The coffee market in China continues to grow at a tremendous pace, with a variety of shops testing out different business models in this industry. But after the rise and fall of Luckin, the sudden rise of instant coffee like Coffee Pls, and a myriad of foreign players like Starbucks, a simple and humble Manner Coffee has now spread through the country.
How it started: small coffee shop in Shanghai
The Chinese coffee chain first started in a 2 square meter store on Shanghai’s Nanyang Road in 2015. In 2019 there were already 10 stores in Shanghai. From the perspective of the store market layout, Manner Coffee has not only deeply cultivated the Shanghai chain, but also entered the southern, central, and northern markets of China by entering the most economically developed cities in the region, laying a good foundation for the whole country.
According to GeoQ Ana data, Manner Coffee currently has around 150 stores nationwide, covering six cities: Shanghai, Beijing, Suzhou, Shenzhen, Chengdu, and Xiamen.
What makes Manner Coffee so special
Manner is known for coffee at a moderate price. One cup sells for around RMB 15-20, earning the name “the king of cost-effective coffee in Shanghai” by netizens. Additionally, people can bring their own cup and get a coffee for only 5 yuan.
In the selection of coffee beans, the Shanghainese coffee shop uses mostly China’s own Yunnan beans. Yunnan coffee beans are of good price and good quality, which reduces the cost of coffee to a certain extent.
What Manner Coffee offers to customers
The standard menu only offers a limited number of beverages, such as espresso and Americano with prices of 10 yuan and 15 yuan respectively, as well as latte, Australian white coffee, cappuccino, hand-brewed coffee, etc. Single items, as well as a variety of items such as mocha, cold brew coffee, macchiato, hot chocolate, are priced from 15 to 25 yuan depending on the size.
The “Secret Menu” offers a more personalized series of items, such as osmanthus/floral/oatmeal series latte, matcha latte, etc. In addition, Manner Coffee also launched a selection of hand-pressed coffee beans. Among them, the price of Brazilian coffee beans is as high as 108 yuan.
Manner vs Luckin: How to very different domestic coffee chains succeed
Manner Coffee has taken a different path of development, completely different from Luckin Coffee in China. Luckin Coffee’s business started out with venture capital with the intention to scale quickly. On the contrary, Manner Coffee started as a boutique café. The creators, unlike Luckin, do not use fully automatic coffee machines and focus on the quality of the coffee beans. The chain includes not only good Chinese coffee beans but also good Chinese baristas. It has centers where they train them, which is not common in China.
Manner Coffee’s online sales channels
The coffee chain also launched products such as portable coffee pods, unroasted beans, oat milk, coffee appliances, equipment, and cups. These products are sold in the Coffee Shop’s Taobao store. The TOP sold items are milk brew latte and Italian blended coffee beans.
Investments from top companies
On October 19th, 2018, Manner completed the 80 million yuan A round of financing invested by Today Capital. This is the first financing after Manner was established. In March of this year, Capital Today also sent senior executives to participate in the daily management of the Manner coffee brand.
On December 24th, 2020, Manner completed the US$100 million strategic financing of private equity fund capital initiated by former Tiger Fund global partner Chen Xiaohong and hedge fund Coatue Management investment.
On February 24th, 2021, Manner completed the A+ round of financing invested by Singapore’s wealth fund Temasek. The value of Manner Coffee after this round of investment was approximately $1.3 billion.
On May 24th, 2021, Manner received a round of hundreds of millions of dollars in strategic financing from Dragon Ball Capital, a subsidiary of Meituan Dianping. This round of financing may be used for store expansion and digital investment. After the financing, Manner’s value exceeded US$2 billion.
Investments from a tech giant
The Chinese tech giants see huge potential in coffee chains and are therefore looking to invest there. According to the Qianzhan Industry Research Institute, the coffee market will surpass 300 billion yuan by 2023, an increase of 33% over 2020. In June 2021, Manner Coffee received an investment from TikTok’s parent company, ByteDance. This is the fourth investment in this Chinese coffee brand in the past six months.
- Manner Coffee is trying to build a brand-wide product system through the expansion process.
- The price advantage of standard coffee drinks attracts traffic and customer base.
- Although Manner has set up online Taobao stores, the current brand development is still mainly offline.
- The substantial investments in Manner drive the growth and expansion of the coffee shop chain.