Kok How Lee

Opinion | Luckin Coffee’s rise over Starbucks reflects changes brewing in China

Luckin’s meteoric rise reflects a market shift as Chinese spend more carefully, and increasingly prefer local brands with more efficient service to slower, more expensive foreign names

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A Luckin Coffee store in Beijing promoting its Kweichow Moutai liquor-infused latte on September 4. The rise of local coffee chains reflects a broader trend of increasing consumer nationalism in China. Photo: Reuters

Kok How Lee

Published: 5:30am, 26 May 2024

China’s coffee-drinking market is turning out to be an interesting brew and the latest quarterly results from local chain Luckin Coffee and international franchise Starbucks offer a fascinating glimpse into the evolving landscape.

Both companies announced their results on April 30, providing a good rear-view mirror comparison of their performances and market strategies.

Luckin Coffee’s meteoric rise in China not only leaves Starbucks in its shadow but also underlines shifting consumer preferences and market dynamics. It highlights the power of innovation and adaptability in the competitive coffee-drinking market.

Luckin Coffee, which doubled its stores last year to 18,590 – including 30 in Singapore, its only other market – added 2,342 more in the first quarter, all but two of which were in China.

This rapid expansion hit Luckin Coffee’s margins and same-store sales dropped by 20 per cent year on year. But it also doubled its customers to 60 million every month on average and boosted revenue to nearly 6.28 billion yuan (US$869.5 million) for the quarter, up 41.5 per cent year on year.

In just one year, Luckin Coffee has opened more stores in China than Starbucks managed to over 25 years – and now has more than twice as many stores as Starbucks’ 7,093.