In the coffee market in a country of billions of people, does Trung Nguyen Legend have a chance to compete with giant Starbucks?
Unlike many other markets, China’s coffee industry has been less affected by the COVID-19 pandemic. This makes the battle for market share among coffee brands increasingly fierce.
Many competitors appear
Experts say Starbucks has promoted coffee culture in China since it appeared in 1999, setting industry standards in terms of prices and products.
However, after two decades, the global beverage chain giant is now facing fierce competition from both domestic and foreign rivals.
Domestic coffee brands such as Manner Coffee, SeeSaw and M Stand, backed by venture capital funds, recorded “rapid” growth before the epidemic broke out.
Foreign brands such as Canada’s Tim Hortons, Italy’s Lavazza and Blue Bottle from the US have entered the market in 2019, 2020 and 2022 respectively. Mr. Bernie Gao, a food and beverage analyst in China of market research company Mintel, said that fast food chains and convenience stores have an advantage in selling high coffee thanks to their large store network.
In September, Starbucks opened its 6,000th store in China. Currently, this chain accounts for 4.4% of the total number of coffee shops in China, behind KFC’s K-coffee chain with 8,500 stores, accounting for 6.2%. Convenience stores Lawson and Family Mart’s Par Cafe are also among the top five coffee chains.
Investors say the market is past its peak, largely due to the pandemic. “Coffee consumption in China continues to grow, although it has lost some of the initial momentum it enjoyed over the past 20 years,” said Mario Zaccagnini, retail director at CBRE East China.
“The lockdowns have had a negative impact on all retail units. Coffee shops are no different than last year, unless the business model relies heavily on takeout and delivery services.”
In 2019, Starbucks introduced a pop-up store concept, Starbucks Now, that allows customers and delivery riders to pick up pre-ordered products. Earlier this year, the company partnered with Meituan to offer mobile ordering and delivery services. It also still operates its own ordering and loyalty app.
In an increasingly saturated market, major brands may have a bargaining advantage over independent competitors.
Ding Zhenwei, an owner with five years of industry experience, is considering closing Fate Coffee, his small roadside shop in Shanghai, due to a combination of factors including COVID-19 restrictions. 19, rent during the lockdown, high commission discounts on food delivery platforms and no social media marketing capabilities.
Starbucks said it plans to enter 70 new cities and open 3,000 more stores in China by 2025. By 2025, China will become Starbucks’ largest market in terms of number of stores, surpassing US market – which has just under 9,000 directly owned stores in 2021.
China accounted for about 12.7% of Starbucks’ total 2021 revenue of $2.9 billion, while the US contributed more than 70%. This shows that Starbucks in China is trying to become a major market in the world.
Penetration of Vietnamese brands
On September 21, the first store of Trung Nguyen Group in the Chinese market was officially opened. This is the first Trung Nguyen Legend Coffee World store in the international market, located at Taikoo Hui Shopping Center, 699 West Nanjing Road, Shanghai, China.
China is one of the world’s leading economies. To compete in any field in this billion-people market is not a simple task for businesses from other countries, including Vietnam.
However, the competitiveness of Vietnamese brands is completely feasible with many advantages. According to rankings from Chnbrand (China), Trung Nguyen Legend’s G7 coffee brand has become a popular instant coffee brand in the billion-people market, holding the second largest market share in the e-commerce market. .
According to data from Trung Nguyen Group, from the beginning of 2022 until now, there have been 800 million cups of Trung Nguyen Legend coffee sold in China, and an average of every 18 cups of coffee sold across China. There is a cup of coffee from Trung Nguyen Legend brand.
The Chinese market also has diverse supplies from nearly 80 countries, mainly from Guatemala, Ethiopia, Vietnam, Malaysia, Brazil… In which, statistics from the Vietnam and China Coffee and Cocoa Associations are always the highest. Vietnam’s large potential coffee consumption market, especially from 2018 to present. From 12th position in 2018, by 2021 China will be Vietnam’s 8th largest coffee import market.
