Chinese fast-growing coffee chain luckin (Nasdaq: LK) on Sept 3 announced that its tea brand “Luckin Tea” will operate independent chain shops and its own new app.
In addition, Luckin Tea named pop star Xiao Zhan, born in the 90s, as the brand spokesperson and is promoting a bold Retail Partnership to accelerate its expansion.
Liu Jian, Luckin Coffee’s chief operating officer, said that Luckin Tea has achieved rapid growth, as its sales have exceeded expectations since it launched in April. While continuing to maintain high growth in the coffee business, the company will use Luckin Tea as another important component to further tap into the Chinese tea beverage market.
Luckin Tea owns its own logo and will open new chain shops as early as October. Unlike Luckin Coffee, which focused on expanding in 1st and 2nd-tier cities, Luckin Tea will concentrate on 2nd, 3rd, and 4th-tier cities. The brand also plans to open stores in shopping malls, whereas Luckin Coffee has focused on setting up branches near offices in order to attract white-collar customers.
Despite that Luckin Tea has its own app, it will also sell Luckin Coffee’s full range of coffee products. However, the brand will offer a larger variety of tea products than do Luckin Coffee’s stores and app. Still, Luckin Tea will continue to operate under Luckin’s concept of “Supreme Quality” and provide generation X consumers with fashionable and tasty tea drinks that are affordable and convenient.
Moreover, to aid the tea brand’s rapid growth, the company is promoting a pilot Retail Partnership to recruit franchise partners. Luckin Tea lists its Retail Partnership’s six advantages: to reduce costs and lower risk, Luckin Tea won’t charge its partners fees until their stores are profitable; Luckin Tea provides its partners with a strong brand, high-quality products, as well as technological support and cutting edge digital operations through the new app.
Liu said that Luckin Tea’s Retail Partnership model can lead its partners to realize higher returns on their investments. He added that since the tea brand will operate independently, overall, the company will expand into more Chinese cities.
Back on July 8, Luckin Coffee rolled out its plan to sell tea-based beverages in about 3,000 stores across 40 Chinese cities. The company had opened 2,370 stores as of March 2019, and it plans to expand to 4,500 by the end of this year and to 10,000 shops by 2021.