Every morning, the same scene plays out in the subway passage at Zhenbei Road in Shanghai. Office workers hurry to clock in, many having already placed a coffee order on their phones. They pick it up on the way and keep moving. No one stops to study a coffee shop’s product philosophy.
Whether a cup of coffee sells often comes down to three things:
- Is it available on the way?
- Is the brand familiar?
- And how much would it cost to drink every day?
Nowwa Coffee recently put its answer on a new menu. A dark roast Americano and freshly made lemon iced black tea each cost RMB 3.9 (USD 0.6), while a fresh coconut latte and orange Americano each cost RMB 5.9 (USD 0.9). The prices are being rolled out across its nationwide store network. Multiple stores confirmed that these are long-term menu prices, not a short-term promotion.
At those prices, grabbing a cup of freshly ground coffee in the morning costs little more than picking up a bottled drink at a convenience store. When work gets busy, customers can buy a second cup without waiting for a coupon. That ease may do more to change consumer habits than a one-off deep discount.
Over the past few years, RMB 9.9 (USD 1.5) coffee made coffee much more affordable in China. Nowwa’s RMB 3.9 price point pushes coffee another step toward becoming an everyday purchase.
Founder Guo Xingjun wants coffee to become something people buy casually wherever they happen to be, then buy again when they finish it.
Why price aggressively to enter the beverage market?
In China’s largest cities, consumers are hardly short of choices when it comes to coffee.
A Luckin Coffee sits across from the store below Nowwa’s Shanghai office. A Manner Coffee operates in the same building, with more brands a short walk away.
Since 2024, Nowwa has positioned itself as a health-conscious brand and adjusted its product lineup around offerings such as fruit coffee. It has also invested heavily in celebrity endorsements and collaborations, signing Song Jia, Yang Yang, and Peng Yuchang as endorsers, and Li Landi and Cao Jun as brand ambassadors. Its collaborations have included IP such as the Gintama manga series and the Miracle Nikki game.
But even after taking these steps, Nowwa still seemed to lack a reason for passersby to change their buying habits immediately. It was a question Guo returned to repeatedly.
After the new menu was introduced, business at this particular store reportedly rose sharply. Daily sales increased from more than 100 cups to more than 300, while the weekly repeat purchase rate doubled.
The increase suggests price can quickly influence buying habits even in a Shanghai office district with plenty of coffee options. For a frequent purchase, a conspicuous price change can attract attention faster than brand messaging. The lower prices also gave more consumers a reason to try the brand.
The beverage industry offers plenty of examples of large businesses built on low prices. RMB 2 (USD 0.3) bottled water, RMB 3.5 (USD 0.5) soda, RMB 4 (USD 0.6) freshly made lemonade, and energy drinks priced around RMB 5 (USD 0.7) helped build the businesses of Nongfu Spring, Coca-Cola, Mixue Bingcheng, and Eastroc Beverage, respectively.
Their package sizes, channels, and gross margins differ. What they share is a price low enough to require little deliberation, creating more buying occasions and denser retail distribution.
Coca-Cola sold its namesake cola for cents for decades. When it eventually raised the price, even a small adjustment was widely reported in the media.
These examples suggest that the more routine and inexpensive a purchase feels, the more readily consumers may make it several times a week or even several times a day.
Frequency supports scale. Scale, in turn, can spread production, logistics, and distribution costs, making low prices more sustainable.
The alternatives consumers consider change when products are priced above or below the RMB 5 mark.
At RMB 3.9, consumers can compare a cup of freshly ground coffee with drinks from the convenience store or Mixue lemonade. A drink priced at just over RMB 5 may still be cheap, but it has moved slightly beyond the price range of something people casually grab off a shelf.
For frequent coffee drinkers, even this small difference can create a psychological dividing line. RMB 5 is not a precise threshold, but it may mark a shift in the buying decision from “Should I have one?” to “I’m passing by, so I’ll get one.”
Low prices alone, however, do not automatically turn coffee into a “water substitute.”
If consumers have to make a special detour for a cup of coffee, even a cheap one is unlikely to become an everyday purchase.
Guo remembers that around 2019, consumers might have ridden a bike specifically to find a good-value cup of coffee. Today, with coffee available in many more places, the time cost of doing so stands out more.
Coffee works best when it appears somewhere people are already going: on the commute to work, in a hotel lobby, at a convenience store, in an internet cafe, or at a gas station.
Calling coffee a substitute for water describes a buying habit, not a literal replacement for water. The point is how frequently people buy and drink it. When people are thirsty, tired, or simply walking past a store, they do not have to stop and calculate whether a drink is worth the money.
Freshly made beverages also offer things bottled drinks cannot fully replicate: ice cubes rattling in a cup in summer, a hot drink handed over on the spot in winter, and a preparation process consumers can see.
Once the price gap narrows, those differences are more likely to factor into the same purchasing decision.
Competition therefore extends beyond the boundaries of the coffee shop. Tea chains are adding coffee machines to existing stores, while bottled teas and sparkling drinks are competing for the same afternoon drinking occasion.
