Costa Coffee in China
Since 2006, Costa Coffee, the British coffee shop chain has entered the Chinese market and expanded in a dramatic way. Based on the Starbuck model, with the implementation of Coffee shop just nearby Starbucks stores, its ambition is to make China become its ‘second home’, having one-third of the market share of coffee shop market. Costa Coffee has the particularity to have his own roastery with their proper blend in every store. The giant has since more than 2861 stores in 30 countries. The owner of Costa coffee even plans to extend the number of the coffee shop from 365 to 900 by the end of 2020.
See also our focus on Coffee shop market in China
Strategic Approach for Costa Coffee to Enter China Market
In order to differentiate Costa Coffee from its strong competitors such as Starbucks or McCafé, Costa Coffee relies largely on local Chinese retailers. One of the recent moves included an agreement signed with the Beijing Hualian Group, a nationwide retailer. Costa Coffee also gives many authorities to its partners; as more it gives authorities, more the operations are efficient.
Unlike Starbucks process, which follows the American way (or foreign way) of standardizing everything, Costa Coffee conducts a strong analysis of the local market in China and is open to change its offer according to its region and the taste of the people in that region. This strategy leads many Chinese consumers to give feedbacks saying, even in Shanghai and Beijing, Costa coffee tastes slightly different. Ye Xiaobo, the store manager of Costa Coffee 1912, said: “Starbucks are more casual like the way Americans do while as for Costa Coffee, is more traditional, rigorous with more focus on the utensils”.
Costa Coffee also noticed that Chinese customers tend to be more comfortable sitting in a more private space while drinking coffee. Costa Coffee has been focussing on a smart way of arranging tables and chairs so that every customer will feel more at ease.
Like its competitors, Costa also embraced the localization strategy by adding iced green tea to stores in southern China and a hot beverage in northern China.
Overview of its Long-Term Business Plan in China
Compared to Starbucks’ 16-year-presence in China, Costa uses only 8 years to reach 25% of the total market share, which shows that it has the capacity to lead Chinese market. According to China Consultants, one-third of its market share in China is only a matter of time. The only problem is that to have too many partners to share its profits can be risky in the future. Thus, how to build an efficient platform where each party has a fixed say and how to create a system to prevent future conflicts remains to be considered.
Costa Coffee Club
Costa coffee in China is directly competing with the American coffee maker “Starbucks” who have seen a lot of success in China with a strong local strategy, with an emphasis on the consumer experience factor. Such as his main competitor the British Coffee brand is proposing a loyalty card for app or android phones, the member can gain points every time-consuming at the shop in order to get free coffee or other goods.
Daxue Consulting expertise
With many years of experience in the coffee shop industry, Daxue Consulting can help you enter the Chinese market and develop your brands to reach millions of consumers. From online surveys to mystery shopping, our consultants in China can give you a full tour of the Chinese market and determine what is the best strategy for your brand. To know more about the Chinese coffee market, do not hesitate to contact our dedicated project managers by email at email@example.com.
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