Luckin Coffee’s “9.9” breakthrough only requires a few drops of Moutai?

Luckin's new product is really popular, with sales of a single product exceeding 100 million yuan on the first day, breaking all records. Why do consumers like this "sauce-flavored latte" so much? What efforts has Luckin made to spread the cost of the 9.9 coupons? Let's take a look!

"From 9 a.m. to 3 p.m., I processed nearly 1,000 orders, used up five or six bottles of cream guns, and poured three cases of thick milk. The system and the receipt machine all crashed, and I felt like I was going to be wasted."

After working at Luckin Coffee for half a year, Xiao Li (pseudonym) did not experience the store runs and surge in orders after Luckin Coffee’s financial crisis, nor did he miss the multiple sell-outs of the Raw Coconut Latte after its emergence, but he still could not escape the critical hit of the “Soy Sauce Latte”.

September 4th was originally a very quiet Monday, but it was stirred up by the "Sauce Flavor Latte" jointly launched by Luckin Coffee and Kweichow Moutai. According to official news, the liquor-flavored thick milk used in this coffee contains 53% Kweichow Moutai liquor, and the retail price is 38 yuan per cup, about 19 yuan per cup after coupons.

One is the "national brand" in the coffee industry, and the other is the "top player" in the liquor industry. Today, according to official news from Luckin Coffee, the first-day sales of a single product exceeded 5.42 million cups, and the first-day sales of a single product exceeded 100 million yuan, breaking all records.

A full Luckin counter, the picture comes from the Internet

Not only has the sales hit a new high, the 19 yuan after coupons are also the most expensive new product in Luckin's history. Compared with the previous generation of raw coconut latte, velvet latte, and thick milk latte, which are all within the strategic range of 9.9 yuan, the average price basically fluctuates between 9 and 16 yuan.

Entering 2023, the main theme of the coffee market has always been low prices. On the surface, Luckin launched a 9.9 yuan event in June and claimed that it would become a normal event; in fact, according to Cezanne, a supplier of white wine and thick milk, the production of raw materials for this high-end coffee began at the end of June, and the final price was much higher than that of products of the same period.

In the coffee and tea market where joint ventures are everywhere, the pricing of other popular joint venture products is mostly not much different from the price range of the original products, including HEYTEA's FENDI Joy Yellow and so on.

In this regard, an industry insider analyzed: "This joint venture may be Luckin's attempt to break through the average customer spending."

The successful product cooperation between Luckin Coffee and Moutai seems to have given a shot in the arm to the low-priced coffee market. A few drops of Moutai are stirring up the trend of freshly brewed beverages.

1. Luckin Coffee plus Moutai, one net for all working professionals

"C in the morning, A in the evening, and working B shift." Coffee is the work of succumbing to life, and wine is the last few drops of self. Once mixed, it becomes a cup of invigorating dopamine, which makes people awake and drunk.

Once you enter Luckin, you will find that it is like entering a deep sea. Luckin has grasped the lifeline of people in the workplace. The small cup contains a strong attitude towards life. Therefore, the sauce-flavored latte also inherits the "social currency attribute" of Moutai and becomes a new physical NFT.

"Fine wine + coffee, I just love this cup." The noble Maotai red and gold-stamped packaging occupies the desk, turning work into a drinking party. When you open your Moments, whether you are a boss, a worker, or a student, if you post anything else, you will seem out of place. Even Starbucks' loyal fans can't resist the temptation and "condescend" to Luckin Coffee to try it out.

Netizens show off their "social currencies", the pictures are from Xiaohongshu

During this process, no matter men, women, young or old, the sauce-flavored latte was popular among them.

"Young people's first Moutai is Luckin Coffee", "If you can't afford Moutai, try Luckin Coffee", "Enjoy your father's happiness in advance"... The barriers between young and middle-aged people have been broken, and workers have made fun of themselves - the most likely person to drink Moutai is the boss, and the most likely person to drink Luckin Coffee is the worker. Drinking Moutai and Luckin Coffee has become "a worker who wants to feel the boss's feeling."

Not only did young people get a novel experience that transcended age and class, but middle-aged people were also invisibly praised.

In front of the store, you can see many middle-aged men with air pods in one ear queuing up; although some netizens complained that Moutai co-branded with Luckin because Luckin consumers don’t have cars and it’s more convenient for them to drink, but several hot searches on drunk driving issues proved that the first people to get drunk might be car owners.

With the support of Moutai, Luckin Coffee has also become high-end. If you can't get Moutai, you can get a sauce-flavored latte. Someone said sarcastically, "Don't we have purchase limits on Luckin Coffee?" Someone else showed a picture of Luckin Coffee with real Moutai, "It's a little bland, I added some myself." These middle-aged people who love Moutai have finally found a way to show off without being hated, in addition to being complained about by young people about their drinking culture.

