Luixing Coffee Surpasses Starbucks in Store Count and Sales
'China's Starbucks' Becomes 'National Coffee'
Starbucks Strives to Regain No.1 Position in Chinese Market
The world's largest coffee franchise, Starbucks, is being outpaced by a native brand in China.
Luckin Coffee Surpasses Starbucks in Number of Stores and Sales
According to the Wall Street Journal (WSJ) on the 19th (local time), China's native coffee franchise Luckin (瑞幸) Coffee has overtaken Starbucks in sales and number of stores, becoming the largest coffee chain in China.
Luckin Coffee currently operates about 13,300 stores in China, which is twice the number of Starbucks stores (about 6,900). In the second quarter sales, Luckin Coffee and Starbucks recorded $855 million (approximately 1.105 trillion KRW) and $822 million (approximately 1.0624 trillion KRW) respectively, giving Luckin Coffee the edge.
Luckin Coffee, which opened its first store in 2017 as the "Chinese Starbucks," expanded to about 3,680 stores in two years until 2019. This contrasts with Starbucks, which entered the Chinese market in 1999 and opened about 4,130 stores over more than 20 years.
Setback Due to Accounting Fraud... Revitalized with Management Changes
However, in 2020, Luckin Coffee faced a major crisis when it was delisted from the U.S. Nasdaq market due to an accounting fraud scandal involving 2.2 billion yuan (approximately 410 billion KRW). Since then, with management changes, aggressive investments, closure of unprofitable stores, and strategic store expansion, it has established itself as China's "national coffee."
In particular, its marketing strategy targeting young consumers has attracted attention. One example is the "Jiangxiang Latte," a caf? latte collaborated with the traditional Chinese liquor brand Guizhou Moutai, launched last September. According to KOTRA, this product sold 5.42 million cups on its first day, achieving sales of over 100 million yuan (approximately 18 billion KRW).
Aggressive marketing using discount coupons and free coffee also played a role. Analysts say that rapid delivery services and convenient mobile payment methods after COVID-19 have contributed to its fast growth.
'Aiming to Regain Market No.1' Starbucks Plans 9,000 Stores by 2025
Starbucks has long prioritized expansion in the Chinese market. As a result, China has become Starbucks' second-largest market after the U.S. in terms of number of stores and sales. Starbucks is striving to regain the top market position by increasing its stores in China to 9,000 by 2025. It is also reported to have launched 28 new beverages exclusive to China.
Wang Jingying, CEO of Starbucks China, recently stated, "Starbucks currently operates in 800 prefecture-level administrative regions in China and plans to expand stores in major hub cities and lower-tier cities to similar levels."
According to global consulting firm Deloitte, the annual per capita coffee consumption in major Chinese cities was 326 cups in 2021, approaching levels in the U.S. and South Korea. However, the nationwide average in China was 9 cups, indicating high growth potential.
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