illycaffe, the Innovative Italian Coffee Brand

Helen Dou 2013.10.7.

Illycaffe is an innovative coffee brand that specializes on espresso. Originated from Trieste, Italy in 1933, illy blend is now sold in over 140 countries worldwide. In China, illy is far behind Starbucks on physical store wise, but illy is enjoying the reputation of “high-end” coffee. As iFeng said, “Starbucks educated Chinese consumers [about coffee], and now illy is swooping in to evangelize.”

Illy adopts differentiating strategies than its competitors. Besides opening creative physical stores, illy is also the exclusive coffee provider in many five-star hotels, such as Portman Ritz-Carlton hotel, as well as in premium brand stores like Haagen Dazs. Illy’s premium strategy just the same as in Italy.

China is not a country prefers coffee drink traditionally, however, coffee brands have smartly penetrated in China market, and different brands play different roles in different phases. Nescafe is the coffee enlightener in China market; Starbucks is the educator; illy comes in as a strong uplifting alternative option for the Chinese coffee drinkers, who are seeking for higher coffee quality and unique coffee experience. We shall say, illycaffe is offering a different and premium coffee lifestyle to today’s Chinese consumers. The key words are “premium coffee lifestyle”.

The majority of illycaffe sales come from hotels and restaurants in China, which means a great opportunity to boost illy business in retail aspect. Illycaffe has identified their audience to be young people who consider drinking coffee is fashionable, and these people are more likely to appreciate arts, which is perfectly fit to illy’s culture and development direction. China has been becoming an increasingly important player in global economy and “young people” are rising, that is one of the main reasons Illy China general manager could confidently say to the public that it was not difficult for illy to make China market to comprise 10% of its global market.

Illy’s coffee & arts lifestyle has been introduced to China as well. After illy galleria opened in New York, Milan, Trieste, Istanbul, Berlin and London, the first Galleria Illy in China has been opened in Beijing in Oct. 26, 2012. The galleria is consist of international contemporary fine arts, performance of students from China Central Academy of Fine Arts, the art of gastronomy, etc. Throughout the galleria, illy is expressing its art, style and taste philosophy and values.

When Starbucks is the market leader and eye-catching brand in the crowded market, illy is a refreshing breeze to Chinese consumers.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of StartJG Hong Kong.

Starbucks' Social Responsibilities

Helen Dou 2013.10.1.

Just like any other successful western companies, Starbucks has taken the responsibilities on the environmental and social issues. While Starbucks is famous for being able to instil the coffee idea into the Chinese consumers' minds, and they have also nurtured the western environmental and social responsibility concept into Chinese mindset. Starbucks is surely a responsible company, and the responsibilities are good to generate more revenue and wider customer base.

Starbucks College Student Forerunner of Environmental Protection

Starbucks corporates with China Soong Ching Ling Foundation to encourage Chinese college students to carry out innovative activities of environmental protection and contribute to the communities. This year is the third consecutive year of this project. The effort is to increase the environmental awareness among college students.

Starbucks Global Service Month - Green Community

As an important part of the Starbucks market, Starbucks China has launched a series of community service activities in over 58 Chinese cities. Throughout the month of April from 2011 to 2013, Starbucks has successfully gathered 47,000 participants and altogether contributed approximately 71,000 service hours. These activities have well built in a "give back to society" concept.

Starbucks China Education Project

The integrated project involves different aspects of efforts.

• Improve the learning environment of rural schools and provide a better condition for the students;
• Fund the rural teacher quality improvement to increase the education fairness for the children in poor countryside, which mostly in western China provinces, such as Yunan, Guangxi, Sichuan, Chongqing;
• Water Education Project is a sub-project of the China Education Project. The aim is to increase people's knowledge of water safety and the importance of water quality.

Commitment to Origins - Global

Starbucks has promoted heavily on their efforts on sustaining the profit of coffee bean farmers to not let them suffer from volatile market fluctuations and support their families.

With all these projects and promotions of the social and environmental efforts that Starbucks has made, it is enough to impress the Chinese consumers and engage the promising generation, i.e. college students, to be hardcore Starbucks fan. 

