Introduction:2016 was the first year that Coffee Wings reported a financial loss, but President Yin Feng had long foreseen this move as paving the way for a long-term strategy. She led her team to expand into supply chain and smart coffee machine businesses, and implemented a "horizontal and vertical" development strategy aimed at capturing China's rapidly growing coffee market. This article delves into the transformation of its business model, the logic behind its market layout, and how it plans to move toward its goal of reaching a hundred-billion-yuan valuation.
In 2016, Coffee Wings experienced its first financial loss since its establishment. In the face of public attention, President Yin Feng—dubbed the “Fairy Sister”—was not surprised. She admitted that this was a short-term cost necessary for nurturing new business areas, and both the board and shareholders expressed their support. She emphasized: “In our seventeen years of entrepreneurship, this is the first time our financials have shown such negative figures, but we are willing to sacrifice short-term gains for greater growth in the future.”
After the annual report was released, star directors including renowned host He Jiong, 58.com founder Yao Jinbo, and Jumei Youpin chairman Chen Ou all expressed understanding and encouraged the team to focus on long-term planning. “Don’t pay attention to outside doubts, solidify the foundation—we care more about the future.”
Yin Feng identified that China’s coffee market was on the verge of an explosive phase, and decided to expand the original two main business lines—offline direct-operated stores and franchise authorization revenue—into four major segments. The two newly added core businesses were supply chain management and urban smart coffee machines, marking Coffee Wings’ official launch of the “horizontal and vertical” strategy, aiming to build a more scalable commercial ecosystem.
Looking back at the pre-IPO layout, Yin Feng remained true to her original aspiration of creating a coffee brand in China that combined urban social attributes with local characteristics. She studied international chains like Starbucks, as well as successful domestic listed companies like 58.com and Jumei Youpin, learning how they achieved long-term growth by continuously expanding new businesses alongside stabilizing their core operations.
Although the original two traditional businesses could generate stable cash flow, their growth was limited. To break through the bottleneck, Yin Feng and her team decided to explore new directions: one was to establish an independent supply chain system, and the other was to invest in the urban smart coffee machine project. The supply chain business covers raw material procurement, production quality control, logistics and distribution, and warehouse management—all requiring a professional team and rigorous processes, which will become new growth points for future revenue and profits.
The urban smart coffee machine is also a key project that Yin Feng has been planning for years. She envisioned using compact smart coffee machines as unmanned retail terminals, not only selling freshly ground coffee but also offering a variety of options such as slushies, juices, and milk cocoa. Each coffee machine occupies just 1.2 square meters, yet can serve as an offline traffic entry point, with potential to extend into more peripheral products and services in the future, complementing online strategies.
In early 2016, Coffee Wings once collaborated with an external technical team to develop a smart coffee machine with entertainment features. It had a cool appearance and cutting-edge design, and even applied for multiple patents, with the goal of becoming the “Apple of coffee machines.” However, considering equipment stability and commercial feasibility, it was ultimately decided to postpone the launch. Instead, a German technology-customized model was introduced to the market first, with its componentsover 70% imported from Europe and America, ensuring better stability and closer alignment with market needs.
In terms of market expansion strategy, Yin Feng proposed a dual-axis development approach: “horizontal and vertical.” Vertically, it integrates the coffee industry chain—from offline chain stores, to urban light smart coffee machine terminals, to ready-to-drink coffee products in supermarkets and e-commerce platforms—achieving comprehensive coverage. Horizontally, it shares Coffee Wings’ accumulated eight operational systems, five management manuals, and intelligent SaaS management tools with franchisees and other light food brands through brand output and management systems, helping to incubate more coffee and light food sub-brands that meet market demand.
Yin Feng is full of confidence in China’s coffee market. According to data from the London-based International Coffee Organization, the average annual coffee consumption per person is 400 cups in the United States, 200 cups in Japan, 140 cups in South Korea, and only 4 cups in China, with first-tier cities like Beijing, Shanghai, and Guangzhou at around 20 cups. But the Chinese market is growing rapidly ata rate of 15% per year. It is estimated that by 2020, if each person drinks one cup of coffee per day, the coffee bean market alone could reach a scale of 50 billion US dollars, with the entire industry chain value exceeding 100 billion US dollars.
She further pointed out that as the post-85s, post-90s, and post-00s gradually become the main consumer groups—individuals who grew up in an environment of information democratization—their acceptance of coffee culture is higher, and they are no longer restricted by region, bringing fresh vitality to the market. She emphasized: “All these data show that the winds of opportunity in the coffee industry have arrived. We will continue to deepen our efforts, first achieving a 2-billion-yuan valuation, then moving toward the 100-billion goal.”
Even while demonstrating grand visions in her business layout, Yin Feng remains pragmatic and low-key. She considers herself a “hardworking dream chaser,” firmly believing that only steady management and continuous innovation can lead to the day when the brand truly blossoms. She believes that compared to international brands, Coffee Wings understands the needs of Chinese consumers better, especially in second-, third-, and fourth-tier cities where residents have more time for socializing and leisure, making coffee not just a beverage, but part of a lifestyle.
She also observed that consumers in first-tier cities prefer efficient and convenient coffee experiences, leading to the launch of lightly operated series such as the “High Energy Series,” “Little Wing Series,” and “Free Wing Smart Coffee Machines.” By adopting a “surrounding the cities from the countryside” strategy, the company is gradually expanding its market footprint. She admitted: “Our goal is not just to be a coffee company, but to convey an international, stylish, and approachable lifestyle concept, creating China’s own ‘third space.’”
The above content is compiled by CoffeeHunters, a coffee news website.
