Luckin Coffee challenges Starbucks in China

Chinese start-up Luckin Coffee has announced plans to open 2500 new outlets in 2019 at a presentation in Beijing, China on 3 January. Reuters reports that the move will allow Luckin Coffee to overtake Starbucks as the country’s largest coffee chain by number of outlets. Luckin Coffee Chief Marketing Officer Yang Fei told reporters the movement is intended to generate scale and speed for the company, which will prioritise growth over profit for the next few years. Luckin Coffee reported a loss of 800 million yuan (US$116.34 million) in 2018, which Yang Fei said was in line with the company’s expectations. China is currently Starbucks second largest market behind the United States. According to Statista, the Chinese coffee market generated a revenue of US$2.087 billion in 2018, and is expected to grow annually by 14.3 per cent. Luckin, which began operation in 2018, has previously partnered with tech conglomerate Tencent to challenge Starbucks presence in China. The partnership followed a similar deal between Starbucks’ Chinese stores and Alibaba announced in August, 2018. Luckin, opened more than 2000 in 2018, and gained a valuation of US$2.2 billion after raising US$200 million in a funding round in December, according to Reuters.

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