China’s Sinopec launches coffee brand with 27,000 locations

Sinopec, China’s state-owned refining, gas and petrochemical conglomerate, recently launched a new brand called Yijie Coffee, aiming to let consumers enjoy a cup of coffee while waiting for gasoline or diesel to be pumped into their vehicles.   

The first Yijie Coffee shop opened on Tuesday in Suzhou—a half-hour drive from Shanghai—selling three series of coffee named after gasoline types of 92-RON, 95-RON and 98-RON.

Though a brand of Sinopec, Yijie Coffee will operate in partnership with China’s online retail brand Coffee Box, a competitor of Nasdaq-listed Luckin Coffee. A Yijie Coffee manager responsible for branding said Coffee Box provide an operation team for building software, developing products and training, while Sinopec Easy Joy Sales Co (a retail brand of Sinopec) does branding and provides the facilities, Chinese newspaper Beijing Business Today reported.

Sinopec Easy Joy Sales Co is the largest chain store brand in China, operating more than 27,000 convenience stores in Sinopec gas stations nationwide. The widespread store network is expected to add strong competitiveness to Sinopec’s new retail strategy, making possible Yijie Coffee’s national expansion.

In a report about China’s coffee market growth, Chinese information provider and consultancy platform Zhiyan.org forecast that Chinese consumption of coffee is expected to surpass RMB70 billion (US$9.8 billion) by the end of 2019, or 7.2 cups per capita, while exceeding RMB180 billion (US$25.2 billion) by 2023, or 10.8 cups per capita.

A Yijie Coffee shop. The slogan reads, "Drinking coffee while having your gasoline pumped". Source: Sinopec

Sinopec’s entry also signals the intensifying competition of China’s coffee market with the emergence of new retail.

On the same day of the launch of Yijie Coffee, Luckin announced it will spin off its bubble-tea business, Xiaolu Tea, or “Fawn Tea” in English, less than five months after the internet coffee brand set foot in the sector. At a press conference on Tuesday, Luckin chief operating officer Liu Jian said that Xiaolu will be distinct from Luckin Coffee to help further its expansion. The tea-focused brand will also sell coffee, according to Liu. But compared to Luckin, Xiaolu will focus on lower-tier cities and casual consumption scenarios, he said.

Recently, Starbucks opened a ‘Reserve’ store, in China’s fourth-largest city Tianjin, including a Teavana bar and a ‘Bar Mixato’ that offers more than 30 cocktails, wines and craft beers.