How Did Luckin Coffee Rebuild Around SOE and Coconut Drinks?

Luckin Coffee completed debt restructuring on April 11, 2022, ending bankruptcy protection and returning to normal operations, after a financial fraud scandal. Full-year 2021 net revenue reached 7.965 billion yuan, up 97.5 percent year on year, and the chain opened 1,221 net new stores, finishing the period with 6,024 locations.

Its current popular drinks include Coconut Latte, Cheese Latte, Thick Milk Latte, Velvet Latte, Iced Americano, Yirgacheffe Dirty, Coconut Cloud Latte, Meteorite Latte, Biluochun Latte, and Okinawa Brown Sugar Velvet Latte. The Coconut Latte drove the revival, soe coffe lines such as Yirgacheffe Dirty built a specialty base, and a Coconut Palm partnership plus Eileen Gu marketing sharpened the brand.

Luckin Coffee has undergone a remarkable transformation over the past two years, from a financial fraud scandal to debt restructuring and doubled revenue, with a completely renewed brand image and product strategy. This article reviews the ten most popular drinks at Luckin currently, including Coconut Latte, Cheese Latte, Thick Milk Latte, Velvet Latte, Iced Americano, Yirgacheffe Dirty, Coconut Cloud Latte, Meteorite Latte, Biluochun Latte, and Okinawa Brown Sugar Velvet Latte, and looks back at its comeback from the brink of bankruptcy to becoming the largest coffee chain in the country. How Luckin revived itself with the Coconut Latte, solidified its coffee user base with the SOE specialty series, partnered with Coconut Palm to create a hit, and signed Eileen Gu for precise marketing—this article explains it all for you. Follow Front Street Coffee to gain an in-depth understanding of Luckin's brand transformation and product charm.

The ten most popular and best-reviewed drinks at Luckin Coffee right now are (in no particular order): Coconut Latte, Cheese Latte, Thick Milk Latte, Velvet Latte, Iced Americano, Yirgacheffe Dirty, Coconut Cloud Latte, Meteorite Latte, Biluochun Latte, and Okinawa Brown Sugar Velvet Latte.

These ten drinks all perform excellently, and friends who love coffee should hurry up and give them a try!

In the past two years, Luckin Coffee has undergone earth-shaking changes. Whether in brand tone or product direction, it has precisely hit the preferences of today's young people. This article will sort out Luckin Coffee's transformation over these years.

On April 11, 2022, Luckin Coffee announced that it had completed debt restructuring. With the support of creditors, the company officially ended its bankruptcy protection proceedings as a debtor. At this point, Luckin Coffee's legacy issues had been fully resolved, and it returned to normal operations.

Prior to that, Luckin Coffee had published an unaudited financial report for the fourth quarter and full year of 2021 on its official website. The report had two highlights worth noting: first, Luckin Coffee's revenue doubled, with total net revenue in 2021 reaching 7.965 billion yuan, a year-on-year increase of 97.5%; second, in fiscal year 2021, it opened 1,221 net new stores, with the number of stores increasing 25.4% year-on-year. By the end of the period, it had a total of 6,024 stores, including 4,397 self-operated stores and 1,627 partner stores, surpassing Starbucks China's 5,557 stores in one fell swoop and becoming the coffee chain brand with the most stores in China.

In just two years, Luckin Coffee went from being mired in difficulties and temporarily losing the capital market's trust to making a strong comeback today, making it a real-life version of "Niohulu·Luckin." The entire process of the brand's self-rescue is something even TV drama scripts would not dare to write.

In June 2017, Luckin, only 18 months after its founding, listed on the U.S. Nasdaq. However, less than a year later, Luckin self-disclosed 2.2 billion yuan in financial fraud, then delisted, and its senior management also underwent a major reshuffle. When the outside world generally believed Luckin was about to fall, it miraculously "came back from the dead" with a cup of Coconut Latte.

Although Luckin Coffee had lost investors' trust at the time, consumers' trust had not been lost. During Luckin's heyday, the brand issued large numbers of coupons, letting consumers experience the joy of buying coffee by taking advantage of discounts. With affordable prices and decent taste, Luckin quickly accumulated a large number of loyal users. Therefore, even after the financial scandal, as long as drink prices remained affordable, consumers' enthusiasm would not be greatly affected.

Luckin not only maintained affordable pricing but also attached great importance to coffee taste. After a round of consumer taste research, Luckin found that most coconut-flavored products on the market focused on the health concept, and contemporary consumers happened to care a great deal about healthy eating. So Luckin developed a product rarely seen on the market—beating raw coconut into rich coconut milk, then blending it with coffee to launch Coconut Latte.

Everyone must be familiar with this product. After it was launched, it quickly exploded both online and offline, and there was even a situation where one cup was hard to find. After the product was released, it not only made the coconut flavor sweep the entire internet and the whole industry, but also brought Luckin's brand awareness to the world. It can be said that Luckin's "life" was drunk back one cup of Coconut Latte at a time. The launch of this product also widened the positioning gap between Luckin and other coffee chain brands, because it had greater bargaining chips to "compete fiercely" with the industry.

With bargaining chips in hand, Luckin's marketing team was also extremely good at grasping consumer psychology. They knew well that when there is too much of something, everyone feels it is "no longer valuable," so Coconut Latte was often sold out for several months after its launch, effectively stimulating consumers' curiosity and keeping everyone thinking about this hit drink they had not yet checked in with.

In terms of signing spokespersons, Luckin also showed unique insight. Before the Winter Olympics began, Luckin, as if it were a fortune teller, signed Eileen Gu, and immediately launched related drinks after she won gold. Product sales and brand discussion heat thus dominated the trending list for quite a while, and netizens exclaimed that Luckin's judgment was really accurate.

After stabilizing ordinary consumers, Luckin began targeting groups with basic coffee knowledge and launched the specialty coffee SOE series—first Yirgacheffe and Yunnan, then Huakui 5.0, and then Paradise Estate. Although the launch of Huakui 5.0 SOE sparked considerable controversy among coffee people, Luckin used it to further consolidate consumers' loyalty to the brand, because everyone could drink specialty coffee, which had always given the impression of being expensive, at ordinary people's prices. As ordinary consumers, who would not love that?

After this round of operations to "steady the troops," Luckin announced on the first anniversary of the launch of Coconut Latte a co-branding collaboration with the national drink Coconut Palm Coconut Juice to launch Coconut Cloud Latte. On the day it went on sale, daily sales exceeded 660,000 cups. Through this strong alliance with Coconut Palm, a marketing expert in the coconut beverage circle, Luckin truly locked consumers in tightly this time.

Since its founding, burning money on marketing once drove Luckin to rock bottom, but it was also burning money on marketing that let Luckin survive. Luckin realized that merely relying on copycat coupon marketing was far from enough. Benchmarking against competitor Starbucks, Luckin forged a path that fit national demand very well, and also forged a path differentiated from the industry.

The speed of new releases is fast enough, coffee is turned into milk tea, the Chinese people's preference for sugar and milk is handled just right, and product prices are also very affordable. Under bold innovation, the number of people drinking Luckin indeed increased. From the financial report data at the beginning of the article, it can be seen that in 2021, more than ten million people placed orders for Luckin Coffee every month.

Luckin's experience over the past two years also tells people that merely copying and imitating others' paths cannot establish oneself in the industry for long. Only true innovation can take firm root in the industry.

When everyone cannot change their surroundings, calmly thinking about a path that suits oneself is the most important thing.

Image source: Internet

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