A cup of sauce-flavored latte costs 100 million yuan, who is the big winner between Luckin Coffee and Moutai?

The joint venture of Jiangxiang Latte and Luckin Moutai has made Jiangxiang Latte very popular. This article analyzes the marketing strategy of Luckin Moutai, I hope it will be helpful to you.

If you haven’t had a sauce-flavored latte these days, you’d be embarrassed to call yourself a young person.

One is life-saving coffee for workers, the other is high-priced liquor for bosses to save face. The combination of the two creates a cup of Maotai-flavored latte containing less than 0.5% Feitian Moutai. The joint cooperation between Luckin Coffee and Moutai can definitely be said to be a "textbook" brand joint event.

The first-day sales of a single product exceeded 5.42 million cups, and the first-day sales exceeded 100 million yuan. While you are still discussing whether you can drive after drinking a sauce-flavored latte, Kweichow Moutai's stock price rose by 1.56% at the opening, and Luckin's chairman was grinning from ear to ear. Who wouldn't say that this "domineering president falls in love with me" drama is really delicious.

1. Luckin Coffee’s hit product manufacturing machine

Undoubtedly, Luckin Coffee has successfully created another hit product. Not to mention the media coverage, consumers were crazy about checking in and sharing on WeChat Moments, and even the boss who never drinks coffee ordered more than 60 cups of sauce-flavored lattes just to try it out, with the main purpose of "happiness".

Bohu Finance still vaguely remembers that in April last year, Luckin Coffee and Coco Tree Coconut Juice cooperated to launch Coco Cloud Latte. The packaging bags, cup sleeves, and stickers were so tacky and very Coco Tree-style that people were so shocked that they had to buy a cup to try it. Bohu Finance took a photo and posted it on WeChat Moments immediately, then took another bite and said, "Well, it tastes really good."

The sales volume of this coconut cloud latte exceeded 660,000 cups on the first day of its launch, which was a representative case in the brand co-branding industry at that time.

But the launch of Iced Raw Coconut Latte made Coconut Cloud Latte a thing of the past. It directly broke the sales record set by Raw Yogurt Latte, with sales exceeding 6.66 million cups in the first week.

But when you thought that the Raw Coconut Latte series was already Luckin's masterpiece, it overturned your perception again. It directly cooperated with the "luxury liquor" Moutai and made innovations on the original latte series. You can directly have a cup of sauce-flavored latte.

To be honest, this is the first time that wine + coffee are combined. Luckin Coffee has condensed "C in the morning and A in the evening" into one cup, which makes people who can't drink liquor rush to buy it, and makes people who love to drink love and hate it. After all, the alcohol content is less than 0.5%.

From products to marketing, Luckin Coffee has it all. Regardless of whether this joint venture is a "marriage into a wealthy family", Luckin Coffee's ability to replicate hits still impresses Bohu Finance.

In 2021, Luckin launched Raw Coconut Latte, which became the brand's first hit product. This was also the key to Luckin's "survival", directly pushing Luckin's store sales from 3,000 cups per month to 5,000 cups per month, helping Luckin cross the profit line.

It also made Luckin Coffee more determined to continue its idea of ​​creating the next hit product.

To this end, Luckin's product development team studied the preferences of young people and believed that milk coffee was a general direction, and then determined the "big latte strategy". From raw coconut latte to soy sauce latte, if you look closely, every big single product of Luckin is a latte series.

For example, Thick Milk Latte, Raw Coconut Latte, Velvet Latte, Coconut Cloud Latte, and Sauce Latte have all become its best-selling products. Zhou Weiming, senior vice president of Luckin Coffee, once said, "For example, our Thick Milk Latte, Raw Coconut Latte, and Velvet Latte have always had good sales. Such stable sales will increase our ability to resist risks, and the pressure of trial and error of new products will not be so great."

It is understood that Luckin will plan new products 6-8 months in advance to leave time for supply chain procurement, product optimization and other departments. From 2020 to 2022, Luckin launched 77, 113 and nearly 140 new products respectively. In other words, Luckin will add a new product every 3 days on average.

A Luckin employee said that every Thursday he would train on the "Luckin University" app for 3-5 hours to learn how to make new products. The frequent launch of new products also increases the probability of hitting a hit.

In addition to constantly "pushing, pushing, pushing", Luckin also has "co-branding, co-branding, co-branding".

Everyone is familiar with brand collaborations. The last time the social media was flooded with messages was when HEYTEA and FENDI jointly launched the "FENDI Joy Yellow" milk tea, which sold over 150,000 cups on the first day of its launch, setting a new record for HEYTEA's first-day sales of new products since 2022.

The logic behind owning a FENDI product for 19 yuan is the same as owning a Moutai product for 19 yuan. As mentioned in Yikou Laopao's article, "We need to attack from a lower dimensionality and give users a handle to show off."