By keeping freshly ground coffee at RMB 3.9 over the long term, Nowwa has an opportunity to become an everyday option alongside the beverages in convenience-store refrigerators.
Freshly made coffee retains its taste and temperature advantages while approaching the price of a bottled drink. That could help it reach a broader market and compete more directly with other beverages.
Where are the savings behind RMB 3.9 coffee?
Printing a low price on a menu is easy. Maintaining it over the long term requires a different cost structure.
Coffee beans are priced on global markets. Large-scale purchasing and an in-house roasting plant can reduce costs, but neither alone explains how a cup of freshly ground coffee can sell for RMB 3.9.
Speaking with 36Kr, Guo repeatedly pointed to the same answer: the shop-in-shop model.
A standalone coffee shop must first cover the rent for an entire unit, renovation expenses, equipment, and labor, then sell enough cups to spread those fixed costs.
Nowwa instead places a coffee operation inside an existing convenience store, restaurant, snack shop, or internet cafe, reusing existing space, foot traffic, and some of the staff. That means the incremental cost of selling one more cup of coffee is very different from the cost structure of opening a coffee shop from scratch.
Under Nowwa’s latest franchise program, a shop-in-shop requires a minimum investment of RMB 49,800 (USD 7,420) and one to two square meters of space. It can open within weeks. Some locations recoup their initial investment in three months.
Over the past two years, Nowwa has reshaped its brand around lower-calorie products. Standalone stores, celebrity endorsements, and R&D all required investment. Those investments, in turn, helped build trust in the Nowwa counters operating inside other businesses.
With that brand foundation in place, Nowwa was able to rapidly expand the shop-in-shop format and grow to more than 10,000 locations.
The format reduced rent and labor costs, while greater scale strengthened Nowwa’s purchasing power.
Nowwa gained more bargaining power through centralized procurement. Its in-house roasting plant, with capacity on the scale of 10,000 metric tons, has also begun production.
Nowwa is now redesigning products around the new price band.
The RMB 3.9 price applies to some products, including Americanos. Guo told 36Kr that consumers continue to buy other beverages at higher prices, such as the RMB 7.9 (USD 1.2) Americano that comes in a “mega jug.” As a result, Nowwa’s actual revenue per cup is currently RMB 2–3 (USD 0.3–0.4) higher than RMB 3.9.
Nowwa began testing the new menu in 12 cities in June, expanded it to 66 cities in July, and began rolling it out nationwide in August.
Guo said about 70% of stores have completed the switch. The remaining stores still need to amend agreements with agents and franchisees, and Nowwa expects the full conversion to be completed by the end of September.
For a time, old cups, old coffee beans, and new materials coexisted in stores and warehouses. Headquarters had to negotiate with franchisees over who would absorb the difference in inventory costs.
Three factors support Nowwa’s long-term pricing: shop-in-shop locations reuse premises and labor, scale spreads supply chain costs, and higher-priced products bring in additional revenue. Together, they give Nowwa room to keep RMB 3.9 on the menu.
Getting an early lead in shop-in-shop coffee
Inside a convenience store in Pudong, Shanghai, coffee may already be becoming the main attraction.
This independently operated store sells close to 200 cups of Nowwa coffee a day. The example shows how a shop-in-shop can grow from a small service beside the counter into a meaningful business for the host merchant.
For the store owner, existing floor space gains a branded service. The store can serve walk-in customers as well as delivery orders, while delivery riders who come to collect coffee may also pick up something from the convenience store.
For Nowwa, there is no need to build an entire store from scratch. It can open along routes consumers already travel and work its way into a wider range of everyday settings.
Beyond convenience stores, Nowwa has expanded its partnerships with discount snack stores, esports internet cafes, mahjong parlors, gas stations, pool halls, bakeries, dessert shops, and operators in other sectors.
Businesses with very different main businesses can all sell coffee. The challenge is getting consumers to recognize the brand and persuading partners to keep allocating space to it over the long term.
The shop-in-shop format is not unique to Nowwa. What differentiates the company is the format’s place in its overall strategy.
According to 36Kr, even when Nowwa was expanding standalone stores, its first principle was to ensure that franchisees could make money.
Most of its existing standalone locations therefore have relatively modest rents. And because the network of standalone stores is comparatively small, each outlet enjoys greater territorial exclusivity, leaving little room for shop-in-shop locations to cannibalize them.
Nowwa has now made the shop-in-shop model a strategic priority.
For Nowwa, it is already the main route of expansion. For many leading brands with large networks of standalone stores, it may only ever be a supplementary channel.
The economics are easy to illustrate. If someone invests RMB 500,000 (USD 74,500) to open a standalone shop, then a shop-in-shop requiring an investment of only RMB 50,000 (USD 7,450) and capable of handling delivery orders opens next door, the first franchisee is unlikely to be pleased.
When the same brand operates two store formats with dramatically different investment requirements, it has to coordinate site selection, pricing, and order allocation with existing franchisees.
