China’s coffee wars: Manner’s crisis exposes industry challenges

Recently, Manner Coffee made headlines on China's Weibo platform following an employee-customer clash. This incident highlights deep-seated issues within the mid-to-low-end coffee market, intensified by a bruising price war between Cotti Coffee and Luckin Coffee. Concurrently, Chinese brands striving for global recognition encounter fierce competition and persistent stereotypes of 'Made in China,' despite a notable increase in high-quality exports. Meanwhile, the baby and child skincare segment defies the declining birth rate, driven by the spending power of new-generation parents and a growing focus on product safety and innovation. The following three stories selected from Jing Daily's WeChat account explore the turbulence and potential within these segments, revealing how brands can navigate competitive pressures, build strong identities, and seize untapped opportunities in China. Manner incident exposes coffee market struggles The recent Manner Coffee controversy going viral online highlights employee-customer conflicts and has cast a spotlight on the management issues plaguing Manner and broader industry challenges. This turmoil underscores the detrimental effects of a price war between Cotti Coffee and Luckin Coffee, which has slashed average transaction prices and strained profitability. Cotti faces stagnant store growth, while Luckin has returned to losses after eight quarters of profitability. Despite a 17.14% compound annual growth rate, China's per capita coffee consumption lags behind the global average, indicating significant untapped market potential. However, fierce competition has led to cost-cutting measures that impact employee relations and operational stability. For long-term success, mid-to-low-end coffee brands must prioritize brand building and ethical practices to maintain consumer trust and navigate this turbulent market. Full story here. Chinese brands grapple with globalization Chinese brands are intensifying their globalization efforts, with export values reaching $1.37 trillion (9.95 trillion RMB) in early 2024, a 6.1% year-on-year increase. However, these brands face stiff competition from international and local rivals, as well as enduring stereotypes surrounding products Made in China. To circumvent competition in developed markets, many brands target developing countries, leading to price wars and potential brand image issues. Overcoming cultural differences and sustainability challenges is critical, as is reshaping the perception of Chinese products from low cost and poor quality to high quality and innovative. While brands like Xiaomi and BYD have made strides in improving the perception of Chinese products, significant hurdles remain. Success hinges on building high-quality products, unique innovations, and compelling storytelling to establish a strong global presence. Full story here. Untapped potential in China’s baby and child skincare market Despite a declining birth rate, China's mother and baby consumer market is thriving, with the baby and child skincare segment showing significant growth potential. In 2023, the number of newborns hit a record low, yet the market was valued at $767 billion (5.58 trillion RMB) in 2022 and is expected to reach $1.05 trillion (7.63 trillion RMB) this year. New-generation parents, particularly those born in the 1990s, are drive this growth with their strong spending power. Issues such as product segmentation, safety, and science-based skincare are shaping the industry, with brands like Hi!papa and Oneleaf leading the charge. As parental awareness of skincare safety and efficacy grows, so does demand for specialized, gentle products. Effective marketing strategies, including expert endorsements and social media influence, are vital for brand success. The market faces challenges like product safety and intense competition but offers significant opportunities for innovation and growth in response to evolving consumer trends. Full story here. WeChat Digest is a weekly roundup of top-performing articles from Jing Daily’s official WeChat channel, offering a niche and nuanced glimpse of Chinese consumers. Alongside translated snippets, direct links to the original Mandarin articles are provided, allowing Mandarin-speaking readers to fully grasp the context and depth of the featured stories.

China’s coffee wars: Manner’s crisis exposes industry challenges

On this page

Published July 02, 2024

Sectors

Insights

Company

China’s coffee wars: Manner’s crisis exposes industry challenges