Hello, greetings and welcome again from Shunyi. Covid has, as we all know, wreaked havoc on many industries. Among those hit hardest was the hospitality industry. Especially food and drink. Aim2D today looks at one brand that is bucking the trend, at least in China. China has around 10 days National Day holiday, so see ya around Oct 14th!
As owner of Kentucky Fried Chicken, Pizza Hut and Taco Bell chains the YUM brand really needs no introduction. Despite having a global recognition, it too has been hit by the Virus. However, 2 days ago Yum China Holdings said it is speeding up its expansion and plans in China over the next five years. Consequently YUM’s shares also went against the grain by increasing on the Hang Seng Index.
Yum is China’s biggest fast food organisation with a store count of just over 11,00 by end of June. However the company sees plenty of opportunities to grow quickly, and is now in hyper drive aiming for faster growth and a target of 20,000. Although the Press Release did not specify details, they also spoke of boosting “emerging brands” as well as existing core brands.
However they did mention Lavazza as one of their emerging brands which they plan to expand to 1,000 stores in 4 years. Lavazza is an Italian coffee shop chain which we reported on back in May 2020:
As others have noted, we also feel, in a way, that is optimistic as trends seem to point to a slow down in consumption or at least, popularity of coffee in China. Equally a small uptick in tea is noted. However, like most things in China, trends can change rapidly. One also has to bear in mind that again, Covid has skewed many stats and surveys so they may no longer be an accurate gauge of reality.
Also, the shift away from coffee seems to be driven by the so called Gen Z who are seeking something that identifies them as unique individuals. Not part of the mass crowd. In 3 or 4 years they may well have outgrown that “phase” and their younger peers moved onto another “fad.”
Finally, it would be a very courageous marketing or analytical firm that goes up against YUM brand’s own data and analysis. They have proven themselves right on too many occasions.
China is not …..
Another thing to bear in mind when we read reports and articles such as this is relativity of size. Initially 200, 000 stores, 3 million users, 50,000 sign ups in one hour seem like huge numbers. And to a brand in say Auckland, NZ it is- although it might likely also crash the Internet. But in countries such as China or India with massive populations, they may be relatively small numbers.
This is important, because, depending on your sector or niche, you may find that even a smaller number is more than enough or beyond your capacity to produce. Or, you maybe surrounded by far higher selling – and therefore popular – brands that you have a snowballs chance in a very hot, mythical place of success. Again, this is why BICYU, as a MarTech Engagement firm joins with many of our colleagues in stressing; “China is NOT one huge, mega 1 billion plus market.“
If you want to find success here, you really, really, really REALLY must do your homework. Due diligence. Research. Get on a plane come here. Often. Spent more than 24 hours in a Shanghai Sheraton Hotel with your embassy’s Trade and Enterprise people. Get your boots – and hands dirty. Get out, into the “field.” Visit the smaller provinces we have talked about;
Assess the potential for yourself. First hand. Marketing and other data producing firms in China have a patchy reputation. But even the best ones can only give you a snap shot of a general picture. What is current today can be stale by weekend.
To repeat, your best chance for success in China is to come here and do your own research. Sure we and our friends know China, but no one knows your business as well as you.
Here endeth today’s lesson! The YUM press release is available- pretty much anywhere – on line, however for a fuller background, we suggest this report from Yicai: Yum China’s Shares Gain on Faster Store Expansion, Over USD5 Billion Capex Plan by LIAO SHUMIN on Twitter.
For that one person in the universe who did not know, October 1st is the China National Day public holiday. We, like many in China will be closed. There will be no publication this Thursday, September 30th, so we will next see you Tuesday October 12th – by which time half that month will have passed.
However, our core support lines and Email will still be open for any China marketing questions you may have.
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