Top Biz News
Coffee war hits boiling point
By Wang Lan (China Daily)
Updated: 2006-08-08 09:08
 |
Large Medium Small |
The most prominent challenger to Starbucks' early lead is widely considered to be Italian brand illy, whose distinctive red and white sign can be seen hanging in cafes across the city. Although most well-known for supplying beans and machines, illy also operates a string of coffee kiosks at office buildings, including one at the Jinmao Tower, the tallest building in Shanghai.
Another purveyor of Italian coffee, Lavazza, is marketing itself as a refined up-market Italian alternative to the US giant. It is said to be particularly picky in the choice of location for its cafes. So far it has opened only one outlet in the city and is planning a second one.
Then there is Pacific Coffee, which already competes head-to-head with Starbucks in Hong Kong. It opened its first shop in Shanghai right in the middle of Starbucks' territory and is quietly scouting for locations for new outlets. In Xintiandi, the trendy entertainment district, a big Coffee Bean & Tea Leaf is fiercely competing for business with a large Starbucks outlet nearby.
Aficionados, of course, say they can easily taste the difference between the US brew and other superior varieties. But these subtleties are lost on most customers, for whom it is convenience that counts. "Nobody is going to walk a mile to buy a cup of so-and-so's coffee," says Xie.
Indeed, Starbucks and other chains have attained a similar standard across the globe; how well they compete in any specific market is often decided by the location of their outlets.
Despite its growing popularity, coffee is still a luxury item in Shanghai, and even more so in the mainland's less affluent cities. Xie and others point out that foreign coffee chains are fighting for a customer base that is actually quite small.