Winning a multi-million-dollar investment from Fengrui: He made cup instant coffee a hot item in e-commerce and sold it at 8 yuan per cup

Wu Jun believes that when Sandunban’s sales exceed 100 million yuan, it will be the day when he completes his entrepreneurship from 0 to 1.

"After all, few people would attend such an exhibition with a niche brand of instant coffee."
This was Wu Jun's first time attending the top exhibition in the coffee industry, and he was a little nervous. After two and a half hours of silence, the first wave of visitors arrived at the booth.
Four years ago, Wu Jun and his old classmates founded the coffee brand Sandunban, trying to promote popular boutique coffee through the "e-commerce + coffee" path.
At first, Wu Jun used coffee utensils to attract users; later, he removed the utensils and allowed novice users to make their own cold-brew coffee at home, which became a promotional point for the product; now, whether users use cold water, hot water, ice milk, or hot milk, they can mix instant coffee without losing flavor.
Currently, Santonban is mainly distributed on e-commerce platforms such as Tmall, Xiaohongshu, and Xiachufang. Relying mainly on organic sales, Santonban ranked first in the domestic coffee category sales ranking on Tmall's "Double 11" last year, and ranked second only to Nestle in the global brand ranking during the "Double 12" period.
In January 2019, Sandunban completed a Pre-A round of financing worth tens of millions of yuan, with Frees Capital as the investor.

Note: Wu Jun promises that the data in the article is correct and is responsible for the authenticity of the content. Pencil Road makes objective and true records and has backed up the speed recording audio.

Recognized by 2,000 people at a top exhibition

One day in March 2018, Shanghai.

Before 8:30, Wu Jun had already entered the venue. It was his first time to attend the industry's top exhibition with his own brand of instant coffee, and he was very nervous. "It's like a rookie attending a summit of bigwigs."

At 9 o'clock, visitors began to enter the exhibition hall, but no visitors appeared in front of the Sandunban booth. An hour later, there were still no visitors in front of the exhibition hall. As the clock was about to point to 11 o'clock, Wu Jun gradually began to get anxious. Just like a roller coaster that always hits the bottom and rebounds, soon, waves of visitors appeared in front of the booth one after another.

In March 2018, Sandunban participated in the top exhibition in the coffee industry.

At the exhibition, coffee experts, Chinese coffee champions, two-time WBC world champion mentor Holly and other professionals expressed their approval after tasting Santonban’s coffee. In the following three days, Santonban received more than 2,000 people and collected a large number of questionnaires.

Santonban was founded in 2015. Its predecessor was the No. 92 Coffee House founded by Wu Jun and his old classmates. In the coffee industry, except for the fierce competition among the top players, the middle and tail players are not under pressure, but Wu Jun is a person who likes to make trouble.

In 2011, he led his team to start baking food projects, mainly selling on Taobao. Due to the rapid iteration of user demand and plagiarism in the same industry, although the net profit reached 25%, he had to add SKUs every year, totaling more than 800 SKUs. He felt that in this business, he was just a trader. He wanted to create a valuable and barrier-free brand, so he turned his attention to the coffee industry.

Wu Jun believes that the domestic coffee industry has a promising future. First, the average Japanese and Korean people drink 300 cups of coffee per year, the US reaches more than 500, but China drinks less than 5 cups, and the demand for coffee is increasing significantly; second, the price of freshly ground coffee with good taste is high, and the flavors of moderately priced and convenient coffees are similar. The market urgently needs a coffee brand that can combine flavor, price and convenience.

In terms of product flavor, Santonban selects premium coffee beans that are rated 80 points or above by international coffee organizations such as SCAA, while also extensively collecting user reviews to find products that better suit user tastes.

Wu Jun has three user feedback channels:

First, the baking project that year brought Wu Jun a large number of food KOLs. He invited more than 100 food experts who matched the product's tone to do evaluations to expand the screening funnel; secondly, he obtained questionnaires by participating in industry exhibitions; in addition, for each product, Wu Jun would discuss with the heads of professional organizations such as Xiachufang and Xiaohongshu to discuss which flavor is more suitable for consumers.

After determining the flavor, another big challenge facing Wu Jun was the issue of user understanding.

Ranked first in sales of domestic coffee category on Tmall during “Double 11”

Santonban focuses on popularizing specialty coffee. The solution to popularizing coffee is to reduce the difficulty for users to understand it. Wu Jun gave an example, "For flavors like Americano and Mocha, Starbucks has been educating users in China for many years, and people are gradually accepting them."

