Can Cross-Industry Coffee Market Growth Outlast the Hype?

The coffee market keeps expanding while competition tightens. Sinopec, Huawei, China Post, and Li-Ning have each entered the coffee business, and Wai Chi Group, which owns Gold Roast cereal, has said it will increase its coffee investment. Observers split on whether this reflects consumption upgrading or a short-lived marketing rush that will end in losses.

Independent shops show both outcomes. Profitable cafes exist, but many close after copying decoration, menus, and formats wholesale, a model that is easy to replicate and easy to abandon. Cross-industry players argue their move is a rational reuse of existing stores, staff, and distribution rather than a novelty bet on coffee growth alone.

In recent years, the coffee market has continued to expand, yet competitive pressure within the industry has also intensified. As the number of coffee shops surges, well-known companies such as Sinopec, Huawei, China Post, and Li-Ning have all made forays into the coffee business, and the Wai Chi Group behind Gold Roast cereal has also increased its investment. Some see this as a reflection of consumption upgrading, while others worry that the rush of big brands into cross-industry ventures will ultimately end in a mess. Is cross-industry coffee a rational choice that follows market rules, or merely short-term marketing sustained by novelty alone? This article analyzes market data, brand advantages, and industry barriers to explore whether cross-industry coffee can shed the label of "short-lived internet celebrity."

Over the past two years, the coffee consumer market has continued to expand, but life has not been easy for coffee practitioners. More and more small coffee shops are opening, and the industry appears vibrant on the surface. At the same time, an increasing number of well-known major brands have poured into this increasingly crowded track. Wai Chi Group, to which Gold Roast cereal belongs, has announced that it will step up its coffee business, and companies such as Sinopec, Huawei, China Post, and Li-Ning have also successively entered the coffee field.

Faced with this trend, some regard it as a typical case of consumption upgrading, while others raise doubts: with so many major brands concentrating on cross-industry ventures, it will probably be hard to avoid an eventual mess.

Consumers' demand for coffee continues to rise, giving many niche coffee brands room to grow. However, some coffee practitioners who choose to open shops are overconfident, treating coffee as a surefire money-making business and entering with a gambler's mentality. Profitable coffee shops do exist, but there are also many that lose money and close. Yet people often harbor wishful thinking, always assuming failure will not fall on them. From decoration and design to menus, they copy others wholesale without anything original. Such easily replicable models are destined to be short-lived and can only end in losses and closure.

By contrast, for those major brands doing cross-industry coffee, the idea may seem abrupt and the leap enormous, but in fact it is a rational reuse of existing resources. China's coffee consumption is still in a period of rapid growth. Data shows that in 2021 China's coffee market size was about 381.7 billion yuan, and the industry is expected to continue climbing at a growth rate of 27.2%, with China's coffee market size potentially reaching 1 trillion yuan by 2025. Faced with such a huge pie, everyone wants a slice.

From this it is not hard to see that giants entering the coffee market across industries are essentially opening up new business rather than blindly following trends. This is an adjustment made in response to market changes in order to adapt to new competitive rules. Behind the giants' scramble to enter the field is their aim at a more segmented coffee track and the enormous business opportunities it contains.

These cross-industry giants have already accumulated considerable visibility in their original industries, and their topic traffic, brand recognition, and outlet channel resources are innate advantages. Leveraging geographical advantages and brand effects, applying these resources as a package to coffee sales can, on the one hand, improve store sales per unit area, and on the other hand, help shape a younger corporate image.

However, different trades are like different mountains. For most cross-industry enterprises, cross-industry ventures are ultimately just a kind of marketing innovation, mainly aimed at attracting attention. For consumers, the novelty brought by such cross-industry ventures will soon fade, and they cannot be expected to keep paying for it forever.

Every industry has its own rules. Today the coffee industry is developing toward greater refinement. From selecting coffee bean producing regions to controlling roasting time, these seemingly simple steps actually require strict quality management and considerable professional accumulation. Although coffee is aromatic, most cross-industry enterprises treat selling coffee as a side business. Once there is the slightest negligence in management, the excitement will probably fade after a short while.

Facing the many players on the cross-industry coffee track, standing out will probably require breakthroughs in multiple dimensions such as quality, creativity, and marketing.

Image source: Internet

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The above content is compiled by CoffeeHunters, a coffee news website.