China’s fastest growing coffee chain, Luckin Coffee (Nasdaq: LK), and leading global merchant and processor of agricultural goods, Louis Dreyfus Company (LDC), have signed an agreement to establish a joint venture aimed at developing a co-branded Luckin Juice business in China.
The coffee giant issued a press release saying that the Singapore signing ceremony was attended by Zhengyao Lu, Chairman of Luckin Coffee, Margarita Louis-Dreyfus, Chairperson of Louis Dreyfus Holding B.V., Ian McIntosh, CEO of LDC, among other executives.
The business will focus on Not From Concentrate (NFC) orange, lemon, and apple juices, for which LDC controls full value chains from farm to customer. In the future, the company plans to build its own bottling plant as well as sell other fruit and vegetable juices.
As for Luckin Coffee, its fast-expanding stores will play an important role as sales outlets. By the end of June 2019, Luckin coffee had 2,963 stores in 40 cities across China. By the end of this year, the company plans to have more than 4,500 stores in total, making it China’s largest coffee chain. In addition, the co-branded juice business will also market its juices via other channels.
In light of China’s status as the world’s fastest-growing NFC market, Luckin Coffee Senior Vice President and Co-founder, Jinyi Guo, said that Luckin and LDC saw a big opportunity to offer high quality, sustainably-produced NFC juices to Chinese consumers. He said that through the joint venture, Luckin is moving to control its value chains, guaranteeing better quality control and the ability to offer superior products and experiences to consumers.
“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,” Guo said. In the future, Luckin Coffee will further reduce costs to meet the needs of broader consumers, he added.
James Zhou, LDC Global Vice President and regional head for LDC North Asia, said that the new move fits well with LDC’s corporate strategy to move further downstream toward Chinese consumers. Founded in 1851, LDC is one of the world’s largest juice production companies with more than 30 years of industry experience. It currently produces sustainably-grown fruit in Brazil and other countries.
(Top photo from Pixabay)