The current status and prospects of China's coffee industry in 2018: Capital has entered the market and the market for freshly ground coffee has changed

With the upgrading of consumption, the structure of Chinese coffee consumption will gradually improve

At present, the Chinese market is dominated by instant coffee products, which is very different from the global consumption structure that is dominated by freshly ground coffee. Instant coffee is made by extracting soluble substances from coffee beans in the factory and drying them into granules. Drying is the forming process of instant coffee powder. After multiple high-temperature operating environments, the aroma, nutrients and health benefits of coffee are basically lost, and the heavy cultural taste and atmosphere are also lost. Freshly ground coffee refers to coffee that is made immediately after the roasted coffee beans are ground into coffee powder on site. The biggest feature is freshness, which retains the original flavor and aroma of coffee to the greatest extent. With the upgrading of consumption, people's pursuit of coffee taste, efficacy and culture is increasing, and the coffee consumption structure of Chinese people will gradually optimize in the future.

Unicorn Luckin Coffee is favored by capital and completes US$200 million in Series B financing

As a unicorn coffee company in China, Luckin Coffee's development model represents the future development trend of China's coffee industry under the new retail trend. While its online business is beautiful and sophisticated, it also seizes the market offline by opening physical stores.

In October 2017, Luckin Coffee opened its first store in Beijing Galaxy Soho. On January 1, 2018, it started trial operations in 13 cities including Beijing, Shanghai, and Tianjin. In May 2018, it had completed the layout of 525 stores. After 4 months of running-in of products, processes and operating systems, it was officially opened on May 8.

On July 11, 2018, Luckin Coffee announced the completion of a $200 million Series A financing, with a post-investment valuation of $1 billion. Five months later, on December 12, Luckin Coffee announced the completion of a $200 million Series B financing, with a post-investment valuation of $2.2 billion. The valuation has doubled, which shows that Luckin Coffee is extremely favored by capital, and its business model, entrepreneurial team and future prospects have been highly recognized.

As of mid-December 2018, Luckin Coffee had nearly 1,650 stores in 22 cities across the country, 28 times the number of stores in February, when it had 60. Among them, the six major cities of Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou and Chongqing have more than 100 stores. It is expected that in 2018, Luckin Coffee will have 2,000 stores.

The coffee industry in Beijing, Shanghai, Guangzhou and Shenzhen is very popular for investment and financing, and is currently mainly in the angel round and A round

2018 became a turning point for the coffee industry, with a large amount of capital invested in coffee delivery and unmanned coffee machines, such as Lian Coffee's 158 million yuan B+ round of financing, Youyin Coffee's 100 million yuan A round of financing, and Luckin Coffee's third round of financing.

Behind the rise of the coffee industry is the undercurrent of intra-city logistics. From the perspective of investment and financing regions, benefiting from intra-city logistics in developed cities, investment and financing events in China's coffee industry are mainly concentrated in developed cities such as Beijing, Shanghai, Guangzhou and Shenzhen. Among them, Beijing has the largest number, accounting for 28%, followed by Shanghai and Shenzhen, accounting for 26% and 10% respectively. From the perspective of the distribution of investment and financing rounds, the largest number of financings are in the angel round and A round, accounting for 48% and 26% respectively.

Blue Cup has big dreams. Luckin Coffee and other coffee companies have stirred up the hotly competitive coffee market.

A large amount of capital has entered the coffee industry, and the Chinese freshly ground coffee market has changed, with new players and new formats emerging one after another. The new brands have made aggressive moves, disrupting Starbucks' monopoly in the coffee industry. In addition to traditional coffee shops such as Costa, Pacific, Carving Time, Man Coffee, and Zoo Coffee, new forms of coffee projects such as takeaway coffee, boutique coffee, convenience store coffee, and self-service coffee machines have entered the freshly ground coffee market to meet market demand.

At present, judging from the current competitive landscape of my country's coffee industry, instant coffee still occupies the Chinese coffee market, with a market share of 71.8%; freshly ground coffee ranks second, with a market share of about 18.1%, and ready-to-drink coffee ranks third, with a market share of about 10.1%. From the perspective of the freshly ground coffee market segment, it can be mainly divided into traditional coffee brands, new online takeaway brands, convenience stores, catering takeaways, and offline coffee self-service brands. The diversification and convenience of freshly ground coffee purchase channels have posed a great threat to the instant coffee and ready-to-drink coffee markets.

The above data source refers to the "China Coffee Shop Industry Market Outlook and Investment Strategy Planning Analysis Report" released by the Forward-looking Industry Research Institute.

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