CoCo, a Taiwanese treat with Global mind
CoCo, a Taiwanese fresh-made tea brand, has been providing high quality take away beverage including boba tea since 1997 and has grown globally in recent years as well.
CoCo’s mission is the relentless pursuit of soothing people with high quality drinks, manifesting in the business model of premium brand position, variety customer choices, and consistent, organic growth trajectory.
CoCo, a Taiwanese fresh-made tea brand, has been providing high quality take away beverage including boba tea since 1997 and has grown globally in recent years as well.
(company website http://www.coco-tea.com/bin/home.php?Lang=en)
CoCo’s mission is the relentless pursuit of soothing people with high quality drinks, manifesting in the business model of premium brand position, variety customer choices, and consistent, organic growth trajectory.
To support above business model, CoCo aligns its operating models in below important ways:
- Product innovation: CoCo leads the fresh-made beverage industry with 30% new product introduced every year, including seasonal and localized flavors to entertain customers’ wide preferences. To support the fast innovation, CoCo established R&D centers at homeland Taiwan as well as abroad to leverage local creativity, not copy-pasting the existing popular recipe and scale up for quick, speculative money. Also, CoCo leads the industry to establish a global sourcing system, facilitating the trial of variety materials at the top of the development funnel to come down with more hot selling flavors.
- Quality control: to make sure the quality is consistent across all franchise stores globally, CoCo adopts a thorough 6-month training with new potential partners before they open the shops so that every operation details is well communicated. On-line education are supported by Taiwan’s high quality ICT infrastructure as well. On the other hand, CoCo’s preparation and storage methods for fresh-made beverage materials are tailored to the unique characteristics of each of the ingredients, and all tea and ingredients are freshly made and prepared right in the stores in front of the customers.
- Organization growth: Apart from the common economic of scale and low price game other fresh-made beverage brands are playing, CoCo pursues high quality product position to claim price premium. Also, CoCo favors an organic/consistent growing path, which appropriately seeks expansion opportunities only when the business is ready instead of grabbing initial market shares in a rush. Take a look at Coco’s expansion history, from 1997 to 2010 there were rough 200 stores, and after the centralized operation organization was ready CoCo quickly expanded to 1,200 stores by 2014.Though it speeds up the expansion, till now CoCo still adopts regional joint alliance model rather than direct franchise. Each region CoCo did strict due diligence on potential partners, and would only authorize the right to sell CoCo products if the partner has proven the ability of regional operation and with shared high quality pursuit vision. CoCo would then make sure it would have the majority stakes in the new joint alliance to keep centralized control.A variety backgrounds of engineering, business development, finance of the management team also contributes to CoCo’s global success. Fresh-made beverage is usually a localized business, and only after the system of centralized global operation as well as oversea implementation has established, which involved many areas of expertise, can fresh-made beverage stores cross the national borders and deliver the consistent quality and customer satisfaction.In 2011 CoCo entered US market, and in 2013 CoCo became the first Taiwanese fresh-made beverage brand operated in Africa.
Above all, CoCo has minded the community service and social responsibility as well. Their marketing initiatives usually tie with local events, for example promotions with new movie release in a local cinema, while on the other hand CoCo was also a generous donator to public caring and sponsor of cultural education events.
We look forward to Coco’s future performance and the more pleasant surprise its new flavors give us. More could be seen on its company introduction video@https://www.youtube.com/watch?v=9NQ5TilIPFg
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1.http://www.coco-tea.com/bin/home.php?Lang=en
2.經略亞太—廠商在台營運成功案例〉之二/台商, CoCo都可茶飲
CoCo sounds delicious! Would love to try one out if it’s ever available in Boston! There multitude of flavors sounds very fun and exciting, however, as they seem to spend a lot of time inventing new flavors, I’m curious as to how much does this drive up the cost of R&D and ultimately the price of the drinks. I also wonder if they share these flavors with customers first, for example in focus groups, to see how well the customers like the new drinks. There quality control systems of intense training before a new store is opened is very interesting as well. It seems CoCo is interested in having each store look and feel the same vs providing latitude for owners to change the store depending on the local region. Do you think this is the appropriate operating model for attracting high quality customers or would they see any benefit in allowing some tailoring for local customers, especially as they are tied into their local community?
First of all, I love CoCo. I went every day for a year, no joke.
With respect to the quality value proposition, I would be interested to hear from management about who they see as their competitors. Are there other bubble tea chains? Or are they only competing with small, one-store type shops? If the latter, the quality strategy makes a ton of sense to me. Consistent product is one of the major benefits to patronizing a chain. I didn’t realize how much training took place! As part of the quality strategy, do they also use more technical equipment than other bubble tea shops? I know CoCo uses some fancy mixing and cup sealing equipment, but I don’t know how that compares to other bubble tea shops. That could be another operating/business model alignment.
With respect to innovation, I’m impressed. 30% of new products each year is a lot! I’m curious if each CoCo location serves the same products or if it varies based on customer taste. (I know that many fast food restaurants vary their menus in various cities and countries). Also, how different are the new products? Do the new products require new equipment or additional training for the workers?
Wow, this looks impressive (and delicious!)
Quick question on CoCo growth model:
1) They are growing really fast – do you think that keeping the growth in such a fast pace and in various geographies is sustainable? Do they manage to keep the quality on new markets as high as in original market?
2) Do you think there is a risk that “bubble tea” might be just a “cool” thing for few years in new markets and than people will get bored or this will be as stable as tea or coffee? How long has bubble tea been present in Taiwan – has Coco invented it in 1997?
Hi MS, thanks for your comment.
Bubble tea was actually invented by another Taiwanese company Chun-Hsui-Tang in 1983, and like you said it is an mature and stable business.
The growth is hence driven by product innovations, being it new flavors, new ingredients, or new mixture of other things, so that season by season customers never get bored.
Regarding the geography expansion concern, I foresee the fast pace would persist for the next few years at least, since currently the stores are highly concentrated in limited countries like Taiwan and China, leaving much potential to be exploited in other regions.