Sales of more than 30 brands have dropped, and instant coffee no longer tastes good

Instant coffee seems to have fallen out of favor in the age of freshly brewed coffee, is that true?

More than 30 instant coffee brands sales fell

The new slightly financial view is concerned that, according to the data of Jiuqian center stage, in the first quarter, Tmall “brewed coffee” category GMV (total merchandise transactions) decreased by 7.1% compared with the same period last year, of which GMV accounted for more than 60% of the category “instant coffee” decreased by 4.4%. 4.4%.

Combined with the previous market data, this is instant coffee since the fourth quarter of last year, has been two consecutive quarters of decline.

On Tmall, among the top ten brands in GMV of brewed coffee category, three and a half, Starbucks, Yong Pu and Nestle's brand Nespresso all showed a downward trend.

Hangzhou media Metro Express - Orange Persimmon Interactive reporter learned from a large supermarket chain in Hangzhou, the first half , Nestle, Xiangyao, Maxwell and other more than 30 instant coffee, the supermarket's sales year-on-year decline in all, most of the decline in the double-digit, the largest decline has exceeded 80%.

In the west of Hangzhou city, another medium-sized supermarket, only a brand of Nestle seven or eight instant coffee on sale, but with a very conspicuous promotional ads: full of 29 yuan back to 4 yuan, full of 55 yuan back to 8 yuan.

The boss of the supermarket said that these months instant coffee sales are not good, a lot of coffee on the shelves or last year's products, but a single strip of good sales, 1.5 yuan per strip, most of the young people buy the Internet cafes in the neighborhood.

China's coffee market has long entered the era of freshly ground, instant coffee seems to have fallen out of favor.

The bygone era of instant coffee's popularity

Instant coffee, in today's age of freshly ground coffee, looks old-fashioned, tastes bad, and is a bad experience, just like instant noodles.

If we go back in time to the 1980s, and before 2018, it was the era of instant coffee.

At the end of the 1980s, Nescafe entered the Chinese market and placed a large number of TV ads and offline ads, especially with a very impressive classic advertising slogan: Nescafe, instant coffee, instant drink, great flavor!

In that era when we just had enough to eat, coffee was a symbol of high-grade quality of life, and many people drank their first cup of coffee, almost all of which was Nestle's instant coffee.

The new slightly fiscal view remember the scene of coffee, go to the supermarket to buy a bottle of Nescafe, and then buy a packet of sugar, pour the coffee powder, put a piece of sugar, plus hot water, a cup of coffee on the brewing of good.

The biggest feature of instant coffee is convenience, it is very convenient to buy, and it is also very convenient to brew. Instant coffee easily enters into the office, travel, family and other consumer scenes, especially the office white-collar workers like instant coffee very much.

In China's coffee market at that time, instant coffee occupied an absolute advantage. According to Euromonitor, in 2013, instant coffee accounted for 97.6% of the entire Chinese coffee market.

In the era of instant coffee, Nestle was the dominant player in the industry, synonymous with “coffee”.

Market data show that Nestle instant coffee market share in China increased from 67.6% in 2015 to 72.4% in 2018, far exceeding the sum of the second and third place in the industry, and Nestle earned a lot of money.

It can be seen that instant coffee has also been brilliant.

Why has instant coffee fallen out of favor?

So, why did the formerly popular instant coffee gradually fall out of favor?

In the view of the new product, the shrinking market share of instant coffee is an inevitable trend in the development of the coffee market, which can be viewed from the perspective of popularization of coffee culture, upgrading of coffee business ecosystem, and enrichment of coffee consumption ecosystem.

Coffee is an exotic product. When coffee was first introduced into China, it was difficult for Chinese people who were used to drinking tea to accept the bitter flavor of coffee, and not all of them liked coffee.

Even if Starbucks later entered the Chinese market and provided freshly ground coffee, many people still thought that coffee was very bitter, and the people who started drinking coffee at the very beginning were still a small group of people.

Since 2015, the emergence of Internet coffee, Lian Coffee at the beginning, and Ruixing Coffee established in 2018, has set off a wave of Internet coffee boom, accelerating China's coffee culture from niche to mass.

The core driving force that made China's coffee culture go from niche to mass is the frantic expansion of freshly ground coffee, as well as the evolution of the coffee business ecology and the change in the coffee consumption ecology.

Starting from Starbucks, Costa, to the Internet coffee brand Ruixing Coffee, as well as from last year to this year is very hot new coffee brand Kudi, foreign fast food brands such as McDonald's, KFC, etc. have launched freshly ground coffee, the new Chinese tea brand Naixue's tea has also launched a coffee product, and even state-owned enterprise giants Sinopec, China Post have crossed the border to sell coffee.

According to data from the 2023 China Urban Coffee Development Report, China's coffee chain brands totaled 733 in 2022, with 28 of them having more than 100 stores. As of 2023, the number of existing stores of 21 coffee chain brands amounted to 25,352.

By the end of May this year, Starbucks had opened 6,200 stores in 230 cities in the Chinese market, and Ruixing Coffee also officially announced on June 5 that the number of stores nationwide had exceeded 10,000 stores.

The frantic expansion of freshly ground coffee brands has made it possible for consumers to buy a cup of freshly ground coffee anytime, anywhere.

Popular coffee brands such as Ruixing Coffee and Manner have also launched portable ear coffee products, which taste much better compared to traditional instant coffee.

Veteran coffee lovers will choose to go to the store for a cup of hand-brewed, or go to Starbucks to buy roasted coffee beans, go home to grind and brew their own beans, and enjoy the coffee good time.

