Coffee War: the new unicorn Luckin Coffee raided Starbucks, Ali Tencent joined the game

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It has become the fastest new unicorn in history in 7 months, with more than 1400 stores in 11 months and sales of more than 5.15 million cups on the first day of the double National Day holiday. The legend created by Luckin Coffee continues, while Starbucks, the "fighter", feels an unprecedented sense of crisis.

This double National Day holiday may be a "nightmare" for Starbucks.

It is true that "make great efforts to do miracles", Luckin Coffee, the "challenger", is strong. On the first day of Singles Day, Luckin Coffee sold more than 5.15 million cups, which is equivalent to Luckin Coffee's total sales in the six months from October 2017 to April 2018, and also equivalent to the five-day sales of Starbucks' more than 3000 stores in China. During the whole double "National Day" event, Luckin Coffee's report card was finally fixed at 18.2 million cups.

If this is not amazing enough, please take another look at these sets of data: on January 1, 2018, Luckin Coffee started a trial run; on April 15, 2018, Luckin Coffee received tens of millions of yuan in angel round financing from investors such as pleasure Capital and Lu Zhengyao. Luckin Coffee announced the completion of Series A financing from investors such as pleasure Capital and Junlian Capital, which is estimated to reach $1 billion. Luckin Coffee ranked 74th in the 2018 global unicorn list released by CB Insights in August 2018. Around November 6, Reuters reported that Luckin Coffee is planning a new round of financing of $200 million to $300 million, raising the company's valuation to $1.5 billion to $2 billion.

The favor of capital gives Luckin Coffee a chance to show his strength. Qian Zhiya, founder and CEO, has repeatedly said: "there is plenty of money." Qian Zhiya, who used to be COO of China excellent car Group, is proficient in the typical "money-burning" style of Internet companies.

Facts have proved that it has always been difficult for Chinese consumers to resist the game of "burning money subsidies", and Luckin Coffee is expanding at an astonishing speed. Luckin Coffee started trial operation on January 1, 2018; Luckin Coffee completed the store layout in May 2018, and announced its official opening on May 8; in November, Luckin Coffee opened 1400 stores in 21 cities across the country, surpassing Coata Coffee, which has been operated for many years, to become the second largest coffee brand in China. It took Starbucks more than 12 years to reach this scale in China, while Luckin Coffee only used it in 10 months.

In August 2018, Luckin Coffee announced that 2000 stores would be built nationwide by the end of the year. At the current rate of development, Luckin Coffee is expected to overtake Starbucks in the second half of 2019.

It is almost impossible to beat Starbucks, which has a long history and near-monopoly, through traditional retail, and Qian Zhiya knew this from the beginning. As a challenger, Luckin Coffee, under the leadership of Qian Zhiya, made a surprise attack on Starbucks and had the feeling of "punching and killing the old master."

In fact, Luckin Coffee's strategy is very simple, completely aimed at Starbucks proud advantage in the opposite direction. Luckin Coffee is famous for its "third space" of high-quality service. Starbucks extends its tentacles to the relatively blank family and company scenes, launches the concept of "infinite scene", promotes the "new retail coffee", and combines online and offline. Hit the consumer pain point. The price of Starbucks, which takes the high-end boutique route, is higher, and Luckin Coffee subsidizes crazily. While ensuring the quality, each cup of coffee is 10 yuan cheaper than Starbucks on average.

As a result, people soon fell in love with this blue cup "Internet celebrity" coffee with a white deer pattern.

After nearly 20 years of entry into the Chinese market, Starbucks, which enjoys the big cake of the Chinese market, has hardly encountered any competitors. Luckin Coffee suddenly caught Starbucks by surprise.

Starbucks is trying to "do the same thing for the other". On Aug. 2, Starbucks partnered with Alibaba's ele.me to launch a special star delivery service to take out coffee in an attempt to respond to Luckin Coffee with a "new retail coffee" style.

It doesn't matter whether Starbucks, which has been focused on offline retail coffee for many years, can quickly change its mind and keep up with Internet companies. Price alone is an insurmountable gap.

Interestingly, instead of cutting prices, Starbucks, which is at a price disadvantage, is trying to raise prices. The city has learned that Starbucks China will raise the prices of some drinks slightly from November 16 to between 1 yuan and 2 yuan. In this regard, some media said that Starbucks in the case of declining sales to raise prices to protect profits, and Apple's way of playing is quite similar.

In addition, in September 2018, Luckin Coffee and Tencent signed a strategic cooperation agreement, the two sides will cooperate to explore robot distribution and the use of face recognition in WeChat Pay, according to the announcement, the two sides will jointly promote and popularize WeChat Pay. On the other hand, Starbucks chose to carry out strategic cooperation with Alibaba.

With the entry of the two giants one after another, the coffee industry may eventually become a battlefield for Tencent and Alibaba.