SHANGHAI – Coffee culture in Shanghai is not just about drinking coffee, but also coffee shops.
The commercial capital of China is dotted with thousands of cafes, brewed through the chic lanes and streets of the former French Concession to the waterfront of the Bund and everywhere in between. Catering to a wide range of coffee connoisseurs, there are cafes where a bear claw dispenses coffee from a hole in the wall, some with a cave-like vibe, and others with a minimalist decor worthy of a shot of caffeine and a click of a selfie.
According to consumer rating platform Dianping, Shanghai is now home to 7,673 coffee shops, including boutique coffee shops as well as national and international chains, all of which compete for a share of the city’s coffee market. A study released earlier this year by Chinese media platform Yicai even noted that Shanghai is said to have more cafes than any other city in the world, including New York, London and Tokyo.
But in an era of intense competition, will boutique coffee shops with minimalist decor and minimal capital resist big national chains like Luckin Coffee and international market leaders, including Starbucks and Tim Hortons, who are expanding their footprint in Shanghai? It depends on who you ask.
Huang Xiaochuan moved to Shanghai from his native Guangzhou in 2018, and after a few stints as a barista in a few cafes, he opened Pace Coffee next to a residential complex in downtown Jing’an District. The 25-year-old said he was drawn to the prospect of owning a cafe due to the city’s “great coffee culture” which is not confined to the young population, unlike his hometown.
Huang Xiaochuan at Pace Coffee in Shanghai, September 29, 2021. Wu Huiyuan / Sixth Tone
However, the chemical engineering graduate recognizes the limitations of his autonomous enterprise. Hours are long, funds limited and competition fierce, so much so that the opening and closing of cafes along the streets of Shanghai has become commonplace.
âOnce you open a cafe, you realize that it may not be as perfect as you imagine it to be, and you have to devote an excessive amount of energy to it,â Huang said, adding that demands and consumer tastes diversified.
And it is the growing coffee culture in Shanghai, along with the expanding consumer base, that has also added diversity to the city’s coffee shop scene. Besides independent and self-managed stores, the city has been fertile ground for local chain stores such as Seesaw, Manner Coffee and M Stand, which were founded between 2012 and 2017.
Now recognized for its minimalist decor, Manner started in 2015 as a two-square-meter hole in the wall in the same neighborhood as Huang’s Pace Coffee. Over the years, its business has only grown – Manner now has 165 stores in Shanghai and 29 in other cities like Beijing and Suzhou, as well as investors such as tech giant ByteDance and the Meituan food delivery app, valuing its value at around $ 28. billion.
Meanwhile, Seesaw is valued at around $ 1.6 billion and has more than 30 stores in major cities, while M Stand is worth $ 6.3 billion with 60 stores nationwide. The once-high-profile Chinese chain Luckin Coffee operated as many as 4,507 stores in 2019, before a fraud scandal shattered the company’s image.
A Manner Coffee store in Shanghai, September 29, 2021. Wu Huiyuan / Sixth Tone
But the success of some local players is only a fraction of that obtained by the international giants who have chosen Shanghai as their gateway to the Chinese market. Starbucks now has 5,100 stores on the Chinese mainland since opening its first store in Beijing 22 years ago, while its Canadian competitor Tim Hortons has opened around 200 outlets since 2019, and 2,500 more. are planned across the country over the next five years.
California-based Blue Bottle Coffee, known to some as âthe coffee apple,â is also currently considering where to locate its first mainland location in Shanghai.
Responsibility for helping the expansion of major market players has been placed on Zino Helmlinger, Senior Director and Head of East China Retail at CBRE Group, which claims to be the largest company of commercial real estate services to the world. When the French executive first landed in Shanghai 13 years ago, he recalled that Starbucks was the only visible coffee brand. But over the years, he’s seen the city and the country’s coffee drinking habits change.
According to the national think tank Qianzhan Institute, coffee consumption in China has increased by 15% since the mid-2010s, compared to a world average of 2%. Meanwhile, the size of the country’s coffee market is expected to reach 21.7 billion yuan ($ 3.4 billion) in 2025.
âCoffee is a very competitive and oversaturated business segment,â Helmlinger told Sixth Tone. âStarbucks changed the habit of drinking tea that was deeply rooted in Chinese culture. They set off the sparks which turned into a fire. Right now, it’s a forest fire in Shanghai.
Coffee beans on display at Jojo Tang’s PPT CafÃ©, Shanghai, August 21, 2021. Courtesy of PPT Cafe”/>
Coffee beans on display at Jojo Tang’s PPT CafÃ©, Shanghai, August 21, 2021. Courtesy of PPT Cafe
However, although Helmlinger works on behalf of the âbig guys,â the avid coffee consumer is also empathetic towards small coffee owners. He said the new generation of entrepreneurs are ready to take risks, even if it means competing with multinational giants.
âIt’s hard to develop your customers, it’s hard not to get eaten up by the competition, and it’s hard to anticipate cannibalism,â he said. âThere are a lot of bold people in Shanghai who are willing to try and willing to lose.â
Jojo Tang, originally from Shanghai, is one of those risk takers. Before cafes flood the city districts, if not filled with xiaolongbao, or steamed soup dumplings and noodle shops, she grew up in a family of coffee drinkers. Giving up her job as an auditor, she opened a dog-friendly cafe named Pawer Point Coffee last June and another called PPT CafÃ© in August.
The names of the cafes hint at Tang’s past office work – PPT is a commonly used shorthand for Powerpoint presentations – indicating that she wants her clients to “forget about PPTs” once they enter the space. The cafÃ© also partners with a non-profit organization to present works of art made by autistic children, combining business and social cause.
âI hope people can see that there are other ways to enjoy life outside of work, such as with pets and art,â she said. âThe competition in Shanghai is pretty healthy. The cafes diversify into different specialties and the business environment is inclusive.
This is what some specialty cafe owners are focusing on instead of directly competing with the bigwigs. Huang believes his “community-oriented” store attracts a different demographic than the chains, which primarily serve “quick coffee” for office workers.
Huang acknowledged that he could face stiff competition in the future and also the threat of business upheaval, referring to the cafes he worked at that have closed due to rising rental costs, overheads or even a change of mind on behalf of their owners.
âWhen you see that most coffee shops in Shanghai are backed by capital, the question is how can the little coffee chops survive,â he said. âMany dream of opening a cafe, but once it’s done it’s overwhelming because you have to take care of so many trivial things. I wouldn’t be unhappy if I ever had to shut down my cafe, as I already achieved my goal of opening one.
Publisher: Bibek Bhandari.
(Header image: Pace Coffee customers in Shanghai, September 29, 2021. Wu Huiyuan / Sixth Tone)