Luckin Coffee did not fully understand this principle from the beginning. As early as 2019, Luckin Coffee had tried brand collaboration and launched coffee yogurt in collaboration with Yili Anmuxi. The two parties were highly matched in terms of target population and brand tone, but the product was announced to be removed from the shelves in less than half a year because Luckin Coffee was caught in a vortex of financial fraud at the time.

But even if Luckin Coffee had not been in trouble at the time, this product might not have become a hit. After all, a strong alliance may make the weaker party, and a strong and weak alliance may not be able to stir up trouble. Moreover, although Luckin Coffee is a weak brand, it has a very strong channel of over 12,000 stores, so it is a very delicate issue to choose the right brand to cooperate with.

In recent years, Luckin Coffee has been constantly trying and exploring joint cooperation. According to data from commercial organizations, from January to September 4 this year, Luckin Coffee has had 12 joint cooperations, but only a few products such as 214 Valentine's Day, Line Puppy and Moutai have become popular.

Therefore, although Luckin Coffee’s joint cooperation has been all over the news, it is also the result of continuous testing and adjustments in the early stage. “In the past few months, the teams of both sides have worked closely together and worked together. After multiple rounds of rigorous product testing and optimization adjustments, the final launch of ‘Jiangxiang Latte’ has come out.” Luckin Coffee Chairman Guo Jinyi mentioned some details of the cooperation during the interview.

In reports on how Luckin Coffee created its hit products, the media all mentioned things like "good at marketing", "strong R&D team" and "strong digital capabilities". These are all technical aspects, but the core aspect is still paying enough attention to and understanding young people.

These insights into young people all come from one man.

2. Luckin Coffee’s key player

In 2020, Luckin Coffee was exposed for financial fraud, and the top management faced a reshuffle. Guo Jinyi, former assistant to the chairman of UCAR Group, went from being a co-founder of Luckin Coffee to the current chairman and CEO of Luckin Coffee. There is another person in the startup team who is rarely mentioned. He is the only former general of Lu Zhengyao who stayed after the financial fraud, Yang Fei, the former CMO of UCAR and now the co-founder and CGO of Luckin Coffee.

Yang Fei has played an indispensable role in the successful collaboration between Luckin Coffee and Moutai. It can even be said that the huge growth in Luckin Coffee’s sales is closely related to his deep understanding of marketing.

Yang Fei is well-known in the Internet marketing circle. He is a young mentor at the business school and has written a book called Traffic Pool. He is also the originator of the traffic pool marketing theory. With the traffic pool thinking, he managed many marketing campaigns such as Shenzhou Special Car and Shenzhou Buy Car. At that time, Shenzhou UCAR took only one year to break through the bleeding road, with more than 40 million users, becoming the first brand of safe travel.

Traffic pool thinking, that is, effect thinking, requires considering effect conversion when doing any brand communication.

In this book, Yang Fei mentioned an idiom: "quick success and instant benefits". "Quick success" means to quickly establish a brand, build popularity, enter the market, and gain traffic; "quick benefits" means to quickly convert the traffic into sales and bring actual results.

Luckin Coffee did indeed do so. In fact, most of Luckin Coffee’s marketing model is similar to that of UCAR’s previous operations.

The first is to burn money to subsidize the market. Yang Fei once emphasized to the public that "there are always competitors who hope that we will stop subsidizing, don't have this hope."

That year, UCAR launched a subsidy war with the high subsidy of "charge 100 and get 100 free", which directly reignited the money-burning war in the private car travel industry.

This crude subsidy method is reflected in Luckin Coffee, which burned through 1 billion yuan in the first two years of its establishment. Luckin Coffee's strategy is simple and crude, and the general route is: signing stars such as Tang Wei, Zhang Zhen, and Gu Ailing to establish brand tone, dense offline advertising in subways, office buildings, and residential areas, and online through LBS marketing, continuous buy-one-get-one-free, and social fission, etc., to conduct comprehensive market testing, attract new customers, and promote activation.

Relying on strong subsidies, Luckin quickly seized market share. In 2023, Luckin launched a new round of price wars. Faced with the price of Kudi coffee as low as 8.8 yuan, Luckin launched the "9.9 yuan coffee per week" campaign and stated that the campaign will last until the end of 2024, directly competing with Kudi.

Burning money for subsidies may seem like an unbridled waste of capital to the outside world, but Yang Fei thinks it is extremely cost-effective. Free for new customers, one more cup for introducing new customers, buy two get one free... It sounds tempting, and the data performance is also excellent. As for burning money, at least it seems that Luckin is not short of money at present.

The second one is “Beat U Marketing”. Yang Fei’s marketing style has always been aggressive. In UCAR’s marketing activities, there is a well-known one: “Beat U” in 2015, which focuses on the concept of “safety” and directly reflects Uber.

