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The explosive growth of Luckin Coffee puts the business strategy of Starbucks in China predicament


Not to slow its growth, Starbucks It has adopted two measures that aims to overcome the stagnation of the coffee market in the West. On the one hand are encouraging those luxury items, more expensive and profit margins Dilated.

On the other hand siren chain it seeks to conquer New markets. Specific They are focusing on Southeast Asia, where China is one of the clear objectives. However things are not being simple to the famous franchise coffee shop, well Luckin Coffee, a specialized own coffee company in the region, You are experiencing explosive growth, eyes of the US company, It is worrying.

Luckin Coffee is a great unknown outside that region. The start-up It was founded in Beijing in October 2017. In just one year, Jenny Qian Zhiya, the founder of the emerging company, He has managed to be opened 1700 establishments in China and the market value of the company reached the 2000 millions of dollars.

But that's nothing compared to what's next. With 300 more local opening process, Luckin Coffee intends to have 4500 establishments at the end of this year. Clear indication that the business strategy is extremely aggressive Qian.

How you are making Luckin Coffee attract Chinese citizens? Small but cozy cafes coffee is served at affordable prices where, and through the intelligent use of new technologies.

Actually, Starbucks Coffee and Luckin could not be more different. While the first appeals to the lavishness and the search for identity and differentiation users, the other is limited to providing a cheap service, fast and comfortable, in which premium user experience.

Unfortunately, these differences are not enough to coexist in the market. In China there is only room for a coffee chain, and Starbucks will have to cafeinarse if you want to rise to the occasion.

The American company has now with a 3400 stalls in 140 big cities of China. The initial plan to achieve the 6000 locations for 2022 It may fall short, it is expected that by then Luckin Coffee has far exceeded that amount.

To catch one of the first things that Starbucks will have to solve are the huge queues that form in their Chinese cafes. Colas causing friction and are enough for many potential consumers go to the competition reason.

Although there who points out that the deal is another outstanding issues cafeteria siren, the reality is that in recent months Starbucks has taken giant steps to address the situation in which he was. It has done so with a colaboration with Alibaba through app Mobile home food delivery Ele.me.

It is still early to know who will dominate this market, but analysts say that Starbucks, despite the good work of his rivals, will emerge victorious from the contest.

The logic behind this assertion is simple: the coffee market in China is young and growing (It has grown 16% in the last ten years), and taste for coffee, and especially for good coffee, He has not yet draft; when you do, Starbucks has hegemony over the fancy coffee, the experiences premium on cafeteria and exceptional quality brews.

In this sense, Coffee is Luckin may be digging its own grave with a strategy based on the products low-cost. China's economy has only grown, and so does the purchasing power of the country's citizens.

About the Author

Article by the editorial team of DiegoCoquillat.com. It has professionals both in the field of hospitality, gastronomy and tourism, and new technologies and innovation.


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