001, China — Tasogare Coffee
Every office dweller thinks about it at some point. Afternoon or early evening, still at the office, basked in the glare from the computer screen. Why wait for coffee? 45 minutes to wait for Starbucks deliveries. Have to walk over to the espresso machine to make it personally.
I first came across Tasogare when my friend mailed me a Tasogare gift box she bought on Taobao Tmall. It was a beautifully designed, bright red box with the three circle logo, and inside were glossy and brightly colored drip coffee sachets and a light travel mug. I at the time was working late nights, and was frequently on the lookout for coffee I can bring anywhere. Tasogare was a welcome surprise. The brand caught my eye among a sea of similar products because it did not appear to sacrifice quality for quantity: in a gift box of roughly 20 sachets at about 150RMB, the roasts tasted like you would get in a roadside cafe.
I’ll admit — I’m not a coffee connoisseur. I’m an average office-dwelling millennial, which means I drink for energy, fake a disdain for adding sugar, and hope it’s not too bitter or sour. Tasogare was right at my sweet spot: easy to carry in its flat drip bags/liquid capsules, immediate hit of energy, and had a variety of different roasts that correlated with different caffeine levels.
I strongly believe that if Tasogare turns up its social media engagement, I believe it could topple its contemporary rivals (e.g. Saturnbird), maybe even someday FT500 competitors. Although it is not perceived as the hottest, most “网红（viral famous）” brand in China, its performance since founding is strong enough to be worth further attention.
1. What is Tasogare Coffee:
Tasogare Coffee （隅田川咖啡，タソガレコーヒース）is a Chinese coffee brand based in Hangzhou, China and Osaka, Japan.
Tasogare Coffee’s core products are drip coffee, coffee bags, coffee liquid pods, and coffee powder. Tasogare products are often sold in boxes of 5+ packets of coffee, bringing per sachet of coffee to about 3–5RMB, making it a mass market good.
2. Founder:
Lin Hao, founder of the company, previously was representative of Japanese coffee brands UCC and AGF Maxim in China. Having spent about a decade in Japan and half a decade in the coffee business, Lin founded Tasogare in Hangzhou, China and has established operations in Osaka, Japan.
3. Tasogare Financial Performance:
Tasogare is one of the leading competitors in the Chinese instant coffee market today. By July 2020, Tasogare has achieved №1 in sales in Taobao Tmall in two different categories: instant drip coffee and liquid pods. Besides digital shopping apps, Tasogare has expanded into offline sales channels including offline convenience stores, supermarkets, and hotels. The overall business has grown 3x every year. Since the brand’s beginning in China in 2009, it has sold 1 million cups by 2014.
4. Chinese Instant Coffee Market
According to Frost and Sullivan, the Chinese coffee consumption market will grow from 70billion RMB in 2020 to 180billion RMB in 2023. For every 5% increase in average income of Chinese citizens, coffee consumption grows on average by 2–3%.
5. Competitive Landscape:
Tasogare faces competition from several angles from within the instant coffee market:
a. Established players: sweet, instant coffee has been a staple in the Chinese market since the 1990s, with Nestle’s Nescafe instant coffee leading the pack.
b. Newcomers: creatively packaged, digitally native coffee brands like SaturnBird have recently come on the Chinese instant coffee scene, thanks to a growing middle class in China and a fast-growing coffee-drinking millennial population in urban centers.
6. What makes Tasogare special:
Tasogare is special because of a few factors:
a. Quality coffee for less: Tasogare’s pricing at ~5RMB/sachet is designed to be affordable to the Chinese middle class. Founder Lin Hao stated in an interview with 36Kr that he positions Tasogare as a good that transcends Starbucks and Nescafe’s core consumer scenarios, in that Tasogare is more affordable than Starbucks and targets a wider consumer range than Nescafe.
b. Japanese branding premium: Although founded by a Chinese-Japanese team, Tasogare is branded and marketed in China as a predominantly Japanese brand. Japanese beverage brands in China enjoy a reputation of being healthy and of high quality, both key differentiators Tasogare stood to gain from.
c. Established distribution channels: Tasogare coffee can now be bought through a variety of online and offline channels: offline through select supermarkets and convenience stores in tier 1 cities, and online through Tmall, JD.com, and meal delivery apps like Ele.me, making the product very easy to buy for customers.
Tasogare targets different consumer segments with different kinds of coffee products:
a. Drip coffee: for consumers who value a studied and cultured lifestyle, and has the time to make coffee with hot water.
b. Cold Coffee bags: for consumers who need quick, on-the-go energy.
c. Liquid coffee pods: for consumers who enjoy self-expression and experimentation.
7. Challenges:
Tasogare is undervalued, and would benefit if it addressed two problem areas in its current business model:
a. Social media digital engagement: Tasogare’s lead competitor, the aforementioned Saturnbird, is a digitally native brand that is particularly active on WeChat. Its creative advertisement campaigns, with cartoons and copy designed to attract millennial consumers, is very popular among trendier urban consumers.
Tasogare currently only has a WeChat platform where products can be ordered, and would stand to benefit massively if it had a better social media strategy and built a social media presence on WeChat, Xiaohongshu (RED), Weibo, and other platforms.
b. Packaging: Many Chinese competing brands are vying for millennial consumers who care about both the creativity of product packaging and its recyclability. Currently, Tasogare’s packaging design is decent, but not a knockout like Saturnbird’s flagship astronaut canisters boxes (or notably environmentally designed). If Tasogare changed its packaging model to something more stand-out, it could gain more market share among its core customer pack.
8. Current Fundraising:
Currently, Tasogare has had one round of early fundraising from XWInvest in August, 2020（兴旺投资, an investment fund based in Shenzhen）.
