Chinese embrace icy DIY drinks as competition with cafes heats up

Nongfu Spring

27/08/2024 02:00

By Sophie Yu and Casey Hall
       BEIJING, Aug 27 (Reuters) - Pre-packaged cups of ice
have been flying off the shelves of Chinese convenience stores
this summer as consumers experiment with tea, coffee and juice
combos to make affordable, cold drinks that don't involve a trip
to a coffee shop.
    China has seen a record breaking heat wave scorch provinces
along its eastern seaboard this month.
    The weather, along with the social media cred garnered from
posting these creations, has helped to propel the popularity of 
ice cups and other pre-packaged drinks as consumers, worried
about job security and the slowing economy, become more
cost-conscious and eschew the likes of Starbucks and Luckin
Coffee cafes, bubble tea chains and juice bars for their own
kitchens.
    "The popularity of ice cups is in line with the
characteristics of the young generation who likes trying new
things," said independent food and beverage analyst Zhu Danpeng.
"People can post their 'achievement' online to share with
friends." 
    A search for 'ice cups' on lifestyle-focused social media
platform Xiaohongshu returns more than 13,000 recent posts, many
of them videos of people in their 20s and 30s showing off their
convenience store creations.  
    One post shows an ice-cup three-quarters full of jasmine tea
then being topped off with lychee juice. In another, a young
woman pours pre-packaged black coffee over orange juice, making
a dupe of the orange-flavoured coffees popular in Chinese cafes.
     
    This DIY trend adds convenience stores to the list of
factors putting competitive pressure on coffee shops in China,
where the drinks market is already fragmented and highly
competitive. Some coffee and bubble tea chains have opened more
than 10,000 stores across the country and offer competitive
coupons and discounts in an effort to attract consumers.
    In addition to getting a cold drink, DIY ice cups give young
consumers a showcase for their creativity. 
    Buying the ingredients to make an ice cup filled with
pre-packaged Starbucks coffee and orange juice costs around 24.5
yuan, fractionally less than a 27 yuan Starbucks but with much
bigger bragging rights.  
    Starbucks  SBUX.O  did not comment about the rising
competition from convenience store drinks, but said in response
to Reuters: "Starbucks has full ready-to-drink (RTD) coffee
portfolios to meet diversified needs of Chinese consumers...
According to Euromonitor, Starbucks now ranks No.2 in overall
RTD coffee market."
    
    "SENSATIONAL SUCCESS"
    Though ice cups have long been popular in South Korea and
Japan, they've never hit it big in China until this year,
according to Jason Yu, greater China managing director of market
research firm Kantar Worldpanel.
    "Ice cups have been a sensational success this summer... I
think it provides a good value for money option for young
consumers to do their own DIY drink," Yu said.
    Using branded juices, pre-packaged coffees and milk drinks
provides consumers with the sense that they are getting a good
deal, while still enjoying a high quality product, he said.
    In convenience stores, it usually costs between 3 yuan
($0.4) for cups filled with ice cubes and 9 yuan for cups with
spheres of ice.
    Some beverage firms have paid heed to the trend, launching
branded ice cups.
    Mixue Bingcheng, a popular bubble tea franchise, began
selling ice cups at just 1 yuan per cup last month. Nongfu
Springs  9633.HK , China's largest bottled water supplier, also
offers 160g ice cups at 3.5 yuan in convenience stores.
    But even as more young people embrace the DIY culture amid a
trend towards thriftiness in China, some drinks enthusiasts say
they will not replace convenience store ice cups with their own
cups filled with homemade ice.
    "The ice cups are not normal ice, you can't make it at
home," one ice cup consumer said in a post on social media
platform Xiaohongshu.
    "Ice cubes in ice cups are made in a different way."
     
    ($1 = 7.1369 Chinese yuan renminbi)

 (Reporting by Sophie Yu in Beijing and Casey Hall in Shanghai;
Editing by Miyoung Kim and Miral Fahmy)
 ((Sophie.Yu@thomsonreuters.com; 861056692136;))