(Yicai Global) Jan. 14 -- Tongrentang, a more than 300-year-old traditional Chinese medicine maker, is seeking to spur growth by coffee shops selling herb-infused drinks.

The No. 1 Zhima Health outlet exceeded its parent's expectations as the store's sales reached CNY20 million (USD3.1 million) in 2020 instead of the predicted CNY10 million after enjoying busy customer traffic in the second half, the parent told Yicai Global.

Zhima Health, a unit of the Beijing-based pharmaceutical group, will open 300 stores in the capital city and 50 in first-tier cities across the country over the next 12 months, according to its plan released last year. But it is falling behind schedule as one planned 1,000-square meter store in Beijing, expected to be kicked off late last year, has not materialized yet. It has three stores so far.

The TCM veteran could use some new successes. Tongrentang spent CNY111 million (USD17.2 million) on research and development with CNY1.3 billion (USD201 million) accrued in sales expenses in 2019, according to its financial report. The gross profit rate of most of its products declined, including those of its best-selling cardiovascular and cerebrovascular health, as well as tonic products.

The first Zhima Health coffee shop, opened in October 2019, is located in the capital city's central business district, next to Starbucks and Tim Hortons, selling cups of saffron or Sichuan peppercorn-infused coffee to consumers for about CNY35 (USD5) per serving.

The "Tongrentang Healthy Coffee" phenomenon will be difficult for others to copy because it is backed by the famous TCM brand, Jin Zhijie, manager of Zhima Health’s new retail business, told Yicai Global. "Our ultimate goal is to promote TCM health management by selling coffee."

“We are not aiming to make money by selling coffee," revealed Jin. "We chose coffee for it can rapidly reach young people in urban areas." The company is piggybacking off of the red-hot coffee boom in China to gain young consumers' favor to promote its health products, he explained.

Time-honored TCM brands have a lot of followers so Tongrentang’s efforts are theoretically sustainable, Yuan Jinxiang, owner of a competing coffee shop called Stamp Caffe, said to Yicai Global.

Saffron can help revitalize the skin, black wolfberry improves eyesight, and young people may be bold enough to try Zhima Health's coffee with Sichuan peppercorns or star anise, Yuan added.

Editor: Emmi Laine