CHINA – Luckin Coffee, a Chinese chain of coffee shops start-up has signed an agreement with Dutch-headquartered agricultural goods producer and seller Louis Dreyfus Company (LDC) to form a joint venture and develop Luckin Juice business in China.
The business will focus on co-branded Not From Concentrate (NFC) orange, lemon and apple juices, for which LDC masters the full value chain from its farms to customers at destination, and plans to build its own bottling plant in the future.
It also plans to bottle and brand other fruit and vegetable juices. Luckin Coffee stores will play an important role as sales outlets, while the business also plans to market its juices via other channels.
“China is the fastest-growing NFC market globally and, together, Luckin and LDC see a significant opportunity to offer high quality, sustainably-developed NFC juices to the Chinese consumer,” said Jinyi Guo, Luckin Coffee Senior Vice President and Co-founder.
“We are pleased to be partnering with one of the world’s largest citrus fruit growers and juice suppliers to launch a co-branded Luckin Juice and continue our ambitious growth plans.
“There are strong synergies between our leading-edge marketing and consumer approach, and LDC’s great juice supply capacity, global reach and strong value chain expertise.
“Through the joint venture with LDC, Luckin is extending upstream toward production, giving greater product quality control along the whole process and the ability to offer better products, a better experience and services to consumers, to further meet their diverse product needs.
James Zhou, LDC Global Vice President and regional head for LDC North Asia added, “accelerating our strategic alliance with Luckin Coffee through this new JV is very positive.
“This fits perfectly with our corporate strategy to move further downstream toward the end consumer, in particular through partnerships, and with our growth ambitions in China.
New York-listed Luckin, which originally focused on take-out coffee, is stepping up efforts to expand its product categories to win more market share from Starbucks. Earlier this month, Luckin said it would open separate stores to sell tea drink across the country.
Luckin, which opened its first store in Beijing less than two years ago, has more than 2,300 locations and plans to have more than 4,500 stores by the end of 2019 and overtake Starbucks number of outlets.
Luckin is leveraging on its technology for orders, deliveries and payments to give it an edge over Starbucks. It’s also offering big discounts and coupons that make many of its coffee products much cheaper.