Can the price war and parity strategy of freshly ground coffee win the market
2023-04-21
Recently, there has been a widespread outbreak of gunpowder on the coffee grinding track. When well-known brands maintain prices above 30 yuan, many new brands accelerate their store expansion and launch a variety of preferential subsidy activities, reducing the unit price of freshly ground coffee to over 10 yuan per cup or even lower, and the price war has become intense. The price war in the chain coffee industry is not the first time that the price of freshly ground coffee has dropped. In 2017, as soon as Lucky Coffee entered the coffee market, it adopted the method of burning money to subsidize, lowering the unit price of freshly ground coffee to within 20 yuan. At the beginning of 2023, with the rise of the price war, the price of freshly ground coffee will further drop to about 10 yuan, such as 10 yuan latte, 8 yuan cappuccino, and some brands of iced American coffee will even fall below 5 yuan. Currently, there are more and more brands specializing in affordable freshly ground coffee. In addition to several well-known coffee brands, fast-moving consumer brands such as KFC, McDonald's, and CoCo have also joined the ranks of affordable freshly ground coffee at low prices. After this year's Spring Festival, CoCo can announce that starting from February, the price of freshly ground American coffee in all stores nationwide will be reduced to 3.9 yuan per cup, and the raw coconut latte will only cost 8.9 yuan per cup. KFC quietly launched the "Small Town Coffee" program in the county town, launching its first 9-yuan SOE premium coffee at the end of last year, with a window opening mode that goes with the click, releasing signals of further market sinking. At the same time, affordable brands such as Dried Coffee and Cubic Coffee have also emerged. The expansion and sinking of affordable coffee brands in the market is an inevitable result of the development of the coffee industry. Compared to the new tea beverage industry, which has entered a stage of slowing down growth, in the past two years, the coffee beverage market has continued to rapidly heat up and the market size has been continuously expanding. The "Analysis Report on Market Demand and Investment Planning of China's Coffee Industry from 2020 to 2025" released by the Prospective Industry Research Institute shows that the average annual growth rate of coffee consumption in China is 15%, far higher than the world's 2% growth rate. It is expected that the size of China's coffee market will reach 217.1 billion yuan by 2025. In this process, coffee has become increasingly popular, gradually transforming from a lifestyle of petty bourgeoisie to a daily life for more consumers. Lin Yue, an analyst in the catering industry and chief consultant of Lingyan Management Consulting, believes that affordable freshly ground coffee has a broad market and has found a survival gap between instant coffee and mid to high-end coffee, filling the gap in popular coffee. Usually, most consumers find it difficult to distinguish between different brands of coffee. Since it is difficult to break through in terms of products, brands can only focus on price, "said catering analyst Wang Hongdong. Chen Jing, a senior analyst at Tianyancha Research Institute, stated that throughout the development of the Chinese coffee market, coffee's attributes and characteristics are in line with the new consumer needs of the people, such as the physical needs of decompression and slimming, the spiritual needs of refinement and self satisfaction, and a wide range of social needs. At present, the coffee category education is preliminarily mature, especially for emerging brands that enter the market relatively late and have low pricing. They gradually occupy the market by utilizing price advantages and high cost-effectiveness, deeply sinking into the market, and attracting more consumer groups, "said Chen Jing. Open source securities research report also shows that affordable freshly ground coffee has become a major trend in the industry, and with the help of low prices, various brands are accelerating the market
Edit：Hou Wenzhe Responsible editor：WeiZe
Source：China Consumer Dairy
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