McCafé’s expansion project of US$380 million in Chinese coffee market

McDonald’s China coffee brand McCafé announced that it will invest 2.5 billion yuan in the next three years to accelerate its expansion in the Mainland China coffee market. By 2023, there will be more than 4,000 McCafé shops in China.

”The Chinese coffee market is booming. Consumers understand and love coffee better. Today, we are very happy to announce McDonald’s has been fully upgraded. In the future, we will increase investment in new store development, equipment upgrades, personnel training, etc. The estimated investment in three years is about 2.5 billion yuan. The goal is to make the places where McDonald’s have a strong aroma. Wheat coffee.”

— McDonald’s China CEO Zhang Jiayin

The Chinese coffee market has a giant potential

The history of China’s coffee industry is not as long as in the Western. Coffee, as an imported product, was firstly introduced by Nestle in 1989. Back in that time, we could only find instant coffee. Later in 1997, Cafés started to open in China, providing fresh ground coffee.

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In 2018, China’s consumption of instant coffee, freshly ground coffee, and ready-to-drink coffee accounted for 71.8%, 18.1%, and 10.1%  respectively. With the improvement of people’s living standards and the gradual awareness of coffee culture, coffee consumption in China is on the rise year by year. According to statistics, the average annual growth rate of coffee consumption in China is 15%, which is much higher than the world’s 2% growth rate. In 2025, China’s coffee consumption market is expected to reach 1 trillion yuan.

Compared with developed countries, China’s per capita coffee consumption is still at a low level. In 2018, the per capita coffee consumption in mainland China was only 0.71% of that of Germany and 1.6% of that of the United States. According to Statista, revenue in the Coffee segment amounts to US$362.6 billion in 2020. The market is expected to grow annually by 10.6% (CAGR 2020-2025). While revenue in Coffee in China is only US$11.7 billion in 2020. The market is expected to grow annually by 11.6% (CAGR 2020-2025).

According to statistics, the increase in per capita income will promote coffee consumption. For every 5% increase in national income, daily coffee consumption will increase by 2%-3%. With the increase in national income and the gradual cultivation of coffee consumption habits, the potential for coffee in China is huge.

How does McCafé sell its coffee in China?

Read as well How to Start a Successful Franchise in China

Website is the first step

Even though Macdonald’s already has its website in China, it still created another website special for its McCafé, because the brand knows very well how it works in China to market its brand.

Chinese people rely so much on the Internet, that they like to search for information about brands, trying to get as much as possible information before making the choice. They are so wary of unknown brands due to scandals that happened in the market.

The website is not only the portal between you and your targets, it can also give you a way to do your Baidu SEO.  Just keep in mind, that simply translating your overseas website into Chinese will not work. The design and the content should be adapted to Chinese habits. Moreover, your website should be hosted in China or nearby to give users a fluent user experience.

McCafé Wechat Ads & Mini-Program

Because McDonald’s is so big in China, investing in Wechat ads is a strategy that works. For smaller unknown brands we would not suggest Wechat Moment ads, they are expensive and the ROI tends to below. First work on your brand awareness, then you’ll be able to get results we WeChat moment ads.

Event marketing #Wake Up Sleepy People# by McCafé

In today’s coffee market, some brands focus on sentiments, while others focus on convenience. For consumers who previously consumed coffee at McDonald’s, the core is nothing more than the basic functional appeal – Wake up.

On 17 November, McDonald’s announced that McCafé will be upgraded, and it has also distributed 10 million cups of lattes to invite consumers to drink coffee for free.

Not only that but McDonald’s also launched eye-catching TVCs and posters for McCafé with the theme of “wake up sleepy people” to attract consumers’ attention in all aspects. This event campaign has been spread on every Chinese social media, for example, Weibo, WeChat, and Tiktok.

This campaign is really very suitable for China, because “long working time, too sleepy” is just the topic everyone talks about online. People who came out with this idea must know very well about the Chinese market, new trends in Chinese society, and online hot topics.

The consumption scenarios of advertisements are full of fun, which reduces people’s dislike of commercial advertisements and makes people feel very immersive. Isn’t it because of sleepiness that we buy McCafé?

KOL cooperation with its McCafé

We just talked about the event “Wake Up Sleepy People” initiated by McCafé. Besides spreading this campaign on every Chinese social media, Macdonald’s has also worked with Chinese KOL to get more exposure and this cooperation is very interesting and attention-catching with good effect. The Kol they have chosen is Jin Chengwu who is a delivery man and got famous for sharing its daily work.

On the take-out order, a customer added: when you come to deliver my order, please go to McCafé and take my free coffee by yawning. This has made a lot of people laugh and got an incredible effect.

There are many advantages to working with KOL. KOLs have built trust with their audience, they are more convincing than traditional advertising or branded content, resulting in very strong ROI (return on investment).

Engagement of viewers and being ranked in the top topics on Weibo

In addition, in order to further expand the topic and get more exposure, McDonald’s also produced a series of posters, initiated the topic #醒醒吧,犯睡人# (Wake Up, Sleepy people), and issued a call for netizens to participate in the discussion and have a chance to get a year of McCafé wheat Coffee for free, this move has aroused heated discussions among netizens and this activity has even in the top topics on Weibo and was ranked third!

Weibo is the largest open social media in China. Weibo’s top topics are very powerful since the platform has more than 550 million users, every user who opens the app can see the list of the top topics.

Will McCafé surpass Starbucks in China?

From the very beginning, McDonald’s announced an investment of 2.5 billion to sell coffee in China, and McDonald’s marketing for this independent brand has already begun.

After announcing the investment, McDonald’s struck the iron while it was hot and took advantage of the opportunity to launch the brand at one time, making consumers aware of it, and then used its every Chinese social media channel to give away prizes and promotions, allowing consumers to experience and engage in the brand launch and upgrade.

According to reports, McCafé has surpassed Starbucks to become the largest coffee chain in the United States. Nowadays, China’s coffee market is booming, and coffee in China is more and more in demand.  In the future, in the Chinese market, McCafé will surpass Starbucks? We will see.

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  1. Hello, I hope this message reaches you well.
    I am a student in LWIS AIS, Lebanon, and I’d like to reference one of your articles in an essay analyzing McDonald’s investment plan for China.
    The article I am talking about is titled “McCafé’s expansion project of US$380 million in Chinese coffee market”.
    Could you please let me know if I have the permission to reference your article? And if yes, could you please give me the name of the author(s) and date of publication?

    Thank you for your cooperation and help
    Best regards
    Jennifer Merjaneh

    1. Hello Jennifer,

      You are very welcome to use our article as a resource.
      It was written by Olivier Vérot and published on November the 20th.

      Have a great day 😉

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