Luckin Coffee burst the "oat latte price bubble" this time

Luckin Coffee launched OATLY oat latte at a price of 9.9 yuan, breaking the high price bottom line of oat latte in the market, which may trigger price competition and market reshuffle among other coffee chain brands in the industry.

Someone finally burst the "oat latte price bubble".

“This cup should be the most cost-effective one among Luckin Coffee.”

On May 20, Luckin Coffee launched its new OATLY oat latte for the first time and included it in the "9.9 Every Week" event menu. It quickly attracted widespread attention from netizens and peers.

Perhaps many people are no longer surprised by the 9.9 yuan Luckin Coffee, but friends who often drink oat latte know that in the well-known coffee chains and boutique coffee shops on the market, the price of oat latte using OATLY Coffee Master oat milk is generally in the range of 20-40 yuan.

Other major brands of oatmeal lattes on the market generally cost more than 25 yuan per cup.

This time, Luckin Coffee has broken through the industry's bottom price in the domestic oat latte market. The 9.9 yuan Luckin Oatly oat latte will undoubtedly "ignite" the price war for the fashionable oat latte in the domestic coffee industry and make the oat latte market "swim".

Image source: screenshot of Xiaohongshu

1. The 9.9 yuan price war reshuffles the oatmeal latte market

From a niche coffee drink to becoming the "standard" of major coffee chain brands and boutique coffee shops, oatmeal latte is becoming more and more popular. According to Meituan's "China Coffee Consumption Insights" report, from 2021 to 2022, oatmeal latte has always ranked among the top ten sales of takeaway coffee. However, affected by many factors such as raw material costs, the price of "oatmeal latte" has been much higher than other coffee categories in the past few years. Under some popular trends of health, "oatmeal latte" has become a symbol of young people's individuality, fashion, and environmental protection. This has also led to the price of oatmeal latte, which should have been more affordable, being "unaffordable".

So is the price of oat latte always “high” because the production cost of “coffee-mate” oat milk is higher?

It is understood that oat milk is made by emulsifying oats with biological enzymatic hydrolysis technology, and it is called "milk" only because it tastes similar to milk.

For example, when OATLY oat milk first entered the Chinese market, it was not very popular. It was not until it adjusted its product positioning and began to cooperate with well-known coffee chain brands such as Starbucks and officially entered the coffee market that it began to flourish. Of course, the "rise" also included the price. After several years of rapid growth, OATLY began to engage in cross-border marketing in tea, baking, and catering, promoting the "healthy, low-carbon, and fashionable" middle-class consumption label. In order to make their products get a premium, major brands have always been happy to see it happen, and no one is willing to puncture the high-priced "bubble" of oat milk.

Image source: screenshot of Xiaohongshu

This time, Luckin Coffee lowered the price of Oatly oat latte to 9.9 yuan, directly removing the "noble halo" of oat latte and puncturing its high-priced "bubble". The "price war" is only a superficial phenomenon, and the key is that it may eventually trigger a price "reshuffle" in the domestic oat latte market.

In the consumer era where "quality-price ratio is king", "it's not that I can't afford xx, it's that xx is more cost-effective" is the embodiment of the realistic consumption concept of contemporary young people. "High-quality and affordable" brands are more likely to capture the new generation of consumers. Many people think that the continuous output of "explosive products" is a major "magic weapon" for Luckin Coffee, but in addition to this, the price power of "good products at good prices" is the core competitiveness of a brand's sustainable development.

Image source: screenshot of Xiaohongshu

In other words, who doesn’t love high-quality and affordable “oatmeal latte”?

The raw materials of Luckin Coffee's Oatly oat latte are Oatly Coffee Master oat milk, which is used by all major coffee chain brands. The quality has improved, and the price has been reduced to 9.9. Luckin Coffee's courage to do so is inseparable from its long-term accumulated scale, deep supply chain and brand influence. After all, it is not as simple as just lowering the price to burst the price "bubble" without overturning. What is tested behind it is the comprehensive strength of the company in many aspects such as upstream supply chain, downstream bargaining power, brand value and brand scale.

2. Young people are fighting back against “food assassins”

When Oatly first entered the Chinese market, it welcomed a new wave of consumption in my country. Capital waved the banner of "consumption upgrade" and was determined to redo all traditional consumer products with Internet thinking. At that time, as long as it was related to the keywords "lifestyle" and "consumption upgrade", it could easily attract young people and middle-class consumers who were keen on trying new things. For a time, various "Internet celebrity hits" emerged in the new consumption track, including high-priced bread, fruit assassins, sky-high ice cream, etc.

However, today, China's consumer market has undergone tremendous changes. The slogan of "consumption upgrade" has long given way to a more rational consumption concept. Consumers have begun to disenchant various consumption concepts, and the market trend has also changed significantly. In the era of "quality-price ratio" consumption, consumers have begun to be more vigilant about the "middle-class trap" around them, and have shown more caution and rejection of over-priced products.

Once upon a time, a cup of milk tea cost more than 30 yuan. However, under the trend of "consumption downgrade", "awake" brands began to pay attention to consumers' sensitivity to high-premium products. In 2022, new tea brands cut prices and announced that high-end milk tea "said goodbye to the 30 yuan era". Various tea brands followed suit and launched a series of affordable products.

"No snowflake is innocent in an avalanche."

Every time a "food assassin" is killed, it will stir up the entire industry and trigger a chain reaction. This time it is finally the turn of "oatmeal latte".

Image source: screenshot of Xiaohongshu

It is foreseeable that when Luckin Coffee brings its "Oat Latte" into the 9.9 yuan price range and returns its price to a reasonable range , it will inevitably push other coffee chain brands to re-examine their product operations and pricing, and even force the upstream of the industry to continue to evolve. Ultimately, more consumers will be able to drink a cup of truly good coffee at a reasonable price.

Author: Shi An, Editor: Zhu Tian

WeChat public account: New Consumption Think Tank