A fight brewing: Luckin targets Starbucks for China’s coffee crown

Luckin’s caffeine-fueled growth has come at the expense of profits. (Reuters)
Updated 04 January 2019
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A fight brewing: Luckin targets Starbucks for China’s coffee crown

  • The firm has expanded at breakneck speed, propelled by a focus on technology, delivery, and heavy discounting, even at the cost of mounting losses

BEIJING: Chinese coffee startup Luckin is aiming to open 2,500 new stores this year and overtake Starbucks as the largest coffee chain by number of outlets in the world’s second-biggest economy, it said on Thursday.

The firm, which only officially launched its business at the start of last year, has expanded at breakneck speed, propelled by a focus on technology, delivery, and heavy discounting, even at the cost of mounting losses.

“What we want at the moment is scale and speed,” Yang Fei, Luckin’s chief marketing officer, told reporters on Thursday at a presentation in Beijing.

“There is no point talking about profit,” he said, adding that subsidies to lure more users would
be an important part of the firm’s strategy for the coming few years.

Luckin said that it was targeting a total of more than 4,500 stores by the end of 2019, which would take it past Seattle-based Starbucks, which has long dominated China’s coffee scene and has more than 3,600 stores in the country.

Luckin’s caffeine-fueled expansion is in stark contrast to Starbucks, which opened its first China store in 1999 and has spent two decades reaching its current store count.

The US chain, which spearheaded the growth of a coffee culture in China, started to see competition rise from smaller peers over the last 18 months, though Luckin has stood out as the most aggressive competitor.

But Luckin’s rise has not come cheaply. The company recorded a loss of more than 800 million yuan ($116.34 million) last year, which its chief marketing officer said was in line with expectations as it pushed to expand.

Luckin, backed by Singapore sovereign wealth fund GIC and China International Capital Corp, opened more than 2,000 locations in the past year, gaining a valuation of $2.2 billion after raising $200 million in a funding round last month.

The firm’s CEO, Qian Zhiya, told Reuters last year that Luckin aimed to outnumber Starbucks
in China.

Reuters previously reported that Luckin was also in early-stage talks with investment banks about an overseas initial public offering.

The firm, however, declined to answer questions about IPO plans on Thursday. 


Oil rises on US-Iran tensions, but trade war concerns weigh

Updated 21 May 2019
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Oil rises on US-Iran tensions, but trade war concerns weigh

  • There are expectations producer club OPEC will continue to withhold supply this year
  • President Donald Trump on Monday threatened Iran with ‘great force’ if it attacked US interests in the Middle East

SINGAPORE: Oil prices rose on Tuesday on escalating US-Iran tensions and amid expectations that producer club OPEC will continue to withhold supply this year.
But gains were checked by concerns that a prolonged trade war between Washington and Beijing could lead to a global economic slowdown.
Brent crude futures, the international benchmark for oil prices, were at $72.24 per barrel at 0534 GMT, up 27 cents, or 0.4 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were up 26 cents, or 0.4 percent, at $63.36 per barrel.
“Escalating tensions between the US and Iran, in addition to signs that OPEC will continue its production cut, drove oil higher,” said Jasper Lawler, head of research at futures brokerage London Capital Group.
US President Donald Trump on Monday threatened Iran with “great force” if it attacked US interests in the Middle East. This came after a rocket attack in Iraq’s capital Baghdad, which Washington suspects to have been organized by militia with ties to Iran.
Iran said on Tuesday that it would resist US pressure, declining further talks under current circumstances.
The tension comes amid an already tight market as the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have been withholding supply since the start of the year to prop up prices.
A meeting has been scheduled for June 25-26 to discuss the policy, but the group is now considering moving the event to July 3-4, according to OPEC sources on Monday, with its de-facto leader Saudi Arabia signaling a willingness to continue withholding output.
Price gains were constrained by pressure on financial markets, which have this week been weighed down by worries that the United States and China are digging in for a long, costly trade war that could result in a broad global slowdown.
Singapore, seen as a bellwether for the health of the global economy, on Tuesday posted its lowest quarterly growth in nearly a decade of 1.2 percent year-on-year. Growth in Thailand, a key Asian emerging market, also slowed to a multi-year low.