As we all know, in China, the price of Starbucks coffee is not regarded as cheap but expensive instead. It is more expensive than in its home-country, while Chinese annual income is way lower than Americans. While Starbucks is benefitting from the higher unit revenue, Starbucks is also striving to build a green and generous image among Chinese consumers to give them a strong reason why they should buy Starbucks products, besides the reason that Starbucks products are premium quality. This will encourage coffee drinkers to choose Starbucks by reminding them that their contribution is not purely for the company's ambition, but for the good of the whole society.

All those community service activities are involving college students, or similar age age group. Starbucks realized that the concept of “community service” is becoming bolder in young people’s mind, because of the trend of studying abroad and the heavier focus on civil education, so it provides the opportunity to engage the young people. Also, it is a “cool thing to do” in most of the young people’s minds. Those activities are very effective in terms of fostering loyal customers.

Starbucks brand is inheriting in Chinese consumers’ mindset and becoming bolder.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of StartJG Hong Kong.

Development Statistics

Helen Dou 2013.9.29.

In China today, many well-known international coffee brands have found the path to reach Chinese consumers' tastes. With the noisy information online, sometimes a clear digit could explain many things and help new entrants to find a different route to establish their coffee.

Undoubtedly, the number of the coffee stores of each brand is the best indicator of the market position.

Starbucks Coffee: over 800 stores (as of 2013)

Costa Coffee: over 300 stores (as of 2013) 

Pacific Coffee Company: 181 stores (as of 2013)

85 Bakery Cafe: 385 stores (as of 2013)

Dunkin' Donuts: 42 stores (as of 2013)

Coffee Bean & Tea Leaf: 34 stores (as of 2013)

Maan Coffee: 34 stores (as of 2013)

Every coffee brand has great ambition and fierce growing plan. However, the market leader is likely be Starbucks for a while, but latter positions are variable.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of StartJG Hong Kong.

The Retail Innovation of Starbucks

Helen Dou 2013.9.19.

September 17th, 2013 - Startbucks China announced its new launch of two concept flagship stores in Beijing - 咖啡礼赞 and 24-hour flagship creative store.

咖啡礼赞, which means praise of coffee or coffee tribute, concept store has demonstrate Starbucks coffee's heritage and leadership in the coffee market. This concept store locates in Beijing Kerry Hotel. It has two floors with coffee bar on each floor. The coffee bar on the second floor featured with a special function - Starbucks Workshop, that provides unique handcraft coffee, which allows the customers to choose coffee beans from various originations to roast and taste the flavors. All barista there have gone through more strict trainings and obtained the "Black Apron" certificate. Normally, Starbucks baristas wear green apron; for those who wear black apron, it suggests that the baristas are in expert level, and they should have better and more professional knowledge on coffee and coffee making skills.

On retail design aspect, Starbucks has incorporated with local artists. Local artists have brought in many traditional Chinese elements into the store design concept and helped Starbucks to tell its story in a local language. On the coffee bar surface creative, a traditional Chinese drawing pattern has been used to communicate the Starbucks coffee journey from planting to manufacturing. A full set of Chinese traditional elements have been adapted throughout the whole store. It is obvious that Starbucks has put in a significant effort on localization.

Another creative flagship store is developed around the concept "兼收并蓄、不拘一格", which means incorporate things of diverse nature and follow no set form. This store is located in Beijing Sanlitun, one of the most dynamic and energetic business areas of urban lifestyle. The first floor is installed clear and broad coffee bar and expresses a young feeling of the take away coffee; the second floor is decorated with long shape coffee bar along the window and wooden furniture, which has effectively contrasted the interior environment with the busy and crowded outside. However, people sitting inside can still feel the buzz of the exciting urban life. The relaxing environment provides people the perfect place for taking a break or friends reunion without excluding the business and fun urban environment. The second floor is also called Clue 1972 to commemorate the birth year of Starbucks. Another special event is that every weekend night, live music performance is held here to connect coffee and music, and this is also a great opportunity for local talent musicians to showcase their talent and live their music dreams.

Resource: starbucks.com.cn



Written by Helen Dou

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of StartJG Hong Kong.