New coffee brands that have been launched for less than 10 years have surpassed global coffee brands with more than 50 years of history. In its fourth-quarter earnings report, Luising Coffee said it posted 7.06 billion yuan (US$980 million) in quarterly revenue, up 91.2 percent year-on-year. Its net profit was also 96.4 million yuan, more than four times higher than the same period a year ago. Annual sales also sharply increased. Last year, Luising Coffee’s sales reached a record high of 24.86 billion yuan (US$3.45 billion). It increased 87.3 percent year-on-year. With a net increase of 8,034 stores last year (including overseas stores), Luising Coffee operates 16,248 stores as of the end of last year.
Thanks to the strong performance of Luising Coffee, Starbucks Corp. yielded the top spot to Luising Coffee Co. last year. It posted 3.16 billion dollars in sales. It has about $300 million less sales than Luising Coffee. Although Luising Coffee’s performance includes overseas stores, the proportion of mainland China is still overwhelmingly high because it opened more than 30 stores in Singapore for the first time last year. Founded in 2017, Luising Coffee trailed Starbucks, which entered China in 1999. By aggressively expanding the number of stores, the company surpassed the mark of 10,000 stores early last year before Starbucks. In the second quarter, the company surpassed Starbucks for the first time in terms of quarterly sales. On top of that, the decline in consumption in China has enabled Luising Coffee to overtake Starbucks. This is due to the fact that Chinese consumers, whose price sensitivity has increased due to the slowing economy, have come to prefer affordable products. In China, Starbucks coffee is sold for more than 30 yuan (about 5 U.S. dollars) per cup, while Luising Coffee costs only 9.9 yuan (about 1 dollar20) per cup. Luising Coffee also attracted consumers with its unique product.
In September, it collaborated with Guizhou Maotai to launch “Jianghyang Latte” with 53-degree Moutai added to its latte. As you can taste the salty taste of Moutai, it quickly went viral on social media. At 38 yuan (about 7,000 won) per cup, it was three to four times the price of regular coffee, but due to the high price of Moutai, it was loved as the nickname “young people’s first Mao tai cup.” The share of local brands in the Chinese coffee market is expected to rise gradually. According to a report released in December by market research firm World Coffee Portal, the number of coffee shops in China is about 50,000, the largest in the world. Competition in the Chinese coffee market is intensifying as local brands such as Luixing Coffee and Coty Coffee open thousands of stores every year.
SOPHIA KIM
US ASIA JOURNAL
