Luckin Coffee Inc, the US-listed Chinese coffeehouse chain, is preparing to make its debut in Malaysia. This move comes at a time when the Malaysian coffee market is experiencing fierce competition, with numerous brands vying to fill the gap left by Starbucks amidst ongoing consumer boycotts due to Middle East tensions. According to sources, Luckin Coffee will partner with a Bursa Malaysia-listed firm, aiming for an aggressive expansion plan over the next five years.
A Rising Star in the Coffee Industry
Founded in 2017 and headquartered in Xiamen, Luckin Coffee has rapidly expanded its footprint, operating 18,590 stores worldwide as of March 31, 2023. The brand is known for its innovative offerings and has become a significant player in the coffee industry, particularly in China.
Expansion in China and Beyond
Luckin Coffee’s growth in China has been remarkable, with over 2,340 net new stores opened in the first quarter of this year alone. The company now boasts 18,558 stores in China, including 12,167 self-operated stores and 6,391 partnership stores. Outside China, Luckin Coffee has established 32 stores in Singapore, marking its only international presence so far.
Strategic Entry into Malaysia
Luckin Coffee’s entry into Malaysia will involve collaboration with a local partner listed on Bursa Malaysia. This strategic partnership is expected to facilitate an ambitious expansion plan, enhancing the brand’s presence in a market that is becoming increasingly competitive. The move comes as Malaysian consumers seek alternatives to Starbucks, which has faced boycotts over geopolitical issues.
Innovative Products and Market Success
Luckin Coffee has gained popularity through its innovative product launches. In September 2023, the company, in collaboration with Kweichow Moutai Co Ltd, launched the Jiangxiang flavored latte. The product was an instant success, selling 5.42 million cups on its debut day and generating sales exceeding RMB100 million (RM64 million). By the end of the year, total sales of the Jiangxiang flavored latte had surpassed RMB900 million, with 45.83 million cups sold.
Overcoming Past Challenges
Despite its rapid growth, Luckin Coffee faced significant challenges, including an accounting scandal that led to its delisting from Nasdaq in June 2020. The US Securities and Exchange Commission accused the company of fabricating sales and inflating costs and expenses. However, Luckin Coffee’s American Depository Receipts (ADRs) continue to trade over the counter in the US, allowing the company to maintain a presence in the American market.
The Future of Luckin Coffee in Malaysia
With its planned entry into the Malaysian market, Luckin Coffee aims to leverage its innovative approach and strong brand presence to capture a significant share of the local coffee market. The partnership with a local firm will be crucial in navigating the competitive landscape and achieving the company’s ambitious expansion goals.
Conclusion
Luckin Coffee’s debut in Malaysia marks a significant step in the company’s international expansion strategy. As the coffeehouse chain collaborates with a local partner and rolls out its expansion plans, it is poised to become a formidable player in Malaysia’s dynamic coffee market. With its innovative products and strong brand reputation, Luckin Coffee is set to offer Malaysian consumers a fresh and exciting alternative in their coffee choices.
