Chinese coffee brands like Luckin Coffee, Manner Coffee, and Cotti Coffee are expanding their footprint in overseas markets, showcasing Chinese brand essence globally from multiple dimensions.
The increasing global presence of Chinese businesses seeking growth opportunities highlights the crucial role of overseas advertising for Chinese brands. In 2022, China ranked second in worldwide advertising spending, amounting to USD 17.9K. In China’s advertising industry, digital advertising dominates, accounting for the majority share. In 2023, TV & video advertising are the biggest players, with a market value of USD 72.32 billion.
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China’s coffee export triumph: top destinations and figures
Singapore has become the preferred destination for many Chinese coffee stores’ expansion due to its unique geographical location, situated at the center of Asia, plays a natural crossroads between the East and the West, providing a solid foundation for Chinese businesses looking to invest in Singapore. Besides, Singapore has a notable surge in its coffee industry and coffee consumption experienced a nearly 6% growth, reaching 95 bags between 2021 and 2022. Similarly, coffee holds a significant place in South Korean culture, evident in the estimated 88,000 cafes, providing South Korea with one of the world’s highest densities of coffee shops per capita and making it an attractive destination for the expansion of Chinese coffee stores.
Franchise frenzy: Chinese coffee chains’ Southeast Asian takeover
In 2023, the Chinese coffee chain Cotti Coffee opened its first store in Kuningan City Mall in Jakarta, Indonesia, following the launch of its outlet in Seoul, South Korea. At the beginning of 2023, Cotti Coffee announced its goal of opening 10,000 stores in three years. Remarkably, within nine short months since its first store opened, they have already launched 5,500 stores worldwide, averaging over 500 new stores per month. Their expansion strategy includes entering other Southeast Asian markets such as Vietnam, Thailand, and Malaysia. With 5000+ stores across 300+ cities in 5 countries, it has become the world’s fifth-largest coffee brand.
In 2015, Mellower, a Chinese premium coffee chain, led China’s premium coffee to go international, becoming the first Chinese premium coffee chain brand to expand into overseas markets. In March 2023, Luckin Coffee expanded to Singapore with nine outlets strategically located in the core business districts, landmark buildings,, and shopping centers, including one in Changi Airport. Singapore’s vibrant coffee culture and high concentration of coffee drinkers make it an attractive market for Luckin Coffee, which is looking to capitalize on the growing demand for coffee in the region. When Luckin Coffee first entered Singapore, it received collective praise, especially among the young customer base who were willing to try new things, sparking a considerable coffee trend. Luckin Coffee not only connects with local consumers and Chinese travelers visiting Singapore but also uses this as an international gateway, offering a new coffee experience for global travelers.
Chinese coffee brands’ innovative marketing strategies
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Cotti Coffee strategically positioned itself as the global sponsor for Argentina’s national football team, featuring prominent ambassadors such as Lionel Messi. The advertising campaign spans both online platforms like TikTok and offline channels, including Cotti Coffee’s stores, such as those in Japan and South Korea.
Furthermore, in December 2017, Mellower Coffee embarked on an expansion into the realm of international fashion design, partnering with the Paul Smith World Tour to delve into the international high-end consumer market and advance its global branding strategy.
Promotion
New sign-ups with Luckin Coffee in Singapore will be rewarded with two valuable coupons for their purchases. These coupons grant them special privileges, including the option to purchase any in-store freshly prepared beverage for SGD 0.99 and a 50% discount on one in-store freshly prepared beverage. Luckin Coffee has curated an array of promotions and offers during Mid-autumn. Customers visiting any Luckin Coffee outlet in Singapore can indulge in a 35% discount on the Triple Taste Set (comprising 3 drinks from a selection) and the Daifuku Dream Latte Combo (which includes 1 daifuku and 1 latte drink).
Pricing
Cotti Coffee’s pricing strategy in Indonesia closely aligns with its value-focused approach in China, mirroring that of its competitor, Luckin Coffee. The beverage prices initiate at Rp18,000 ($1.17), with the added incentive of promotional discounts for first-time customers and app-based orders. In contrast, the average beverage cost at the extensively present Starbucks, boasting over 540 stores in Indonesia, is nearly fivefold higher at Rp40,000 ($2.50).
Chinese instant coffee brands: digital approach for a new generation
Saturnbird coffee, Tasogare, and Yongpu, embraced a digital-first marketing approach targeting tech-savvy youth. They successfully penetrated the American Asian e-commerce platform Yami. Additionally, Tasogare and Saturnbird have made their debut on the Asian fresh produce platform Weee!. Hot Morning, another Fujian-based instant coffee brand, joined forces with Saturnbird on Amazon’s online channels. Customers in the United States who have purchased Saturnbird coffee on Amazon have posted positive reviews, highlighting its convenience and suitability for travel. Furthermore, some individuals made their purchase after encountering the brand on Facebook, indicating a rising popularity and effective promotion in overseas markets.