Leading brands can experiment with shop-in-shop locations. But turning that model from a supplementary format into a strategic priority requires balancing the interests of an existing store network.
That is why leading brands built primarily around standalone stores can struggle to make shop-in-shop locations their main line of expansion.
Nowwa, by making the format a central strategy, faces fewer such constraints.
Coca-Cola also once relied on local partners to put its drinks in more places.
In 1899, two lawyers from Chattanooga acquired the bottling rights for Coca-Cola across most of the US from Asa Candler for a contractual payment of USD 1. That dollar was reportedly never collected.
The two men later devised a tiered sublicensing system. Over the following decades, that network spread across the US and reportedly created more millionaires than any other company of the era.
Freshly ground coffee, however, differs in one important respect: it cannot be bottled in advance. Every cup still has to be prepared at the point of sale.
A shop-in-shop network therefore needs both locations and the ability to deliver consistent products and service.
The brand, partnerships, and operational capabilities Nowwa built in earlier years have now come together to create a distribution advantage.
Together, these elements give Nowwa a more complete operating model for reaching a mass market.
RMB 3.9 makes more people willing to buy. Shop-in-shop locations let them buy along routes they already travel. And the brand and systems already embedded in those locations allow partners to keep selling.
As coffee consumption in China becomes increasingly routine, Nowwa has an opportunity through its shop-in-shop network to turn freshly ground coffee into a mass market beverage.
Can Nowwa become the “Coca-Cola of coffee”?
Low prices are changing how Nowwa thinks about products.
In the past, its product development largely took its cues from freshly made coffee and tea drinks. After this round of price cuts, bottled beverages have instead become a major source of inspiration.
Nowwa has introduced RMB 3.9 freshly made iced black tea and guava lemonade, aiming to meet more of the demand for convenience-store beverages from a small counter preparing drinks to order.
Across the industry, beverage categories are becoming less distinct. Tea chains are adding coffee to existing menus. Coffee brands are putting iced black tea front and center. Convenience stores can sell both packaged drinks and freshly made beverages.
Competition is no longer defined simply by the sign above the door. It increasingly depends on which brands consumers pass on their morning walk and see on their afternoon ordering screen.
A coffee shop’s competitor may sometimes be a milk tea chain. At other times, it may be a bottle of unsweetened tea within easy reach inside a refrigerator.
Using the beverage market rather than the coffee shop as its reference point broadens Nowwa’s scope for product development.
Americanos serve consumers looking for caffeine. Iced black tea and fruit tea can appeal to consumers looking to quench their thirst. A single shop-in-shop can cover more occasions across the morning and afternoon.
Host stores therefore gain more ways to attract customers and encourage repeat purchases, while Nowwa has a chance to generate more consistent sales volumes at each location.
The shift from selling coffee to supplying everyday beverages takes shape with the RMB 3.9 menu.
The low prices also draw more attention to earlier brand investments.
Lower-calorie products, celebrity endorsements, and the in-house factory support product choice, brand trust, and reliable supply, respectively.
The RMB 3.9 price first gets consumers to notice Nowwa. Only then do they have an opportunity to see the groundwork the company has laid.
Guo said that after the price adjustment, consumers have also begun paying more attention to Nowwa’s health-conscious positioning.
Lower prices reduce the barrier to a first purchase. Fresh preparation and familiarity with the brand can then make the next purchase feel more natural.
Guo recalls a conversation from years ago, when an industry insider asked whether the brand would have room to raise prices once it grew larger.
Guo’s answer at the time was:
“When we have the ability, we will only keep lowering prices.”
Looking back, Nowwa’s goal appears unchanged. But the conditions needed to support it took years to develop.
Guo acknowledged that when Nowwa first began experimenting with shop-in-shop locations, he never imagined it could sell an Americano for RMB 3.9.
A Nowwa shop-in-shop in Indonesia that sells coffee for the equivalent of RMB 4–5 (USD 0.6–0.7) and moves more than 700 cups a day also gave him the inspiration and confidence to cut prices in China.
The experience illustrates how decisions made in individual stores can reshape a company’s plans.
The possibilities opened up by RMB 3.9 coffee extend beyond simply opening more coffee shops.
Freshly made coffee can make use of existing retail networks and appear along more of the routes people already travel every day.
Nowwa has already connected price, brand, and existing physical space. In doing so, it shows how existing retail space could support further growth in coffee sales.
Same-store cup sales, repeat purchases, and partner-store earnings will show how far the model can go.
Price gets more consumers to notice Nowwa for the first time. A broader store network then makes the next purchase easier to make on a familiar route.
For freshly made coffee, growth driven by price and availability may ultimately offer more potential than simply adding more dedicated coffee shops.
KrASIA features translated and adapted content that was originally published by 36Kr. This article was written by Xiao Xi for 36Kr.
Note: RMB figures are converted to USD at rates of RMB 6.71 = USD 1 based on estimates as of September 23, 2026, unless otherwise stated. USD conversions are approximate and, where appropriate, rounded for ease of reference. They may not fully match prevailing exchange rates.