How Did Luckin Coffee Rebuild After the Fraud Fine?

Luckin Coffee staged a turnaround after its 2020 accounting fraud, which was exposed by a Muddy Waters short-selling report and followed by a 1.2 billion yuan fine and a settlement with the SEC. The chain replaced its management team, then signed freestyle skier Eileen Gu in September 2021. When she won Olympic gold, its custom drinks sold out and brand attention surged.

The recovery rested on marketing timing rather than a single athlete. Luckin tied limited drinks to Gu's Winter Olympics run, and demand outpaced supply on her championship day. Some buyers mocked the small discount as stingy, yet the campaign shifted public attention away from the fraud penalty and back to the products, giving the brand a visible traffic dividend.

Luckin Coffee once landed on the US stock market with lightning speed, but was pushed to the brink of collapse after Muddy Waters' short-selling report exposed its financial fraud. However, through a management shake-up, a settlement with the SEC, and then signing Eileen Gu and leveraging the Winter Olympics traffic, Luckin staged a textbook-level turnaround. On the day Eileen Gu won the championship, Luckin's custom drinks quickly sold out, and the brand's voice surged. Although the championship discount was mocked by netizens as "stingy," the traffic dividend and positive image have already allowed Luckin to emerge from the shadows. This article will review Luckin's ups and downs, analyze how it leveraged a sports star to rebuild its brand, and explore its real situation after the 1.2 billion fine.

Once upon a time, it took Luckin Coffee only a little over two years from its birth to its listing on the US stock exchange. However, the good times did not last long. An 89-page report released by short-selling firm Muddy Waters exposed the truth of its financial fraud, leading the outside world to believe for a time that Luckin would never recover. But a turning point followed. Luckin not only completely replaced its original management team, but also reached a settlement with the SEC. Entering this year, wave after wave of marketing campaigns have made multiple products sell out one after another.

Yesterday, Luckin Coffee spokesperson Eileen Gu stood on the championship podium, sparking a nationwide celebration, and the coffee drinks Luckin tailored for Eileen Gu also sold out in response. As the Winter Olympics craze swept the country, many netizens said outright: Luckin really has an eye for choosing people.

This rather visionary decision can be traced back to September 2021. Unlike ordinary people's 18, Eileen Gu at just 18 was already a top athlete in the ice and snow sports world. She won the X Games world extreme sports championship and dual titles at the Freestyle Skiing World Championships, attracting global attention, and Luckin naturally did not miss this focal figure.

Today, Eileen Gu's multiple labels, confident figure, and bright smile have won her countless fans and, by the way, boosted Luckin Coffee.

Eileen Gu was born in the United States and grew up in San Francisco. She was introduced to skiing due to the influence of her mother, Gu Yan, and later traveled far and wide to compete around the world. Even when she could not go to training grounds during the pandemic, she insisted on exercising at home. Yet academically, she never slacked off, even getting into Stanford University with an excellent SAT score of 1580 (out of 1600).

In the United States, a country mainly made up of immigrants, one can always hear remarks like "Go back to your country" (Go back to XX), and Eileen Gu really gave up her US citizenship to represent China on the podium of world ice and snow sports. In China, where several freestyle skiing events are still in their infancy, she set an example, and every medal she won kept setting records for China in multiple freestyle skiing competition areas.

Facing doubts from some sour critics, her blunt responses left them speechless. She fired back at US media and even replied to comments until dawn, then woke up the next day and competed as usual. This is no different from ordinary foodies binge-watching dramas all night and still clocking in to work on time in the morning. This shows Eileen Gu's ordinary side and brings her closer to the public.

In addition, on the Winter Olympics stage, Eileen Gu showed a tender side, kneeling down on the field to comfort fellow competitors. Who wouldn't love such a hexagonal super girl? Add Eileen Gu's identity as both an athlete and a top student, and even a "domineering CEO" style novel would not dare to write it this way. After yesterday's godlike jump, even I want to exclaim: Mom, I think I've seen a goddess!

Before Luckin Coffee signed with Eileen Gu, Eileen Gu was already famous, and the then Tokyo Olympics had stirred the nation's enthusiasm for sports. Luckin took a liking to Eileen Gu's tone of "professional, young, stylish, and healthy," and afterward Luckin built its new brand promotion around "Young means Luckin." In September last year, Luckin officially announced Eileen Gu as brand spokesperson and launched Eileen Gu custom new products "Walden Skiing Latte" and "Blue Velvet Sassy Snow Latte."

Before the Winter Olympics, Luckin even launched Eileen Gu cup sleeves, Eileen Gu-themed straw standees, human-shaped standees, and set up two Eileen Gu-themed pop-up stores in Beijing.

When Eileen Gu entered the finals, the Luckin team immediately grasped the "traffic code" and spread the materials and assets prepared before the Spring Festival, from store image standees to cup sleeves and cup bags, and the cloud platform even completed the switching of assets within 1 hour after the championship.

After Eileen Gu won the championship, Luckin immediately sent out congratulations and launched a big promotion, issuing a 4.8 discount "Congratulations to Eileen Gu on Winning the Championship" coupon.

However, compared with the usual 4.2 discount and 3.8 discount, Luckin's championship discount this time seemed very stingy. As a result, it sparked heated discussion among netizens and even added heat to the "Luckin" label.

Even though the discount was not large, Luckin's Eileen Gu-recommended drinks still sold out for a time. Some netizens also said that giving out free coupons would not be excessive.

Then, Luckin again sent out 66 free coupons through a lottery.

Over the past six months, people's enthusiasm for traffic-driven pretty boys in TV variety shows has faded. The emergence of various "tax evasion" and "falling from grace" news has brought certain negative effects to the brands they endorse. Compared with those entertainers who rose through traffic, the image of Olympic champions is more positive, and the probability of negative incidents is much lower. Luckin seized the opportunity to sign Eileen Gu, and the impact on its brand has been obvious to all these past two days.

Today, Luckin Coffee has successfully turned things around: the founder team was kicked out, quarterly reports are profitable, the Huakui series is out of stock, and then there is the large amount of traffic brought by Eileen Gu. Earlier everyone was still worried about how many cups Luckin would have to wash to afford the 1.2 billion fine, but now it seems not to be a big problem.

Image source: Internet

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The above content is compiled by CoffeeHunters, a coffee news website.