The milestone of Starbucks 5000 stores is actually a business history of Chinese coffee

Starbucks opened its 5,000th store in Mainland China. This store is located in Qingdao. From the design point of view, it looks like a sailing ship about to set sail.

This is a landmark.

Back in Beijing in 1999, Starbucks might not have thought that its story in China would be so rugged, vivid and full in the future. In the blink of an eye, in addition to its foreign identity, Starbucks is more like a man who cultivates an oasis. In the face of a vast but barren land, it has carefully created and cultivated a coffee market and extended narrative business stories.

To some extent, behind the 5,000 stores are not only Starbucks China’s brand narratives, but also China’s coffee stories. The number "5000" not only marks the victory of Starbucks China's store expansion, it also includes the complex fact that the blue ocean becomes the red ocean, the nobility becomes intimate, the simplicity becomes exquisite, and the leisure becomes fast.

This is a turning point for Starbucks and also a turning point for Chinese coffee.

Class consumption

On January 11, 1999, the first Starbucks opened in Beijing International Trade Center.

At that time, reform and opening up had been going on for 20 years, and people escaped from the gradual impoverishment of daily life and began to enjoy the material life brought about by the surge of wealth. But that was the age when a pot of tea could be soaked repeatedly for one day.

Although from the late Qing Dynasty, coffee was brought into China by foreign missionaries. However, for a long time later, the exotic bitterness and arrogance of coffee did not allow more people to come into contact with this crop.

▲ Picture from unsplash

As a large tea-producing country with a long history, China has the most extensive tea-drinking audience in the world, and coffee lacks competitiveness here. The lack of capital also makes coffee lose its backing, and coffee lacks the possibility of planting coffee deserts as a commodity.

In this way, for most of the 20th century, coffee lost the opportunity to break through in the populous Chinese market.

Until the intervention of chain brands such as Starbucks, coffee finally awakened the gradually sleepy citizens. In the beginning, this kind of awakening started from TV commercials. Two years before Starbucks appeared, Nestlé Coffee broke the silent market in mainland China with the phrase "It tastes great." After that, coffee began to spread to local and well-off families in today's first-tier cities.

At that time, coffee consumption was fashionable and ceremonial.

Children in old Shanghai still remember that coffee is packed in gift boxes. There are big jars in the gift box, and small spoons and coffee cups are also given. Every time a guest comes, people will take out coffee from the cupboard in the home for the guests to taste. At that time, during the Chinese New Year, coffee will become a trendy gift and be handed over to oneself by relatives.

The coffee in the hotel also attracts affluent families. The waiter approached the guests with the coffee and carefully put the sugar cubes into the white ceramic cups. After stirring, a smooth and sweet cup of coffee was successfully made.

A large number of western brands flooded into people's vision at that time. In 1987, the first KFC opened in a busy section of Beijing. In 1990, a sculpture of Uncle McDonald's appeared in Shenzhen Dongmen Commercial Pedestrian Street.

People have been loving Coca-Cola, which has returned to the market for 20 years, and until then there has been no Western drink comparable to it.

▲ Picture from McDonald's official website

Thus, Starbucks appeared in China accompanied by lion dances and flower baskets.

In 2019, the 20 years since Starbucks entered China, the number of coffee cups consumed per capita in China was only 7.2 cups. In 2018, the figure was 6.2 cups. At that time, the number of coffee cups consumed per capita in the United States was 388.9. Japan is 279. In 2019, 84% of Chinese people drink instant coffee.

Although China's coffee consumer market has not yet reached its potential, and coffee education has not penetrated everyone from all walks of life, changes have already occurred.

This fast-moving coffee brand born in Seattle has become a cultural symbol in China. After entering the country, Starbucks has its own label of "consumption upgrade".

This label may come with coffee, but more of it is brought by Starbucks' pricing strategy. On the first day Starbucks entered China, Starbucks' pricing remained at around RMB 20.

A surviving video clip recorded the scene of Starbucks China’s opening day. A man with Beijing dialect said to the camera, “Based on my current income, I may not come often because the price is definitely higher. of".

But then he said:

Maybe after such a period of time, three, five, eight years, there may also be opportunities (often) to come.

As he expected, China's economy has developed by leaps and bounds. From the data point of view, China’s coffee consumption is still a long way from the blowout, but Starbucks relied on a slightly higher-priced brand strategy to quickly establish Starbucks’ brand name and became the undoubted leader in the market at that time.

To a certain extent, the high price directly affects consumers' desire to consume, but Starbucks also relied on the strategy of high pricing to promote the establishment of Starbucks China's brand image. High-end, fresh, and stylish, a series of keywords circled a group of high-class consumers.

Schultz said in an interview with The New York Times,

For many years, the Chinese have been very fond of Western brands, especially Western luxury brands. I think we may have benefited from it.

