What does Starbucks success in China say about 35-yuan coffee?

A cup of coffee priced at 35 yuan in a county town became a trending topic on Weibo, where reactions ranged from jokes to complaints that it equals a full day's food budget. The discussion was sparked by a DT Finance article citing Meituan data showing takeout coffee orders in tier-four and tier-five cities rising sharply.

The report counts growth of 257% and 253% in tier-four and tier-five cities in 2021, far ahead of tier-one and tier-two markets. Chains such as Luckin, Starbucks and Lucky Cup have pushed into lower-tier cities, and local independent shops have appeared alongside them. Starbucks success in China and its mid-to-high positioning sit at the center of this price and consumption debate.

A cup of coffee for 35 yuan might seem unremarkable in a tier-one city, but when that price appears in a county town, it quickly sparks widespread discussion. The Weibo trending topic "Who is drinking 35-yuan coffee in county towns" once shot to the top of the list, and netizens' reactions were all over the place. Some joked, "Of course it's that expert," while others blurted out, "That's my whole day's food budget." Meanwhile, data released by DT Finance shows that in 2021, takeout coffee orders in tier-four and tier-five cities grew by more than 250% year-on-year. Chain brands like Luckin, Starbucks, and Lucky Cup accelerated their push into lower-tier markets, and local independent coffee shops also quietly emerged. The consumption logic, price polarization, and social attributes of county-town coffee are becoming a new proposition that the coffee industry cannot afford to ignore.

Last night, a topic on Weibo titled "Who is drinking 35-yuan coffee in county towns" quickly climbed onto the trending list.

Many netizens were baffled at first, so they simply took the words "35 yuan," "county town," and "coffee" and made jokes about each one in turn.

In the comments section, a large number of people blurted out, "It's definitely not going to be me anyway." Some did the math and said it was equivalent to their entire day's food expenses, while others sighed that in small places, everything is expensive except wages.

One netizen even responded with a wildly imaginative take: "Isn't it obvious? It must be that expert who trended a couple of days ago. They drink two cups a day."

Clicking into the topic page, the pinned post is an article from DT Finance titled "I Can Hardly Afford the 35-Yuan Coffee in County Towns Anymore."

The article cites the "2022 China Freshly Made Coffee Category Development Report" released by Meituan. The data shows that compared with the previous year, takeout coffee orders in tier-four and tier-five cities surged by 257% and 253% respectively in 2021, leaving tier-one and tier-two cities far behind in growth rate.

Those major coffee chains once commonly seen only in first-tier metropolises are now choosing to "sink down" and swarm into tier-four and tier-five cities, competing for county-town markets. The most representative among them are Luckin, which takes a budget-friendly route, Starbucks, which positions itself in the mid-to-high end, and the rapidly rising Lucky Cup. DT Finance's statistics show that between 2019 and 2022, the number of Luckin and Starbucks stores in tier-four and tier-five cities rose significantly.

However, besides these recognizable chain brands, the real main force in county-town coffee is actually local independent shops opened by locals themselves. The vibe of these stores is quite close to boutique cafés in big cities: careful interior design, products that emphasize pour-over, fresh grinding, and visual appeal, and similarly high pricing.

Friends who returned home for Chinese New Year probably all had the same feeling: at the busiest intersection in their home county town or township, there is likely already a Luckin or Starbucks, or a community coffee shop has popped up near their own neighborhood. Coffee lovers have been lamenting that they finally no longer have to worry about having no coffee to drink when they go back home.

Coffee pricing is clearly heading toward two extremes. At one end, a cup can drop to just a few yuan after discounts and promotions; at the other, it can easily cost dozens or even over a hundred yuan. But no matter the price point, both can find their customer base in lower-tier cities and county towns. It is just that the consumer demands behind them are different. As one netizen incisively summed it up: "Rich people are everywhere, and people without money are everywhere too."

The group in tier-four and tier-five cities willing to spend heavily on coffee is not after using this "life-extending water" to stay awake or refresh themselves, but rather to "find a place to sit down and chat." What they truly care about is the social venue and comfortable atmosphere provided by the café.

In addition, the increasingly popular check-in culture in county towns, along with the boost from all kinds of influencers on social platforms, has also made cafés with a built-in fashionable air a priority choice for young people going out to gather. At the same time, a group of thoughtful coffee entrepreneurs brought trendy playstyles from tier-one and tier-two cities back to county towns first, successfully winning the favor of local young people.

From this, it can be seen that coffee's performance in lower-tier markets is still worth continued attention. After all, the consumption potential of this market has far from been fully unleashed. However, as far as the county-town coffee niche is concerned, it will probably take more patience and time to cultivate it slowly.

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