Japan-inspired Chinese coffee brand gets Series C
Chinese coffee brand Tasogare has raised several hundred million renminbi in a Series C funding round led by Yijing Capital and state-controlled Jiande Group. Qiming Venture Partners and Bu’er Capital re-upped.
The new capital will support product R&D, the development of offline sales channels, branding and marketing, and recruitment, according to a statement.
The company secured CNY 300m (USD 43.5m) in Series B funding in 2021 led by Qiming and Yijing Capital. This followed a Series A of undisclosed size in 2020 from Shenzhen Qianhai Xingwang Investment. Other backers include InvesTarget.
Tasogare has sold more than 1bn cups of coffee to date through an omnichannel sales engine that encompasses e-commerce platforms, live-streaming and new media, as well as hotels, supermarkets, and convenience stores. It has been the best-selling liquid coffee brand on Tmall for three consecutive years.
Hao Lin, the company's founder, was previously the China representative for Japanese coffee brands UCC and AGF Maxim.
Lin established operational bases in Hangzhou and Osaka and signed exclusive supply agreements with coffee producers in Japan and Brazil. Intricate procedures are followed to ensure consistently high product quality. These include using only seasonal fresh beans, an eight-hour "dripping" extraction process, and three layers of film to shield incoming light.
The company is also building domestic supply chains. A local factory with an annual production capacity of more than 1.3bn cups of coffee is scheduled to come online in 2024. It is estimated this will reduce costs by 30%.
There has been plenty of private equity investment in Chinese coffee shop chains and brands. Luckin Coffee is the most widely known, given its rapid scaling and subsequent fraud scandal. The company is currently being revived under the stewardship of Centurium Capital.
Other investments in the space include M Stand, a coffee shop chain with ambitions to become the Starbucks for China's younger generation, and Saturnbird.
Investment in domestic brands in China reached a record high in the first half of 2021 but then collapsed as pandemic-related lockdowns were imposed. It has yet to fully recover.
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