Starbucks relied on Chinese people's knowledge of coffee, and it spread from high to low.

"Third Space" and Expansion

In the eyes of Chinese people, the establishment of Starbucks' "high-precision" image is actually inseparable from the "third space." This is the secret of the early Starbucks being able to ramp up all over the world, including the Chinese market.

The concept deduced to the extreme by Starbucks is not the original Starbucks.

In the 1970s, American sociologist Oden Berg earlier proposed the concept of "third space". Simply put, the family living space is regarded as the first space, and the workplace is the second space. In addition, there is a third kind of space, which is a place for people to rest, talk, and entertain.

In 1981, when Schultz was the general manager of a household goods company, he traveled to Milan to participate in the International Houseware Fair. On the streets of Milan, he met several coffee shops, and the owner of each shop knew the customer’s name. . The creator of the largest coffee brand in the future was inspired by it: people and coffee can be connected through personal intimacy.

▲ Schultz, the picture comes from @星巴克中国微博

In 1988, Schultz bought Starbucks for US$3.8 million and began to realize his vision of a coffee shop, that is, to create a space where guests can have warmth and belonging, and provide customers with high-quality services, not just simple coffee The transaction is so simple.

Specifically, the "third space" is the same as all Starbucks store decorations you see today: warm and soft lighting, slow and comfortable music, and tables and chairs suitable for work and conversation.

Until now, the impression that Starbucks has given to Chinese people is still the exquisite image of the "Universal Joint Office Center."

Sitting and working at Starbucks, having a sip of coffee, talking about business, or typing on the keyboard of a Macbook alone, is a picture of the "third space" that Starbucks has portrayed in China. In the early days of Starbucks China's development, Starbucks took advantage of the Chinese people's "bad concept" of coffee to create Starbucks coffee as a consumer product for the wealthier class, and through the creation of a "third space" to encourage core consumer audiences like white-collar workers to stay in the store.

Starbucks is not unique to the "third space". However, when the brand coffee was arbitrarily sown, the Shangdao coffee from Taiwan was finally covered by the tattered leather sofa with a business atmosphere. The Korean coffee accompany you and Man Coffee only left a dusty bear after the radical expansion. , The carving time that rose from the ground between the universities is finally no longer carved by time. Only Starbucks moved steadily in the fight.

Even if a space can be easily created, the standardization of Starbucks decoration and products, site selection considerations, employee service and brand culture under the direct operation model cannot be achieved by these once-popular coffee brands.

The expansion of Starbucks happened easily with the "third space" and other characteristics.

▲ Picture from unsplash

After Schultz acquired Starbucks, Schultz expressed his desire to become a nationwide company in the United States, and to incorporate values ​​and codes of conduct throughout the company. By 1992, Starbucks had rapidly opened 53 stores in the United States. In the same year, Starbucks was listed on the Nasdaq.

In China, the speed of expansion is no different.

After the millennium, Starbucks seems to realize the potential of the Chinese market. At the end of 2005, Starbucks established the Greater China Support Center in Shanghai. In 2006, Starbucks bought back shares in North China. In 2017, Starbucks reclaimed the remaining 50% of the shares in East China for US$1.3 billion. Starbucks completely took the Chinese market back into its own hands.

Prior to this, the coffee market with huge consumption potential in East China had been a joint venture with Uni-President.

According to data released by Starbucks, it took Starbucks nearly 17 years to open 2,000 stores in China. After regaining its direct management rights, Starbucks expanded rapidly, reaching 3,400 in 2018.

By the end of 2019, the number of Starbucks stores in China reached 4292, second only to the United States.

Every home is the same, every home is different

The 22 years that Starbucks has entered the Chinese market have not been without a crisis of public opinion. For example, the media’s questions about its pricing, the controversy at the Forbidden City store, and the "Luo Yonghao and the Zhongbei Big Cup" incident that became a stalk, but in general, for a brand of this size and volume , These public opinion crises will not hurt one's muscles and bones. In the expansion of the Chinese market, Schultz also encountered setbacks in exploring the Chinese management team and how to localize Starbucks culture.

In business, the biggest challenge is actually competition.

When the Chinese coffee market attracts many local and foreign brands to enter the market, the advantage of the "third space" that is beneficial to Starbucks does not belong to Starbucks alone. Almost at the same time, all coffee brands have established their own "third space."

In 2006, COSTA entered China, and this coffee brand, also from the West, showed great vitality. Within 3 years of entering the Chinese market, COSTA's expansion rate once reached 2.5 times that of Starbucks. Wherever Starbucks opened a store, COSTA followed. At that time, COSTA set a plan for itself to develop 2500 stores in 2018.

▲ Picture from @COSTACOFFEE China Weibo

However, because COSTA's positioning in China has always been floating in the upper echelon, marketing is out of place and the product reputation is insufficient, although the store expansion is aggressive, Starbucks has not entered the Chinese market as early as more than ten years on the whole.

