Daxue Consulting, Thinknum
By Dan Bolton
Cafés and coffee shops that survived China’s lockdown are rebounding quickly due to adaptations that are influencing retailers facing the same threat globally. Travel bans, mass transit shutdowns, and shelter-at-home orders across Asia, Europe, the United States, and Canada boosted online ordering and payment and on-demand pickup at drive-thru locations.
Chinese cafés reported online transactions increased from 9% pre-crisis to 80%, according to marketing strategy analysis Sofya Bakhta with Daxue Consulting in Beijing.
Data from Aurora Mobile shows that during the COVID-19 epidemic, consumption of instant coffee grew 47%, and sales of canned and bottled coffee increased 17% compared to the previous year totals, she explained. “I think these numbers are mainly explained by coffee drinkers stocking up and the fact that packaged goods are easily ordered via e-commerce,” she said.
Cafés suffered noticeably during the crisis, according to Bakhta. “Sales overall are expected to decrease by 25% this year,” she said. “Only 1% of China’s coffee shops increased their profit compared to the same period of 2019,” she said, adding that “almost 67% had no or almost no income.”
A retail survey conducted in March showed revenue dropped 50-80% at 19% of these businesses. Sales at Starbucks locations were down 75-80%, said Bakhta.
“China is on the uptick,” according to Starbucks c.e.o. Kevin Johnson, who estimates the coronavirus epidemic cost the company up to $430 million. He said that 90% of Starbucks locations in China are now open, including shops in Wuhan. Johnson told investors that as containment efforts expand, the company will rely on takeout and drive-thru and operate a few grocery locations.
A Daxue Consulting analysis of Tmall statistics indicated that search-engine queries about coffee surged by more than 100% during the coronavirus crisis and resulted in an 80% increase in transaction volume. Sales of coffee in capsules “more than doubled during the period,” according to Bakhta.
Sales of packaged beverages are not enough to offset losses. At the height of the crisis, 65% of China’s fast-food locations closed along with 67% of bars and 56% of convenience stores, according to Bakhta.