Saturnbird is rapidly expanding its global presence through its independent website – en.saturnbird and harnessing the one-stop e-commerce platform, Shopify, for sales. The majority of Saturnbird consumers are in the 24-40 age range, leading to its strategic presence on platforms like TikTok, Instagram, and YouTube. On TikTok, the hashtag #saturnbird has reached approximately 2 million views, with users sharing unboxing videos of Saturnbird coffee, creating coffee-related content, and showcasing coffee consumption in various settings. The brand has garnered increased traffic and followers from its TikTok presence. Their YouTube presence also boasts numerous review videos, with one amassing an impressive 66,000 views.
Power of collaboration: a perfect blend of creativity
Luckin Coffee has collaborated with award-winning designer bottle brand boii to create a series of transparent hexagonal bottles (S$14.90, doubles as a thermos and tea infuser) in many colors, on top of the eye-catching boii egg-shaped ‘PAINT’ cups (S$17.90 each) in the classic Luckin white and electric blue.
Cotti Coffee introduces flexible joint venture models, including single-store and regional partnerships, supporting a diverse range of partners, particularly aiding local small enterprises and entrepreneurs. Regional partners benefit from flagship store preferential policies, exclusive regional rights without committing to a specific number of openings, and additional expansion and operational performance commissions. In addition, Cotti Coffee is planning to establish coffee bean and raw material supply chain bases in locations such as South America, Ethiopia, and Vietnam. This initiative aims to gather high-quality raw materials globally, laying the foundation and strengthening the global supply chain for international development.
Bridging borders: the potential of China’s undiscovered market in the international landscape
In September 2023, Luckin Coffee and Maotai unveiled their collaborative product, “Sauce Fragrance Latte”. The quantity sold reached a staggering 5.42 million cups on the first day of sales, with sales revenue exceeding 100 million Chinese yuan. Hashtags like #Sauce Fragrance Latte Is Popular In South Korea and #Sauce Fragrance Latte Is Trending In Thailand have sparked heated debates on Weibo. Although the trending phrases have a lot of hype, Luckin Coffee’s overseas stores haven’t reached South Korea and Thailand yet.
Many Thai netizens have also expressed their desire to try it and they commented under the post on Weibo, “I really want to taste it,” “It looks delicious,” and “Hope it can be sold in Thailand.” This could be seen as a proactive move by Luckin Coffee to build anticipation for its future expansion in these countries. Overseas media outlets are indeed reporting extensively. For example, a Korean media outlet claimed that the Sauce Fragrance Latte is a “mysterious beverage that sells 18 billion Korean won in a day” and “captures the youth market.”
Source: finance.sina.cn, desgined by daxue consulting, Luckin Maotai Latte has sparked heated debates in Weibo and Korean news
Chinese coffee brands face challenges venturing into global markets
One of the biggest challenges facing China coffee brands is the global competition in the expansion of coffee stores as well as instant coffee. In addition, Starbucks also launched a highly customized instant coffee tailored for Chinese consumers, featuring packaging similar to Saturnbird in 2021, thereby intensifying the competition with Chinese instant coffee.
In some countries, tea surpasses coffee in popularity. In India, 79% prefer tea, contrasting with 19% for coffee. The trend is growing in the United States as well, which has grown by 20% since 2000. In Europe, where 56% favor coffee and 27% tea. In Europe, where 56% favor coffee and 27% prefer tea, there might be an opportunity for Chinese coffee brands to explore expansion in the European market in the future.
Coffee consumers abroad exhibit a pronounced inclination toward crafting their own brews. HiBREW, which is a high-tech brewing system is expanding in the Middle East, Europe, and South East Asia and also cooperated with some overseas coffee reviewers. Premium instant coffee varieties such as freeze-dried, single-serving sachets, and coffee capsules find a smoother path into international markets, whereas coffee chains like Luckin in the U.S. may encounter more formidable hurdles. In the American coffee market, a substantial 79% of coffee enthusiasts prefer to brew their coffee at home.
Key takeaways for Chinese coffee brands expanding overseas
- Luckin Coffee, Manner Coffee, and Saturnbird are strategically expanding their global footprint, exemplifying the essence of Chinese brands on a worldwide scale, with Singapore emerging as a prominent destination for their expansion.
- Cotti Coffee is extending its reach to global markets by implementing a similar value-focused approach and adding incentives for discounts.
- Chinese instant coffee brands like Saturnbird Coffee, Tasogare and Yongpu are expanding into overseas markets through the utilization of e-commerce platforms.
- While collaborations between Chinese coffee brands and overseas counterparts or other famous brands attract considerable attention, there’s still untapped potential for China to fully penetrate international markets, given the current emphasis on the domestic market.
- The intense competition, consumers’ preference shifting towards tea culture, and inclination towards crafting their own brews in some of the countries may be potential challenges for Chinese coffee to venture into international markets.
