Luckin, a fast growing coffee retailer in China

China is known as a country with tea as its favourite beverage, but it is now finally warming up to coffee. This is after the arrival of Luckin, startup purveyor of coffee that people are now showing love towards coffee, much like what happened with Japan and 7Eleven. Luckin is claiming that it is carrying on the new retail trend where the customers can order coffee online which would be delivered to their doorsteps or a nearby store within 30 minutes.

As expected, Chinese people do love coffee, and it is delivered to their doorstep makes it an even better choice. But how do the numbers stack up? Well as far as investments go, the company has a one million evaluation with investors like Dazheng Capital, Joy Capital, the Government of Singapore Investment Corporation and Legend capital (Sohu) cashing in.

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In a recent interview, founder and CEO Qian Yazhi, who was also former at UCAR, made a statement that Luckin has already served 1.3 million customers with a total of 5 million cups being delivered to them. This interview happened in May, so the results are quite recent ones too. But for a startup like this, to grow such a high margin is not possible without a high number of stores. In China, Luckin already has over 500 stores in 13 major cities. They are a relatively new setup in China, so a little bit of promotion helps a lot. Probably with the view of a bit of development, Luckin sent a letter to Starbucks accusing them of monopolistic practices and also proposing a lawsuit shortly. To this Starbucks replied by saying that coffee in China is a huge business and that they are ready to compete. However, they also made it clear that they don’t want to indulge in any kind of publicity stunt from Luckin.

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As per some data analysis, coffee consumption is somewhat replacing tea consumption in China at the rate of 15% per year. People who saw the opportunity took it, and now we have not only Luckin but also coffee box as a new retailer. The founders of both these saw the potential of coffee in China as even reports predict an RMB 1 trillion in the market by 2025. Looking at Luckin’s competitor Coffee box, which is also a coffee delivery platform already has an RMB 158 series B+ funding.

Luckin has not yet expressed any interest in expanding their venture to the other countries. They want to make a permanent place for in their native country for now.

What holds next for Luckin after this A round of financing? Will it reach the market the analysis claims or will it be just one of many companies who gets lost in the competition?