Caixin
Dec 23, 2020 07:26 PM
BUSINESS & TECH

Sinopec Hopes Coffee Tie-Up Can Add Buzz to Non-Fuel Sales

This latest venture marks a change in fortunes for Coffee Box, which was forced to close all of its offline stores in September.
This latest venture marks a change in fortunes for Coffee Box, which was forced to close all of its offline stores in September.

Energy giant Sinopec Group, which operates China’s largest chain of gas stations, is looking to boost non-fuel sales by cashing in on demand for takeout coffee at its filling outlets.

Also known as China Petrochemical Corp., Sinopec is expanding a partnership with troubled cafe startup Coffee Box with the formation of the Easy Joy Coffee joint venture, the company said in a statement on Tuesday.

The deal was inked with subsidiary Sinopec Easy Joy Sales Co. Ltd. which operates the non-fuel merchandise sales and consumer business of China’s largest oil refining, gas and petrochemical conglomerate, including a chain of eponymous convenience stores where the coffee will be sold.

Over 90% of Sinopec’s some 30,000 filling stations across the country have one of its Easy Joy convenience stores nearby, making it the nation’s biggest convenience chain. The climbing incomes of China’s middle class have seen the nation’s thirst for coffee soar. By 2023, the market is expected to triple from 56.9 billion yuan ($8.7 billion) in 2018, according a 2019 estimate by market data firm Frost and Sullivan.

Founded in 2014, Coffee Box launched as a coffee delivery platform where customers place orders online to get drinks from the likes of Starbucks or Costa. However, a year later it opened its own brick-and-mortar stores in major cities like Beijing and Shanghai. The partnership with Sinopec, which was launched last September, saw Coffee Box beverages sold in nine gas stations in the eastern city of Suzhou.

Easy Joy Coffee has opened a location on the outskirts of Beijing, according to Sinopec’s statement. The new venture brings together a team of coffee aficionados and internet experts to manage the day-to-day operations of Easy Joy Coffee, Sinopec Easy Joy said. The size of the investment by either company has not been made public.

This latest venture marks a change in fortunes for Coffee Box, which was forced to close all of its offline stores in September. It then pivoted to sell packaged coffee products, like espresso capsules and read-made coffee drinks on WeChat and Alibaba Group’s online marketplace Tmall.com.

Sinopec Easy Joy has been trying to break into sales of products other than fuel in recent years with several attempts to offer services in tourism, insurance, food and advertising. But the future for domestic gas stations cashing in on non-fuel sales remains uncertain, as less than 10% percent of their profits come from unrelated businesses, according to Shanxi Securities Co. Ltd. By comparison, some gas stations overseas earn almost half of their profit from side businesses, said the report.

Contact reporter Anniek Bao (yunxinbao@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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