Three and a half drip coffee Grand Slam set

Wu Jun believes that extending through peripherals may be a good way. After Santonban was established, it launched sets of utensils such as drip coffee and hand-brewed coffee. Through the improvement of these utensils, Coffee Novice can brew a cup of drip coffee without losing flavor according to the QR code process, but at that time users could only use hot water to brew it.

Since then, the company has started to develop LABS (lossless flavor extraction system) to extract premium coffee into powder. Users do not have to worry about the time control and hand shaking of traditional brewing, and coffee can be dissolved instantly in hot water, cold water, hot milk and cold milk.

During this period, the team also created a cold brew filter coffee that users can enjoy at home in the summer, but it usually needs to be refrigerated for 8 hours. At that time, this kind of coffee could only be tasted in coffee shops such as Starbucks. At this stage, users can enjoy cold brew filter coffee in just 3 seconds, and the company spent 2 years to achieve this breakthrough.

Due to the high cost, another problem that Santonban needs to face is pricing. The market price of Nestlé's coffee powder is only 1 yuan, so is anyone willing to spend 10 yuan to buy a bag of instant coffee? The average price of freshly ground coffee in offline stores is only more than 20 yuan.

Wu Jun was in distress. He began to think, can he use a certain medium to highlight the uniqueness of coffee, so that coffee has a stronger premium space and reduces consumers' concerns about spending 10 yuan?

"At that time, when I saw coffee scenes in American TV series, I would pause and observe carefully." One morning, he suddenly woke up after falling asleep with doubts, and instantly thought of the direction. Afraid of forgetting it when he woke up in the morning, he also wrote down his inspiration on a note.

Three and a half cups of coffee.

He believes that coffee originated from cups, and powdered coffee should also return to cup packaging. "Most coffee on the market is packaged in bags and bars, which are not expensive. If I want to design it in a cup shape, I have to open a new mold, test the accuracy of each mold, and develop a special production and filling system, but I think it's worth it."

A good product is one that allows users to judge its uniqueness at a glance. In pursuit of this quality, Santonban delayed its product launch for half a year.

Since it was summer, online coffee sales were low. However, the cold brew instant series became a hit as soon as it was launched, with monthly sales exceeding more than 20,000 boxes and nearly 200,000 cups.

At present, Santonban’s main sales channels are Taobao, Xiaohongshu, Yitiao and other platforms, and it has never involved offline sales. With the expansion of scale, the cost of products has also been reduced, and the price has stabilized at 8 yuan per cup. With word of mouth, its sales have also maintained natural growth. During the "Double 11" period last year, Santonban ranked first in Tmall's domestic coffee sales rankings, and continued to grow during the subsequent "Double 12", ranking second only to Nestle in the world.

Received tens of millions of investment from Frees Capital

Even though the product was delayed for half a year, the team expressed their support. Wu Jun said, "These are my old classmates of more than 20 years. We have similar values ​​and we have a good understanding when working together."

In addition to this founding team of "old men", the company has also gathered a group of "cute" people born in the 1990s. Old men are afraid that they can't keep up with the trend of the times, so the final product color and design are usually handed over to the "post-90s board of directors" to make the final decision. "We provide the direction, and the final decision-making power is in their hands," said Wu Jun.

At present, Santonban has a 2,000-square-meter roasting factory. For the roasting of coffee beans, Santonban can provide real-time services throughout the entire process. In terms of coffee processing, Wu Jun selected dozens of suppliers with whom he had previously cooperated, most of which supplied products to countries such as Germany and Japan.

In 2018, Luckin Coffee and Starbucks fought each other, and a number of offline coffee brands emerged. Wu Jun said that he had no pressure. First, the main battlefield of these coffees was offline, and Santonban focused on online; second, after users were educated by these players, portable instant coffee became a better choice in places that were difficult to reach in offline stores.

"Even though the coffee industry was in turmoil last year, overall, the industry's innovation is still not active enough." Wu Jun explained that the problem within the industry today is that the giant players are not flexible enough, while most boutique coffee shops still face this business with feelings and dreams. "Future opportunities belong to players with stronger innovation capabilities, which may come from model upgrades in the coffee industry or from external brands, such as Luckin Coffee, which emerged from the Internet industry."

In January this year, Santonban completed a Pre-A round of financing worth tens of millions of yuan, with Frees Capital as the investor. Frees Capital's key investment directions include consumer upgrades, enterprise services, and deep technology, and has invested in brands such as Three Squirrels, Guancha, and Xinliangji.

After completing the financing, Wu Jun said that he will focus on the following three aspects: first, strengthen marketing and publicity, create marketing events with users, and accelerate the expansion of the Santonban brand; second, refine operations, open offline experience stores, build the image of Santonban, and shorten the distance between users; third, adjust SKUs and enrich the product structure.