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Luckin Coffee has overtaken Starbucks in domestic sales in China, according to its quarterly revenue report released last week.
The comeback follows a year of aggressive expansion, pushing low prices and diversified offerings tailored to Chinese consumers.
The 9.9 yuan per cup of coffee deal accelerated Luckin's market expansion. Luckin also made it clear that it plans to continue this. Guo Jinyi, chairman and CEO, said it will be a regular activity, and "continue for at least two years".
9.9元对瑞幸扩大市场份额起到提速作用。瑞幸也明确表态，计划将这一活动继续推行下去。瑞幸咖啡董事长兼CEO郭谨一表示，“9.9元”活动将常态化进行，且“活动将至少持续两年”。 [4]
From April to June 2023, Luckin Coffee earned 6.2 billion yuan ($862 million), an 88% jump on the same period a year ago. The company also surpassed the milestone of 10,000 outlets for the first time.
Starbucks, by contrast, reported a net income for the same period of 5.9 billion yuan ($820 million) from around 6,000 locations across the country.
This marks the first time Starbucks has fallen behind its local competitor in single-quarter earnings.
Founded in 2017, Luckin was once one of China’s most successful unicorns. By 2019, the company had listed on New York’s Nasdaq, raising $600 million through its IPO. But within a year, China’s leading homegrown coffee brand was forced to de-list from the exchange, fined $180 million after admitting it had inflated its earnings and falsified accounting data.
The founders of the business were sacked and a new management team brought in.
In 2020, the founder Lu Zhengyao was removed from Luckin Coffee. The new management immediately cancelled previous large-scale expansion plans and chose to operate in a low-key manner.
2020年，创始人陆正耀被瑞幸咖啡“扫地出门”，新的管理层随即取消了此前瑞幸大规模烧钱扩张的举措，选择低调运营。[2]
This makes Luckin’s turnaround and overtaking of Starbucks even more remarkable.
But its position in China is still precarious. Starbucks remains the dominant brand in China, and there are a number of other domestic coffee chains expanding rapidly.
When it comes to coffee, many people in the past probably thought of Starbucks first, but now Luckin might come to mind. But it may also be Nowwa Coffee or Manner Coffee.
一说起咖啡，过去很多人恐怕第一时间想到的是星巴克，现在可能换成了瑞幸，“也可能是Nowwa（挪瓦）咖啡或者Manner”。 [1]
And there is one competitor that Luckin is really worried about:
The new brand Kudi Coffee, created by the former chairman of Luckin, Lu Zhengyao, and the former CEO, Qian Zhiya, lowered the price of their coffee with its "1 yuan to drink coffee" deal. This is seen as a direct move to take Luckin customers. The two coffee chains are often also directly competing against each other for customers and franchisees in lower tier markets.
由原瑞幸咖啡董事长陆正耀、原CEO钱治亚打造的新品牌库迪咖啡，用“1元喝咖啡”拉低了价格下限，被从业者认为是“转化瑞幸用户”，而且两家也非常“默契”地在下沉市场相遇，争夺小镇客流和加盟商。 [1]
So will Luckin continue its comeback?
That’s what we’re learning about this week!
Favourite Five
1. 翻盘 fān pán
turning the tide, reversing the situation
中国咖啡江湖上演着一场翻盘大战 - A battle of turning the tide is unfolding in China’s coffee sector. [1]
Related:
反超 fǎn chāo - overtake, surpass
翻身 fān shēn - make a comeback, turn things around
逆风翻盘 nì fēng fān pán - make a comeback against significant challenges
2. 爆雷 bào léi
exploding mine; major financial crisis
乔南对爆雷前后的瑞幸做过深度复盘，据他总结，是因为瑞幸第一时间针对运营、战略、营销多个层面进行了全方位调整 - Qiao Nan conducted a thorough review of the events before and after the financial fraud incident at Luckin Coffee. According to his analysis, it was because Luckin Coffee immediately made comprehensive adjustments across various aspects such as operations, strategy, and marketing. [1]
Note: Often used to describe financial fraud.
