BEIJING, People’s Republic of China — Luckin Coffee Inc. has announced the launch of Luckin Tea as an independent brand and its brand ambassador Zhan XIAO, as well as a pilot program for its pioneering Retail Partnership model to recruit partners nationwide.
“We have experienced strong growth of our Luckin Tea series since the initial launch in April 2019, which is far beyond company’s expectations,” said Mr. Jian LIU, Chief Operating Officer of Luckin Coffee. “To further capitalize on the opportunity in the freshly-brewed tea market, we are strategically launching Luckin Tea as an independent and complementary brand and rolling out the store footprint nationwide. We will continue to maintain the high growth of the coffee business, while taking the tea drinks as another important driver to further explore the breadth and depth of the market.”
The Company expects, according to Mr. Jian LIU, both Luckin Tea and Luckin Coffee stores to function in highly complementary roles. In terms of product category, Luckin Tea stores will also sell a standard range of classic freshly-brewed coffee, with a broader enriched assortment of freshly-brewed tea drinks. In addition, stores will focus more on “leisurely” consumption moments, targeting locations in shopping malls and other lifestyle-centric commercial areas, while Luckin Coffee stores will continue to expand its presence primarily in office locations. Strategically, stores will initially be rolled out in Tier 2 through Tier 4 cities, whereas Luckin Coffee will focus on Tier 1 and Tier 2 cities. Luckin Tea will consistently take Luckin Coffee’s core value of “quality first”, providing high quality, high convenience, and high affordability freshly-brewed tea drinks to consumers.
Luckin Coffee also announced its pilot Retail Partnership model to support the expansion of Luckin Tea. Different from traditional franchise model, the Company’s Retail Partnership model has multiple advantages for its partners, including attractive terms with no upfront partnership fees, reduced operational risk, the ability to leverage the Company’s pervasive brand recognition, premium products and extensive supply chain, as well as access to the Company’s disruptive technology-driven new retail model. Through the Company’s innovative Retail Partnership model and digitalized operation platform, partners will not only be able to control their service quality effectively but also mitigate investment risk while increasing profitability at their stores.
“The launch of both our independent Luckin Tea brand and Retail Partnership model will significantly bolster our current operational capabilities. Through these initiatives, we will cover more cities while substantially improve the number of transacting customers, purchase frequency, and operational efficiency,” added Mr. Jian LIU.
According to industry sources, Luckin’s well-recognized brand, pioneering technology, strong operational capabilities, capital strength, as well as established supply chain and nationwide store network have enabled it to become one of the largest players in China’s freshly-brewed tea drinks market. By launching an independent Luckin Tea brand and Retail Partnership model, the Company will continue to accelerate its expansion into lower-tier cities while further increasing its overall market share throughout China.