Cudi, who doesn't want to fall behind, sticks to Luckin Coffee

A few days ago, Luckin Coffee became popular all over the Internet with a cup of sauce-flavored latte, and every young person had a cup in their hands. This huge marketing success certainly attracted the attention of many peers, especially Luckin Coffee's old rival, Kudi. Kudi immediately launched a joint product with Wuchang Rice, and the aroma of rice and the aroma of wine were full of gunpowder. Let's take a look together.

A drop of Luckin's wine is a grain of rice for Kudi.

Luckin Coffee’s “Sauce Flavor Latte” became a hit, and Kudi is jealous.

Image source: Photographed by the author

"Soy sauce aroma? Or rice aroma?" On September 11, the official poster of Kudi Coffee pointed directly at Luckin Coffee. At a time when the combination of Luckin Coffee and Moutai was booming, Kudi Coffee quickly launched three "rice milk lattes" co-branded with Wuchang rice, and the slogan "Late-night wine hurts your liver, early-morning porridge nourishes your stomach" was even more provocative.

The coffee industry is really good at playing! Luckin Coffee has a joint venture with Baijiu, and Kudi has a joint venture with Baijiu's "mother" - rice, again hinting that I am your founder. Luckin Coffee wants to "have Baijiu and coffee, one cup after another", and Kudi advises "take care of your stomach, drink one less cup". This wave of business war really has the flavor of the confrontation between Pepsi and Coca-Cola.

Image source: Screenshot of Kudi applet

It’s no wonder that Kudi Coffee is jealous. Every year, there are so many brands that cooperate with each other. Last month, Nayuki’s sparkling lemon tea also cooperated with Luzhou Laojiao. The tea and coffee circle is so popular. Why is Luckin Coffee’s “Jiangxiang Latte” so popular? The workers each hold a cup of Luckin Coffee wrapped in Moutai paper trays. On the WeChat Moments screen, there are five Luckin Coffee cups, which directly makes Lu Zhengyao very anxious.

Isn’t it just a joint venture? Cudi came up with a trick. Since coffee can be made into milk tea and milk tea can be made into eight-treasure porridge, then we can directly merge the similar items and make coffee into eight-treasure porridge. By the way, we can use rice milk latte to play with the same origin and emphasize our status as a "father".

But this time, consumers are not buying it. On social platforms, many consumers complained, "If you really want to nourish your stomach, who would be so stupid as to drink coffee to nourish your stomach?", "I drink Maotai latte because I can't afford Maotai. Wuchang rice is very fragrant, but who hasn't eaten rice?", "This wave of commercial war is really vicious. It's not on the same level as Maotai latte."

His brother suddenly hooked up with the son of a wealthy family. Kudi was not confident and wanted to win. But he didn't expect that the aroma of rice was still difficult to resist the aroma of sauce.

1. Cudi, who has always been strong, tried to get Luckin Coffee

For a full half month, the popularity of Luckin Coffee's collaboration with Moutai is still continuing to ferment. The topic on Weibo has evolved from the initial #Can drinking Moutai co-branded coffee help you drive? to #Luckin plus Moutai, Wall Street kneels down.

Luckin Coffee's joint venture has left a strong mark in the domestic advertising and marketing industry. Other brands have also realized that if they can't catch up with the big brother Moutai, they will try their best to take advantage of Luckin Coffee's popularity.

Many brands are trying to get a share of this overwhelming wealth, such as the King Bed Room with Soy Sauce Flavor, Soy Sauce Flavored Meat Floss Biscuits, Soy Sauce Flavored Chocolate, and Soy Sauce Flavored Latte. Compared with other brands that try to get a share of this wealth, Kudi is really "getting a share of it".

Just take advantage of it, and even go the crazy literature route. If you turn to Guizhou in the southwest, I will go to Wuchang in the northeast and hurt consumers with rice coffee latte. From now on, rice coffee latte is unlikely to have a chance. Some consumers suggest that if you want to defeat Luckin Coffee this time, you may have to try to make a "mud coffee latte" or "leek latte".

You know, when Lu Zhengyao used the money of European and American stockholders on Wall Street to treat Chinese people to cheap freshly ground coffee, how glorious it was. A cup of "leek latte" can not only emphasize the glory of the past, but also arouse the resonance of workers. We don't have to stand on the sidelines now, watching Luckin Coffee with hatred.

This wave of tight business war has once again brought the love-hate relationship between the old rivals, Kudi and Luckin Coffee, into the public eye. Luckin Coffee went to Singapore to expand overseas, and Kudi followed to Indonesia; Luckin Coffee’s price was 9.9 yuan, while Kudi’s was 8.8 yuan; the spokespersons were also scrambling to sign, with Luckin Coffee signing Yu Shi and Kudi signing Chen Muchi right after.

If you say that Kudi is not too strong, it has opened 5,000 stores in the past ten months and has brought down the price of coffee. You should know that it took 21 years for the coffee godfather Starbucks to open 5,000 stores. If you say that Kudi is too strong, it always tries to take advantage of Luckin Coffee, and "freeloading" has become a label that Kudi cannot tear off.

Hangzhou Xitian Plaza store Photo source: Photo by the author

Hangzhou Xitian Plaza store Photo credit: Photographed by the author

Among these, the three most hotly debated ones are: one is the price war, two is deliberately opening stores next to Luckin Coffee, and three is the type of drinks.

Previously, Luckin Coffee proposed to "bring high-quality coffee into the '9.9 yuan era'", while Kudi was committed to lowering the price even further. In May this year, Kudi officially kicked off the price war, issuing "8.8 yuan all-you-can-drink coupons" every Monday in an attempt to attract more consumers.