3. 浴火重生 yù huǒ chóng shēng
rebirth through baptism by fire
2022年11月，就连曾经做空瑞幸的幕后推手雪湖资本，也成了这家公司的股东，其创始人马自铭称，“瑞幸咖啡的浴火重生是中国商业史上的一个奇迹” - Snowlake Finance, who even shorted Luckin Coffee in November 2022, has become a shareholder in the business again. Its founder, Ma Ziming said: “Luckin Coffee’s rising from the flames is a miracle in the history of Chinese companies”. [1]
More: Read more in this week’s The China Project Phrase of the Week.
Related:
卷土重来 juǎn tǔ chóng lái - make a comeback, rise from the ashes
起死回生 qǐ sǐ huí shēng - come back to life from the brink of death
大起大落 dà qǐ dà luò - rise and fall together, ups and downs
东山再起 dōng shān zài qǐ - rise again in the East, make a comeback after a setback
4. 东窗事发 dōng chuāng shì fā
exposed through the east window; a secret or scandal that’s been exposed
2020年瑞幸“东窗事发”后，星巴克在中国市场基本保持着每年净增600家门店的速度 - After the exposure of Luckin's scandal in 2020, Starbucks has managed to maintain a pace of adding around 600 new stores per year in the Chinese market. [1]
5. 旗鼓相当 qí gǔ xiāng dāng
evenly matched
“翻身”后的瑞幸显然更疯狂，两家的门店数从旗鼓相当到差距逐渐拉大 - After the comeback, it's clear that the revitalized Luckin Coffee became even more aggressive. The two companies used to have similar number of stores, but the difference has gradually widened. [1]
Consuming the Conversation
Useful words
6. 惊天 jīng tiān
earth-shattering, shocking
它自曝财务造假22亿，引发商业史上惊天丑闻 - It self-disclosed a financial fraud of 2.2 billion yuan, triggering a shocking business scandal. [1]
7. 崩盘 bēng pán
collapse, total breakdown
公司几乎走向全面崩盘，但过去三年多，它是怎么冲到上万家店的 - The company was on the brink of a complete collapse. But it went on to expand to tens of thousands of stores over the past three years. How did they do it? [1]
Related: 崩溃 bēng kuì - collapse, crumble
8. 蚕食 cán shí
gradually erode
近年来，星巴克中国业绩下滑、市场份额被蚕食，也是不争的事实 - In recent years, it's an undeniable fact that Starbucks' performance in China has declined and its market share has been gradually eroded. [1]
Related: Similar to 吞食 (which is more aggressive and faster).
9. 斐然 fěi rán
remarkable, impressive
瑞幸的创新成效斐然，同时也是在用一种创新的形式积极推广中国传统茶文化 - Luckin has made remarkable achievements through its innovation, which is also a new way to actively promote traditional Chinese tea culture. [4]
10. 撒钱 sǎ qián
scatter money; spending money lavishly
一度是分众传媒大客户的瑞幸，不再撒钱投广告，转头开始做社群化的运营拉新 - Once a major client of Focus Media, Luckin Coffee stopped lavishly spending on advertising and instead shifted towards community-based operations to attract new customers. [1]
Related:
烧钱 shāo qián - burn money, spend excessively
11. 蛰伏 zhé fú
lay low, hibernate, bide one's time
2020-2023的三年间，瑞幸从跌落、蛰伏到重拾野心 - During the three years from 2020 to 2023, Luckin Coffee went from falling from grace to laying low and then regaining its ambition. [3]
Three-character phrases
12. 吹牛皮 chuī niú pí
boast or exaggerate
一种观点是，彼时全球流动性过剩，导致这种“吹牛皮”式的商业思维大为流行 - One viewpoint is that at that time, global liquidity surplus led to the prevalence of this "blowing cowhide" style of business thinking. [1]
Note: The full version of 吹牛.
13. 双寡头 shuāng guǎ tóu
a market situation with two dominant players