COSTA, which was acquired by Coca-Cola in 2018, failed to usher in a new round of spring. Affected by the epidemic last year, COSTA withdrew from Starbucks competition by closing its stores on a large scale.

There is also competition for coffee brands such as Pacific Coffee and Mcafee. Starbucks felt threatened but could not be shaken.

It wasn't until 2017 that Luckin Coffee was born, and the coffee brand that made Starbucks really shaken appeared. Luckin has rapidly grown into a leader in the domestic coffee market with the "Internet play" that Starbucks has never seen before. Overwhelming advertising and marketing, discounts that break consumer perceptions, and an online order model that breaks through the "third space", the concept of "fourth space" that is more efficient and creates more consumption scenarios is emerging.

It was also about the same time. In September 2017, Starbucks officially connected to Alipay. A year later, Starbucks fully cooperated with Alibaba and launched the "Special Star Delivery". In 2019, Starbucks launched the "Brown Express" service. "Order online, pick up at the store" has become Starbucks' promotion model to adapt to the digital age.

▲ Picture from Starbucks China official website

In those days when the coffee industry was at its peak, Luckin completed the layout of 525 stores after 4 months of trial operation. In 2018, Luckin also sued Starbucks for unfair competition.

For Starbucks, a new domestic coffee brand expanding its stores at an unexpected rate can bring pressure. But in fact, behind the crazy marketing, Luckin's cost per cup of coffee has soared. Because of the non-overlapping of most of the customer groups caused by price levels and store positioning, Luckin and Starbucks' market competition is misaligned, but the marketing voice cries have collided.

In other words, "Coffee Express" has a certain background in the development of market competition technology, but on the other hand, it also conforms to changes in consumer trends.

In 2014, Starbucks introduced its "Selected Stores" to China, attracting consumers with high-quality coffee experiences and coffee categories. In 2017, Starbucks opened a selection ™ The Shanghai Baking Workshop attempts to interpret the "coffee experience" more deeply.

These attempts are the embodiment of Starbucks' attempts to provide more in-depth coffee education to Chinese coffee consumers. Starbucks also opened "pet-friendly stores" and "sign language stores" to convey Starbucks' corporate values. This is the biggest advantage that Starbucks can compete with other brands of coffee in addition to coffee itself.

▲ Starbucks various aprons

As a chain management brand, Starbucks has standardized on branding, service, quality control, operation management, and employee training. Under standardization, the decoration style of the store is similar, and the service of the staff is considerate. But at the same time, breaking through standardization is also what Starbucks pursues. Starbucks stores in China with different appearances and different functions integrate the decoration details of local culture. Sometimes, the staff's aprons of different colors can bring surprises to people.

▲ Xi'an Datang Furong Garden Starbucks

In the Chinese market for many years, Starbucks' cultural and creative products are unmatched by many coffee brands. In the early years, Starbucks’ cat claw cups exploded. Tmall’s first batch of 1,000 cups were robbed within 0.07 seconds; Starbucks continued to launch limited Christmas red cups and various joint names. Various younger marketing methods have also allowed the old Starbucks brand to create more surprises for consumers.

▲ Picture from @星巴克中国微博

In April last year, Luckin was caught in a turmoil due to "financial fraud", and the battle with Starbucks has not yet produced a winner.

Either by luck or background, Starbucks has not lost its rhythm in the Chinese market.

At the end of 2020, Starbucks China, which had previously been affected by the epidemic, fully resumed its business. Although the revenue is not as good as expected, new stores are still blooming steadily in various cities in China.

For Starbucks, the challenge continues. New-style teas have exploded in recent years. Heycha and Nai Xue, which also focus on the "third space", have emerged. More niche specialty coffee brands have won the favor of capital, attempting to challenge the status of higher players, even Old rival Rui Xing is also "resurrecting from the dead." Can Starbucks still occupy the Chinese coffee market in the future?

To be sure, Starbucks is serious about making friends with China and Chinese consumers. This foreign brand, which has repeatedly used the positive image of "News Network", has proved this with its investment in the Chinese market and the support of the industrial chain.

In any case, the milestone of 5,000 stores has been established.

For Starbucks, this is difficult but great. When Wang Jingying was promoted to Starbucks China CEO in 2016, Schultz stated that Starbucks will operate more than 5,000 stores in mainland China in 2021. Looking now, this has been achieved.

In the future, what else will Starbucks try to make waves in the Chinese coffee market?

At least it has enlightened the Chinese people's understanding of coffee, and has revealed an increasingly mature local coffee market.

Compared with the coffee wasteland a few decades ago, what is stepped on is now fertile soil that everyone wants to get a share of.

This narrative of the brand finally reached a turning point. We looked back and found that a business history had already emerged. This may be the biggest success of Starbucks in China.

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