Teahouses and coffee shops in Beijing

 

A London-based market researching firm, published an industry report on coffee shops and teahouses in China in late December 2012. According to the report, China’s coffee market has expanded rapidly from 2007 to 2012. During that period, the number of coffee shops increased from 15,898 to 31,783, nearly doubled. On the contrary, the market of teahouses grew 4%, a much slower pace than coffee shops. So far, no teahouse brand could compete with Starbucks, the giant brand aiming to open 1,500 stores by the year of 2015.

 

The report also presents that 12% urban interviewees claimed that they have been to coffee shops at least once in the past year. 20% of them said they have been there more than five times. Only 5% interviewees have never bought any products offered by coffee shops.

 

 

The coffee chain stores entered into China’s market in late 90s’ but they have grown quickly due to targeting middle-income group and expansion strategy. On the other hand, teahouses focus on tourists, senior people and high-end consumers. The strategy of offering tea drinks in coffee shops is a threat to teahouses as these tea drinks become popular among young generation. It is estimated that 23% Chinese consumers choose to buy tea drinks when they go to coffee shops.

 

As for the crisis of tea culture, the report points out that lack of systematic investment is the main reason why the teahouse chain has not been fully developed. Though some teahouses and related associations have the plan to open chain stores, not much money could be raised to carry out the plan.

 

In Beijing, teahouses are relative prosperous because of Beijing’s history and culture, especially in Dongcheng District. There are approximately 80 teahouses in Dongcheng District; most of them are located in tourism zones and business districts. Some branded teahouses only operate company stores, such as Laoshe, and Wuyutai, etc. Others allow franchises stores like Be for Time.

 

A research done by Central University for Nationalities shows there are several problems exist in the management of teahouse chains. a) Some management of teahouses pay more attention on incorporating culture elements on the decoration of teahouses while ignoring the real cultural connotation. By merely promoting products to consumers and earning profits from it would restrict the development of teahouse chains. b) Some teahouses are managed by professional experts in tea industry but the teahouses are not managed well. These managers regard their teahouses as a platform only to promote tea culture and meet friends, instead of a real company. c) Lack of varieties of products and services. Consumers do not have many options when going to teahouses as some of them only provide a place for people to take a break. Traditional tea drinks are offered but they are lack of local characteristics.

 

Mintel predicts that the market value of China’s cafes and teahouses will increase to 121 billion RMB from 2012 to 2017. There is great potential in developing branded and franchised teahouse chain stores. In order to take the market, teahouse operators should do more to attract more customers.

 

Sources:

http://industry.caijing.com.cn/2012-12-20/112378744.html.

http://www.zgchy.com/2013/0106/102429.html.

http://www.ltbka.com/html/c15/2013-06/5358.html.

China Market Research (Shanghai).

China MS report.

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