Kudi's low prices don't stop there. On June 1, Kudi became the global sponsor of the Argentine national football team. During the carnival month, Kudi gave new users free drink coupons worth 1 yuan and free drink coupons worth 0 yuan. A large number of low-priced coupons flowed into the market, even attracting a wave of "scalpers". After the best time window, the only option is to engage in price wars.

In addition to low prices, Kudi opened stores like Luckin Coffee and even put up a banner saying "Luckin Coffee founder treats you to coffee for 8.8 yuan". Opening the menu of Kudi Coffee Mini Program, its drink types are highly similar to Luckin Coffee. The raw coconut latte, raw cheese latte, thick milk latte, and raw coconut Dirty coffee drinks are exactly the same as Luckin Coffee.

Image source: Photographed by the author

2. Kudi Coffee only learned the basics of Luckin Coffee

Facing the "provocation" from Kudi, Luckin Coffee did not relax. Whether it was launching a 9.9 yuan promotion or continuously promoting new products, it was an expression of actively responding to the challenge.

Netizens watching the game always say that this is a "high-end business war", but in fact it is not a fair fight at all.

In 2020, Lu Zhengyao, the former founder of Luckin Coffee, was dismissed. Since then, he has started a series of entrepreneurial ventures, entering the fields of small noodles and pre-prepared meals. After making high-profile efforts but still seeing no improvement, Lu Zhengyao turned his attention back to the coffee field he was good at and launched Kudi.

But it needs to be made clear that today's Luckin Coffee, except for its name, has no trace of its past, and what Cudi copied is the Luckin Coffee before the scandal.

What Kudi is good at is still the rapid expansion of the territorial enclosure. The brand adopts a fully joint-venture franchise model, claiming that "it does not do direct sales, fully supports franchisees, and avoids conflicts of interest", and does not charge franchise fees or monopolize market share. Looking back at this point, only seeking quantity instead of quality, low-price marketing and crazy store expansion are more like a low-quality expansion.

Today, Kudi is still following the same path that Luckin Coffee took before 2020. Perhaps in Lu Zhengyao's mind, if he could bring Luckin Coffee to Wall Street before, he could also lead Kudi to reap the benefits of capitalism.

But in fact, opening a large number of stores in a short period of time is not the fundamental reason for Luckin's current success. In 2020, as Luckin's old and new forces alternated, the company welcomed a new team of professional managers. After Luckin's chairman and CEO Guo Jinyi took office, Luckin's business strategy changed greatly: it stopped "crazy store opening + high subsidies", closed stores that lacked profitability, and switched to refined operations.

It was precisely because of the change in business thinking of the new management team that the dying Luckin Coffee was brought out of the quagmire and the brand truly came to life.

On the other hand, from a brand perspective, Luckin Coffee has largely captured the coffee mindset in second- and third-tier markets.

Kudi’s expansion is indeed fierce, but as a new coffee brand, Kudi has not yet had a coffee that has become truly popular or remembered by consumers. On the other hand, Luckin Coffee’s raw coconut latte directly helped it get out of the trough. After the raw coconut latte, coconut cloud latte, and raw cheese latte, new products followed one after another. Luckin Coffee successively launched tea coffee and sauce wine series, integrating Chinese tea, wine and other elements into coffee.

Cudi’s “imitation” speed can’t even catch up with Luckin’s innovation speed. They are not on the same level. How can this work?

"Dragging down" and "hard-riding" Luckin Coffee can indeed bring in temporary traffic, but in the long run, the key to determining a brand lies in how many products are sold.

3. "Hard injuries" are difficult to cure, and Cudi still needs to be himself

Putting aside the long-standing grudges between the two, the coffee industry is in a fierce battle. Cudi still needs to be himself and face up to the hidden worries behind the "storm".

The business gene of the founder determines the vitality of a brand. Similarly, the newly born Kudi also has a strong personal style of Lu Zhengyao. Looking back at Lu Zhengyao's entrepreneurial career, in many projects such as UCAR, CAR Inc., and Luckin Coffee, he was inseparable from the "gambling nature". Lu Zhengyao is good at business routines such as financing expansion and IPO cashing out.

This time, with limited capital, Lu Zhengyao tied up 5,000 franchisees to take a gamble together.

In a past interview, a Kudi franchisee stated that joining Kudi basically does not require capital verification or franchise fees. The initial investment includes deposit, store equipment and decoration, rent, and some working capital, which is about 300,000 yuan in total.

However, judging from the general feedback from franchisees, it is not easy to make money from a Kudi store. On various social media platforms such as Douyin and Xiaohongshu, negative news complaining about the lack of profit from joining Kudi Coffee is almost everywhere.

Franchisees are faced with the common dilemma of using price wars to keep up but not making profits. "Three months after opening the store, the balance is still negative. There are many orders, but the unit price is too low." "Only a few people make a small profit, and they are hanging on with a little profit. I have been running for a few months, and I have to sell nearly 500 cups a day on average to break even. If I still don't make money after the summer, I will prepare to do something else." said a franchisee of Kudi.

The reason many franchisees are able to persist is that they can obtain orders through subsidies in the early stage and then slowly recover their costs after raising the price of their product lines in the later stage. However, they don’t know whether consumers will still be loyal when the price of Coodi rises to the same level as Luckin Coffee.

At the same time, some new problems were also exposed one after another: Kudi stores often experienced material shortages, supply chain management was in a state of chaos, and due to the inconsistency of core materials such as coffee beans, milk, and ingredients, the quality of products produced by each store was extremely unstable.

The track of good business is bound to be crowded, and there is not much time left for Cudi. It is time for Lu Zhengyao, who is making coffee with a sickle, to pay attention to these "hard injuries".

Author: Lele

WeChat public account: New Consumption Think Tank (ID: cychuangye)