In addition, ready-to-drink coffee is also grabbing the market share of instant coffee, including coffee giant Starbucks, Nongfushanquan, Wahaha and other beverage brands are also making continuous efforts to ready-to-drink coffee market.

This year, Nongfusanquan launched a new product line of carbonized bottled coffee. Wahaha following the launch of cat edge coffee in 2016 on the new “curry”, once again back to the ready-to-drink coffee track. Functional beverage brand Dongpeng Special Drinks also launched a ready-to-drink coffee product last year.

Coffee from the instant era into the era of freshly ground, but also an international trend, this trend is manifested in other countries around the world, for example, in 2020, the United States, Japan, freshly ground coffee accounted for 87%, 63%, respectively.

Instant coffee does not smell good?

According to the “2023-2028 China Instant Coffee Industry Supply and Demand Analysis and Development Prospect Research Report” released by CRRP Research Institute, China's coffee consumption market is currently around 100 billion yuan, of which instant coffee accounts for 72%, i.e., the market size is about 72 billion yuan.

A venture capitalist said that most of the business in the coffee industry is actually under the water, and in the past two years, Ruixing has attracted the most attention, but in fact the freshly brewed coffee market to which Ruixing belongs still accounts for only 15% to 20% of the coffee market in China, despite its rapid growth. The remaining 65% to 70% of the coffee market is actually the world of instant coffee, with ready-to-drink coffee ranking third in terms of market share, accounting for about 10% of the size, and the rest of the market being occupied by coffee beans, capsule coffee, hanging ear coffee and other niche coffee consumption methods.

Jingdong Supermarket's recently released “2023 Coffee Industry Insights and Trends” report shows that instant coffee is still the main product in the market, and junior coffee players such as small-town crowds, blue-collar crowds and young groups favor instant coffee.

Instant coffee consumption also has seasonal consumption characteristics, climate causes coffee category sales show seasonal differences, consumers in the spring and winter more love hanging ear, summer tend to choose coffee liquid, coffee powder and ready-to-drink.

However, as new products are introduced, China's instant coffee market is accelerating its renewal and iteration, and the industry ecology is showing a more diversified trend.

First, the consumption channel of instant coffee has shifted from offline to online.

In the era without e-commerce, the main sales scene of instant coffee was superstores, while the sales scene and channels of instant coffee now have long been shifted from offline to online.

The 2023 China Urban Coffee Development Report shows that China's online instant and ready-to-drink coffee sales scale has continued to grow over the past three years, with instant coffee accounting for a relatively high proportion of the scale, and the traditional instant coffee category coming out on top in terms of sales.

Nestle is still the leader of the instant coffee industry, and Euromonitor data shows that Nestle's market share in the instant coffee sector will reach 72.3% in 2022.

As mentioned earlier, instant coffee is only a downturn in sales in offline super channels, but online sales data is still growing, even if instant coffee sales fluctuate in the short term, it is a normal market phenomenon.

Secondly, the instant coffee category is more diversified, and the popularity of boutique instant coffee is accelerating.

In the past, when it comes to instant coffee, the first thing that comes to people's mind is Nestle instant coffee powder, and nowadays the categories of instant coffee have been very many, including instant coffee powder, ear coffee, espresso coffee liquid, capsule coffee, freeze-dried coffee and so on.

Freeze-dried coffee and coffee liquid have become the hottest selling instant coffee categories in 618 this year.

Tmall data show that during this year's 618, three and a half, strong encounter coffee (NESPRESSO) and Yong Pu ranked in the top three of the sales list of brewing brands.

These new instant coffee brands pursue to build a boutique instant coffee brand, in terms of products, categories, taste, packaging, drinking methods and other aspects of innovation, to tell a new selling point, to tell a new story of instant coffee, attracting a lot of young consumers.

Boutique instant coffee such as Three and a Half Coffee, Yong Pu Coffee and Sumida River Coffee have set off a boutique and niche consumption boom of instant coffee, and instant coffee still occupies a place in the market.

At the end of March this year, coffee retail brand Sumida River Coffee announced the completion of hundreds of millions of yuan in Series C financing, led by Yijing Capital and Jiande Holdings, followed by Buer Capital and Qiming Venture Capital. The brand focuses on the concept of “ration coffee” and takes the cost-effective route, and by the end of 2022, the cumulative coffee sales of the whole network will reach 1 billion cups.

Third, the new instant coffee has become the main direction of the instant coffee track in the future, and market players have rushed in, each showing their skills.

Instant coffee is still heating up, and the major coffee players in the market have been making efforts in this track.

Currently, market players such as Starbucks, Ruixing Coffee, KFC, Lianhua Coffee, Nova Coffee and others have launched coffee liquids or instant coffee powder in their online flagship stores.

Even instant coffee giant Nestle has had to pick up the slack and follow suit, with the Nestle Starbucks Global Coffee Alliance announcing the launch of the strategically new Starbucks Follow the Star Cup Super Fine Instant Coffee in 2021. Maxwell also did not give up the boutique instant track, also launched a cold extraction freeze-dried coffee powder, hanging ear coffee powder and other products.

In the future, the market share of traditional instant coffee will be further reduced, especially the proportion of traditional super sales will be lower and lower, but the new instant coffee category will be richer, more segmented, more diversified, and has entered a new era of development of a hundred flowers blossom and a hundred schools of thought.

The main player of instant coffee track in the future will be the new instant coffee, so that instant coffee is still a good business in the future, instant coffee business is still very fragrant!