By LU Yibei
Pacific Coffee, once the second-biggest coffee chain in China after Starbucks, appears to be up for sale. China Resources is reportedly considering selling its coffee chain to Ning Ji, a lemon-tea brand that has been rapidly expanding over the country.
The deal could cost Ning Ji up to 500 million yuan (about US$70 million).
Although neither party has officially confirmed the rumor, Pacific Coffee could be a hard sell. Recent keywords associated with the brand largely revolve around store closures and contraction.
Contraction is all too obvious. Dismantling Pacific Coffee stores has become a mini-industry in itself, with over 130 vanishing in three years. Only 300 remain.
In major cities, Pacific Coffee is disappearing from core business districts as China's hot coffee scene is a little too strong for an old stager. The brand’s focus on a traditional and serious brand identity doesn’t resonate well with consumers, who want the best or the cheapest. Nostalgia in the coffee business is a thing of the past.
In addition to closures, Pacific Coffee is selling assets including office and catering equipment, furniture, and even its own self-service coffee vending machines. Those vending machines were the future once!
Why would Ning Ji inflict such a burden on itself? A new zesty brand would certainly overhaul the whole operation.
Bigger players like Luckin and Tims are expanding and but might not find Pacific Coffee’s stale old assets too appealing.
