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Luckin Coffee, the Chinese chain that faced a fraud scandal four years ago, has made an impressive comeback by outperforming Starbucks in the crucial China market. Luckin reported a total net revenue of 24.9 billion yuan ($3.5 billion) in 2023, marking an 87% increase from the previous year. While Starbucks reported a total revenue of $3.05 billion in China for fiscal 2023, it did not disclose a full-year figure for China sales.
Luckin’s rapid growth was fueled by its expansion efforts, reaching 16,218 stores in China by the end of 2023, nearly double its count in 2022. In comparison, Starbucks had 6,975 stores in China as of January, up 14.5% from the previous year. Despite falling behind in store count and sales, Starbucks maintains a lead in profitability over Luckin.
The rise of coffee culture in China has contributed to the success of both Luckin and Starbucks. With coffee consumption increasing by 15% in the past year, China has overtaken the US as the world’s largest branded coffee shop market. Luckin, founded in 2017, focuses on catering to young consumers with affordable prices and cashless transactions. In contrast, Starbucks has partnered with Alibaba and Meituan to expand its online reach to Chinese consumers.
While Luckin faced setbacks in the past, including being delisted from the Nasdaq and receiving a $180 million fine, the company has successfully rebuilt its Business with support from Centurium Capital. Starbucks, on the other hand, continues to innovate by introducing unique drinks like a pork-flavored coffee to appeal to local tastes.
As the competition between Luckin and Starbucks heats up in China’s growing coffee market, both companies are focused on strategies to sustain growth and market share. Stay tuned for more updates on the evolving coffee industry landscape in China.
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