Helen Dou 2013.10.11.
Starbucks Coffee, the coffee market leader in China;
McDonald’s, the fast food leader in China. Seems like the two business giants are
happy with their own dominant territories, but looking at the prosperous growth
of coffee market in China, McDonald’s decided not to just watch but to take
part in.
In China, McCafe has been spreading across 24 cities with
over 500 stores now, while Starbucks has presence in 60 cities with more than 1,000
stores. By the end of 2013, McCafe has the ambition to open up 200 more stores
in China.
McCafe’s giant success was not too hard to expect, even
though at the primary entrance to the coffee market, people doubted: how can a
fast food chain compete against Starbucks. By looking at the McCafe today, the
question is answered well.
1.
The perfect channel and guaranteed audience
base. McDonald’s is the largest fast food chain in the world with more than
18,710 outlets worldwide; in China, there are more than 1,500 outlets. It is
easy to sell coffee along with the meals, not to mention many people
would drink coffee anyways; McCafe just provides convenience for the customers.
2.
The price advantage. Even though China is a very promising coffee
market, the annual consumption is only 3-5 cups per capita, coffee drinks are
still expensive for many people. A cup of coffee sometimes is more expensive
than a meal in China, so many people treat coffee as an indulgence rather than
a everyday-must. However, Chinese people still desire to enjoy coffee, and
McCafe provides good coffee for a 20% cheaper price and tasty just as good to most people. When the market is not
mature enough to have deep understanding of coffee, price makes a great
difference.
McDonald’s ambition in China is big. Currently, there are around 90,000
employees in China, and the company is planning to hire 75,000 more employees in
this year. The recruitment represents the growing size of the business in
China. Starbucks is the solid coffee market leader, but competitors like McCafe
is making Starbuck’s victory challenged.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of StartJG Hong Kong.
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