International
Entered2024.02.25 11:36 Modified2024.02.25 12:17
Starbucks lost to ‘local’ Luckin in the Chinese market
Consumers holding Luckin Coffee (Photo = Luckin Coffee website) Luckin Coffee, a local Chinese coffee brand, surpassed Starbucks for the first time last year and became China’s No. 1 coffee company in terms of annual sales. A new brand launched less than 10 years ago has surpassed a global coffee brand with a history of more than 50 years.
On the 23rd (local time), Luckin Coffee announced through its fourth quarter earnings announcement that quarterly sales increased by 7.065 billion yuan ($980 million), an increase of 91.2% compared to the same period last year. Net profit for the period also increased more than four times compared to the same period last year, reaching 96.4 million yuan. Annual sales also rose significantly. Luckin Coffee’s sales last year reached a record 24.86 billion yuan ($3.45 billion). It increased by 87.3% compared to the previous year. With a net increase of 8,034 stores (including overseas stores) last year, Luckin Coffee operates 16,248 stores at the end of last year Luckin Coffee’s annual sales (data = Luckin Coffee) Luckin Coffee’s performance has helped Starbucks expand its presence in the market It lost its first place to Luckin Coffee. Starbucks generated sales of $3.16 billion last year. Sales are about $300 million less than Luckin Coffee. Although Luckin Coffee’s performance includes overseas stores, its sales in mainland China are still extremely high, as Luckin Coffee only opened about 30 stores in Singapore for the first time last year.
Established in 2017, Luckin Coffee followed Starbucks, which entered China in 1999, at breakneck speed. By aggressively expanding the number of stores, it achieved ‘10,000 stores’ earlier than Starbucks at the beginning of last year. In the second quarter, it surpassed Starbucks for the first time in terms of quarterly sales. Number of Luckin Coffee shops (data = Luckin Coffee) In addition, with the decrease in consumption in China, Luckin Coffee was able to surpass Starbucks. This is due to the fact that Chinese consumers, who have become more price sensitive due to the economic slowdown, prefer low-priced products. In China, Starbucks coffee is sold for more than 30 yuan (about 5,500 won) per cup, while Luckin coffee is sold for 30% of the price at only 9.9 yuan (about 1,800 won ‘to win) the cup.
Luckin Coffee also attracted consumers with its unique products. Last September, in collaboration with Guizhou Moutai, they launched ‘Changhyang Latte’, a latte with 53 percent Moutai liquor added. You can taste the unique saltiness of Maotai liquor, so it quickly went viral on social media. At 38 yuan (about 7,000 won) per cup, it was three to four times the price of regular coffee, but because the price of Moutai liquor was so high, it was loved and nicknamed “young people’s first Moutai cup.” Cooperation with Guizhou Moutai Liquor, ‘Janghyang Latte’ Luckin Coffee (Photo = Luckin Coffee Website) The market share of local brands in the Chinese coffee market is expected to increase. According to a report released by the market research company World Coffee Portal last December, the number of coffee shops in China was about 50,000, the largest in the world. Competition in the Chinese coffee market is becoming increasingly fierce, with local brands such as Luckin Coffee and Coty Coffee opening thousands of stores each year.
Reporter Han Kyeong-kyung
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