvenience of taking up memory on your device. It is easy-to-use and takes orders using a 2-click cashless system from more than 40 of the best coffee shops around Madrid, Barcelona, and Valencia. With the goal of establishing 100 stores between Madrid,Valencia, and Barcelona by the end of the year. This platform allows independent owners to maintain their uniqueness and independence with an active database while also having a process similar to large coffee chains. The customers place their order over the phone and confirm the order. Each order brings customers credit that can be exchanged in Barissta’s entire network and a small commission is given to Barissta for each product sold. In order to join this network, businesses must meet a series of requirements, such as good customer service, free Wi-Fi, nice design, and a high quality of coffee. Their main objective is to attract high quality coffee to those who have never experienced it same as STW, we only work with authentic cultural and nature spots which carry unique local culture and mostly run by local people. Barissta also has a Youtube channel that covers the story behind some of the stores they work with. For more information on Barissta click here!