New forces in China's coffee market: Can Cudi Coffee become the next 'Starbucks”?

Lu Zhengyao plans to start his last business venture in life and leaves Luckin Coffee. It looks like his new venture, Kudi Coffee, is trying to imitate Luckin’s model to create a new coffee brand.

Kudi Coffee has adopted the three strategies promoted by Luckin Coffee, including large-scale advertising, highly competitive price strategies and digital transformation. Lu Zhengyao hopes to apply the successful strategies of Luckin Coffee to the expansion process of Cudi Coffee.

In February this year, Kudi Coffee launched the two-month "Coffee Carnival Event in One Hundred Cities and Thousands of Stores", selling various coffee products at low prices, with the lowest price being only 9.9 yuan/cup, and It also provides an invitation event for new users with free coffee for 0 yuan. This is the most important marketing activity of Kudi Coffee to date, with a total of about 1,300 stores participating in 181 cities at or above the prefecture level across the country. This is very similar to Luckin Coffee’s initial low-price sales strategy.

Kudi Coffee adopts the same joint venture model as Luckin Coffee in terms of franchise. Kudi Coffee does not charge a franchise fee, but charges a service fee based on the gross profit of the store operation. Kudi Coffee’s investment team also continues to emphasize that the founders and team members are all former employees of Luckin Coffee, and the coffee beans and product supply chain are also similar to Luckin Coffee.

According to public reports, the core management team of Kudi Coffee does include some people from brands such as Luckin Coffee, China Car Rental, and China Private Car. The identity of "former Luckin founder" is clearly marked on the official website of Kudi Coffee, and a signboard with "former Luckin founder" is also placed in the store. It can almost be said that this connection is written on the cup. In addition, according to industry insiders, Kudi Coffee uses a salary that is twice that of Luckin Coffee to poach Luckin’s old employees.

However, it is not easy to build a successful brand like Luckin again. Luckin Coffee has successfully captured the Chinese people’s demand for coffee, but when Kudi Coffee entered the market, this demand had already changed. Luckin Coffee and Starbucks already have a considerable number of branches, and brands such as Luckin Coffee that focus on low-price strategies are also expanding rapidly. Although Kudi Coffee has learned from Luckin’s model, it faces limited market opportunities.

In addition, compared to Ruixing, Kudi Coffee lags behind in terms of financial strength and cash burn scale. The low-price strategy ultimately still requires competition in quality and service. Compared with brands such as Luckin, Kudi Coffee is still smaller in terms of supply chain and bargaining power.

The challenge that Kudi Coffee faces in the future may not only be to surpass Luckin Coffee, but to become China’s next “Starbucks”. There is no brand that represents Chinese coffee culture because the Chinese coffee market lacks a deep brand culture. Only with unique core competitiveness can Kudi Coffee create a real craze in the coffee industry.

In general, more and more brands are joining the competition, indicating that the Chinese coffee market is developing towards a popular trend. It is not easy for Kudi Coffee to achieve long-term development and replicate Luckin's success. It needs to demonstrate unique competitiveness in the market.

The above is the detailed content of New forces in China's coffee market: Can Cudi Coffee become the next 'Starbucks”?. For more information, please follow other related articles on the PHP Chinese website!