After Coca Cola, which has the strategy of “all kinds of drinks”, has been included in the bag, Costa coffee family, an international coffee brand, has also begun to move towards the goal of “all kinds of coffee brand”. On April 6, Costa announced the launch of a new flavor cold extract instant coffee series in China. This is the first time that Costa launched the British classic instant coffee series in China last year, and it has once again improved the territory of boutique instant coffee in China.
Since Costa joined Coca Cola in 2019, expanding the ready to drink coffee category is one of the important strategies of Costa in the Chinese market. However, there are many ready to drink coffee brands in the Chinese market. In the future, with the blessing of Coca Cola, what else can Costa rely on to tell a good coffee story?
Further expand the territory of coffee
On April 6, Costa announced the launch of a new flavor cold extract instant coffee series in China. The two new flavor cold extract instant coffee products are cold extract latte and cold extract black coffee. Since April, the series has successively landed in Coca Cola tmall flagship store, Jingdong flagship store, major cooperative e-commerce channels and offline Super channels.
“Chinese consumers have high expectations for innovation in the coffee industry, and customized innovation for the local market is the core driving force for development,” the head of Costa Costa China told Beijing business daily. With the help of Costa’s professional coffee technology and product innovation accumulation in the past 50 years, Costa will plan a rich product line for its ready to drink coffee category. In the future, Costa will continue to launch more customized and brand-new instant coffee products for Chinese consumers.
It is worth mentioning that this is another upgrade after Costa launched the British classic instant coffee series in China for the first time last year. It is reported that the series is specially designed for Chinese consumers and aims to further develop the market of ready to drink coffee.
In March 2020, Costa launched the first British classic instant coffee product for the Chinese market. “As the first step into China’s ready to drink coffee market, the series promotes Costa’s multi category coffee strategy.” Costa said.
Zhu danpeng, an analyst of China’s food industry, said in an interview with Beijing Business Daily that with the tonality and product strength of the whole brand, Costa is easy to enter the premium ready to drink coffee market. In particular, it will launch a customized version of coffee for the Chinese market, which meets the demand of Chinese consumers for coffee market.
Business experience of “whole category”
“In 2019, after joining Coca Cola, Costa has become a leading brand of Coca Cola’s Chinese coffee category. Expanding the ready to drink coffee category is one of Costa’s important strategies in the Chinese market. In the future, Costa will continue to tap the potential of China’s coffee market and strive to create a “full range of coffee brands.” Costa said.
Just like Coca Cola’s “all category beverage” strategy, Costa also aims its future development at “all category beverage”. It is reported that Costa coffee was founded in 1971 by Bruno and Sergio Costa, two brothers from Italy, in London’s old Paradise Street. Now it is the largest coffee chain brand in the UK, operating more than 4000 stores in more than 30 countries around the world. Since 2011, Costa coffee Express has more than 10000 outlets around the world.
In January 2019, Coca Cola officially acquired Costa. Since then, Costa has become one of Coca Cola’s many beverage brands. After being acquired by Coca Cola, Costa has been exploring in retail. In early 2020, Costa launched two ready to drink coffees and sold them through e-commerce platforms, stores, supermarkets, convenience stores and other channels. In June 2020, Costa cooperated with onecup, a capsule beverage machine of Jiuyang, to launch capsule coffee and enter the home coffee market. In December 2020, Costa and Swiss lotus, the chocolate brand, opened a joint flash shop.
Zhu danpeng said that with the blessing of Coca Cola’s brand effect and scale effect, Costa has greater development space, and the two sides complement each other. Costa’s focus on instant coffee is also to form a differentiated development among many coffee brands.
In an interview with Beijing business daily, the relevant person in charge of Coca Cola said: “Costa and Coca Cola are complementary and powerful. Costa’s expertise and capabilities in the field of coffee will provide Coca Cola with a powerful and global coffee platform to help Coca Cola accelerate its transformation into a full range beverage company. The professional marketing experience, global scale and distribution network of Coca Cola system will also bring more channels and business cooperation opportunities for Costa. “
However, there are also views that Coca Cola does not have rich experience in coffee, and the acquisition of Costa is also to avoid relying too much on the development of carbonated drinks; for Costa, to further gain a foothold in the coffee market, product expansion is the first step.
Fight the Red Sea market
Since the 1980s, Nestle launched the “1 + 2” instant coffee, Chinese people have gradually formed the habit of drinking coffee. In 1999, after the first Starbucks store entered the Chinese market, the coffee market was further opened.
According to Euromonitor International data, the domestic ready to drink coffee market is expected to exceed 14.9 billion yuan in 2021, showing a strong development trend. Among them, China’s coffee market is one of the most active innovation markets in the world.
In the current coffee market, Mengniu, Yili, Nongfu Shanquan and other beverage giants have laid out the ready to drink coffee market one after another; in addition, emerging coffee brands such as santongban and yongpu are also favored by the capital market. According to the data of Industry Research Institute, Nestle ranks first in China’s ready to drink coffee market share (by sales volume) in 2020, with 42.6% market share. Suntory, Starbucks, uni president, Weiquan and Coca Cola occupy 7%, 5.3%, 4.4%, 3.4% and 1.6% market share respectively.
Industry insiders said that it is not difficult to see from the above data that although Coca Cola is a giant in the beverage field, its coffee business performance is not outstanding.
From the perspective of new retail, Bao Yuezhong, a new retail expert of FMCG, said: “Costa’s introduction of ready to drink coffee is in line with the new development trend of the current beverage market, especially driven by various ready to drink models such as milk tea and lucky coffee, ready to drink has become a new development feature of China’s beverage market. In this case, Starbucks and Costa are discussing transformation, which is very necessary. However, in recent years, Costa has not taken any obvious actions in mode innovation and electronic operation. How to develop better still needs further observation. “
Costa has always been confident about its future development in the Chinese market: “China has become one of Costa’s most important international growth markets. In order to further develop the Chinese market, Costa coffee family will not only continue to optimize its existing business, but also lay out more diversified channels of Chinese coffee, aiming at building an “Omni channel coffee brand”, tap the potential of Chinese coffee market and gain more market growth. “
Beijing Business Daily reporter Qian Yu Baiyang photo source: Official wechat screenshot of Costa
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