Does Trung Nguyen Legend have a chance to fight the “big guy” Starbucks in the billion people country coffee industry?26/10/2022
Unlike many other markets, China’s coffee industry has been less affected by the COVID-19 pandemic. This makes the battle for a market share of coffee brands increasingly fierce.
There are many competitors
Experts say Starbucks has been promoting coffee culture in China since it emerged in 1999, setting the industry standard in terms of price and product.
However, after two decades, the global beverage chain giant is now facing fierce competition against rivals both at home and abroad.
Domestic coffee brands such as Manner Coffee, SeeSaw, and M Stand, backed by venture capital funds, recorded “rapid” growth before the outbreak.
Foreign brands such as Tim Hortons of Canada, Lavazza of Italy, and Blue Bottle from the US entered the market in 2019, 2020, and 2022 respectively. Mr. Bernie Gao, a food and beverage analyst in China According to market research firm Mintel, fast food chains and convenience stores have a strong advantage in selling coffee thanks to their large store networks.
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%. Lawson convenience stores and Family Mart’s Par Cafe are also among the top five coffee chains.
Investors think the market has passed 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 of CBRE East China.
“Lockdowns have harmed all retailers. Coffee shops are no different from last year unless the business model is primarily based on takeout and delivery.”
In 2019, Starbucks introduced an express retail model, Starbucks Now, that allows customers and delivery drivers to pick up pre-ordered products. Earlier this year, the company partnered with Meituan to provide delivery and mobile ordering services. It also still operates its ordering and loyalty app.
Ding Zhenwei, an owner with 5 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, rent during 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 several stores, surpassing the market. US market – which has just under 9,000 directly owned stores by 2021.
China accounts for about 12.7% of Starbucks’ total revenue of $2.9 billion in 2021, while the US contributes more than 70%. This shows that Starbucks in China is trying to become a big market in the world.
The 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 in the international market, located at Taikoo Hui Trade Center, 699 West Nanjing Road, Shanghai, China.
The first store of Trung Nguyen Legend in the Chinese market.
China is one of the leading economies in the world. Competing in any field in this billion-people market is not an easy task for businesses from other countries, including Vietnam.
However, the competitiveness of Vietnamese brands is completely feasible with many advantages. According to a ranking 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 on average every 18 cups of coffee are sold across China. There is 1 cup of coffee from the Trung Nguyen Legend brand.
The Chinese market also has a diverse supply from nearly 80 countries, mainly from Guatemala, Ethiopia, Vietnam, Malaysia, and Brazil… According to statistics from the Vietnam Coffee and Cocoa Association, China is Vietnam’s largest potential coffee consumption market, especially from 2018 up to now. From 12th place in 2018 to 2021 China is Vietnam’s 8th largest coffee import market.
It can be seen that Trung Nguyen is having clear opportunities to break through in the billion-people coffee market, especially when one of the group’s brands is gaining popularity here.
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