Although many netizens criticized this marketing campaign as "touching Uber", the data once again proved that "users are not obsessed with cleanliness". This campaign directly raised the popularity of Shenzhou UCAR. When Shenzhou UCAR issued an apology and placed coupons on the page for compensation, it actually guided users to download the App. That month, the number of downloads increased three times month-on-month.

In 2018, Guo Jinyi publicly accused Starbucks of signing exclusive agreements with many office buildings and shopping malls, which prevented Luckin from entering shopping malls. Later, Luckin even sued Starbucks for suspected monopoly.

Luckin Coffee staged a "bumping into porcelain marketing" drama, and indeed quickly gained popularity comparable to first-tier brands afterwards, and was gradually regarded as the "Chinese Starbucks."

Yang Fei copied UCAR's marketing experience to Luckin Coffee, which quickly worked. Although many brands have followed Luckin Coffee's lead, none of them have been able to become the next Luckin Coffee.

For example, Kudi Coffee has 5,000 stores through low-price subsidies to grab the market, posing a certain threat to Luckin Coffee. However, Kudi Coffee has not yet produced a phenomenal hit, and the sales of many franchisees have declined to varying degrees. It can be seen that relying on Luckin Coffee to solve traffic anxiety is not a long-term solution.

After Luckin Coffee launched its Raw Coconut Latte, Mixue Ice City’s Lucky Coffee launched its Coconut Latte. However, it was just a copycat and did not find the right positioning. Although it had a price advantage, its store expansion speed could not keep up with Luckin Coffee and Kudi.

It can be said that Luckin Coffee is very much in the style of Yang Fei from products to marketing. This is the "soul" of Luckin Coffee, which other brands cannot learn.

3. Can the success of Luckin Coffee + Moutai be replicated?

The joint cooperation between Luckin Coffee and Moutai is the result of 1+1>2.

Luckin Coffee not only improved its brand image, but also told people that drinking Luckin Coffee is prestigious, and its product sales also increased. The topic about Moutai on the Internet is still fermenting. Moutai, which wants to capture the hearts of young people, not only attracted the attention of young people, but also attracted the attention of Moutai ice cream, and announced that it would soon launch Moutai chocolate with liquor.

This wave of marketing made Moutai, Luckin Coffee and users smile. Looking back at the joint cooperation between wine companies and the tea industry, it is not the first time, and Luzhou Laojiao is worth mentioning.

In 2020, Luzhou Laojiao and Cha Baidao jointly launched "Zuibu Shangdao", but in February 2021, "Zuibu Shangdao" stores across the country were taken offline one after another, and the two subsidiaries established for cross-border marketing were also cancelled.

Some stores said that they removed the related products because they had conflicts with the new products, and that some consumers would give up buying the milk tea because of the alcohol content. Other stores said that the headquarters removed the product because of poor sales in the southern market.

Luzhou Laojiao, which wants to capture the hearts of young people, is not resigned to this, and in August this year, it cooperated with Nayuki's Tea to launch the "Jointly-Branded Intoxication Gift Box", offering two special cocktail menus: Nayuki Sparkling Lemon Tea and Nayuki Lychee Black Tea.

In recent years, traditional wine companies have been constantly trying to make their brands younger, and brand collaboration has become a regular marketing move. However, it is difficult to find a hit product, and most collaborations are just for show.

Luckin Coffee's low-dimensional high-dimensional approach may provide some inspiration for brands. This kind of marketing is also a way for brands to gain more space and quickly build brand awareness.

Bohu Finance also believes that more brands will try to awaken users and attract new users in this way. For example, in the past two days, there was news on the Internet that Mixue Ice City and Wuliangye would cooperate. Although it was denied by Mixue Ice City, it may become a reality in the future.

Looking back at Luckin Coffee's second quarter financial report this year, total net revenue was RMB 6.201 billion, a year-on-year increase of 88.0%. During the same period, Starbucks also released its third quarter financial report for fiscal year 2023, with Starbucks China's revenue of US$822 million (approximately RMB 5.96 billion), a year-on-year increase of 50.9%.

This is also the first time that Luckin Coffee's revenue has surpassed Starbucks China, which is of great significance. The Chinese coffee market is no longer monopolized by Starbucks, and more and more brands are entering the market. This joint venture with the popular sauce-flavored latte has undoubtedly given the brand new ideas.

Instead of discussing whether Luckin Coffee will replace Starbucks China, we might as well pay more attention to the business thinking that this "super species" has brought to Chinese consumer brands. It is still having an impact today, and the wine and beverage industries may usher in a domino effect of "Luckin Coffee + Moutai"-style marketing.

Author: Lingling

Source public account: Bohu Finance (ID: bohuFN), focusing on leading companies, featuring in-depth originality, to discover wonderful things for you.