The picture comes from the Internet

The unexpectedness of the product and its touch on consumers' mindsets are only part of the reason for its popularity. Marketing master Luckin Coffee also manipulated the fierce screen-sweeping of WeChat Moments, with people rushing to join the queue of posting their orders and making jokes.

From the perspective of time progress, rumors about the material had already been circulated in a small range on social platforms a week in advance, completing the accumulation of original cold start heat.

Luckin then sold coupons in two Douyin live broadcast rooms the night before. In addition to offering a lower discount of 17 yuan, it also launched 10-cup coupons and 2-cup coupons, emphasizing in the live broadcast that they can be given to colleagues and friends, strengthening the social attribute. This move is very critical. According to Douyin sales data, the co-branded product sold over 10 million in 4 hours within the first live broadcast, and as of yesterday evening, more than 1 million cups were sold.

After the launch, all kinds of materials were available, the logo deer became a tipsy version, various expert reviews were released, and one topic after another was thrown out. When faced with public doubts about whether it contained Moutai, the full record of the production of Baijiu Thick Milk was immediately released.

The picture comes from the Internet

However, the large number of orders in a short period of time and the high popularity also backfired on Luckin Coffee. Many consumers complained to Business Data, "I waited for 3 hours but it still didn't arrive. I couldn't pick it up at the store, and I couldn't refund the order when I contacted customer service."

Overall, the collaboration between Luckin Coffee and Moutai has become a classic case in the industry, both in terms of product planning and marketing strategy.

Even before this cup of coffee reaches your mouth, it has already successfully refreshed the tea industry.

2. Luckin Coffee, which sells for 9.9 yuan, is planning to raise the price?

But it is obvious that Luckin Coffee wants more than just applause.

An analyst lamented to Business Data Pie, "Looking at the discussions flooding the social media and the paper bags listed in stores, the last time Luckin Coffee was so popular was when it exploded in 2020." However, contrary to the sharp drop in its stock price at that time, Luckin Coffee's face turned red, Luckin Coffee's K-line turned red, and liquor stocks continued to rise.

5.42 million cups of "Soy Sauce Latte", with 30 million yuan of Maotai liquor poured into it. Netizens are worried about Luckin Coffee, fearing that it might lose money, but Luckin Coffee has no intention of losing money to gain publicity.

But based on a rough calculation of the content, after deducting the cost per cup, Luckin Coffee still wins.

The picture comes from the Internet

According to Chinese food industry analyst Zhu Danpeng's analysis to The Paper: Normally the cost of coffee is around 3.5 to 4 yuan, and the cost of a sauce-flavored latte may be 8 to 9 yuan. Overall, with a selling price of 19 yuan after getting a coupon, there is still a lot of profit margin for a sauce-flavored latte.

Fine wine + coffee, not only has face, but also substance. With high-end brand co-branding, real ingredients (but not much) and social fancy gameplay, Luckin Coffee, which has been offering discounts all year round, raised the price from 9.9 yuan to 19 yuan in one fell swoop while controlling costs, and consumers even called it "cheap".

It has to be said that this was a successful battle to increase the average customer price. Especially at a time when the low-price war in the coffee market is protracted, you know, netizens have always commented on Luckin: "Drinking Luckin at the original price is more painful than death", but now, what people see is not that coffee has become more expensive, but that Luckin has brought down the price of Moutai.

Luckin Coffee Chairman Guo Jin said at a meeting after the second quarter financial report: Since Luckin Coffee launched the 9.9 yuan campaign in June, consumer response has exceeded expectations. He also said that Luckin Coffee plans to normalize this campaign: "It has been decided that this campaign will last at least two years."

But looking at the history of the Internet, whether it is online car-hailing or community group buying, price wars can only be a phased strategy. In the short term, Luckin can spread the cost through large-scale sales, but whether it is the costs brought by internal competition among peers, overseas store expansion, and traffic price increases, they will bring sequelae to the road after opening tens of thousands of stores.

However, on the surface, Luckin Coffee is frantically shouting "9.9", but privately, Luckin Coffee's average customer spending is actually increasing. According to third-party data, Luckin Coffee's average customer spending was just over 10 yuan in 2019. After two years of climbing, by 2022, Luckin Coffee's average customer spending reached 15.5 yuan.

Even for the 9.9 yuan event, many netizens have shared on social platforms that there is a problem of "taking advantage of the familiarity of the customers". "My event page shows that I can get one coupon per week, but my mother's page shows that I can get one coupon per day."

The picture comes from the Internet

In the entire beverage industry, Luckin Coffee is the "king of popularity", with low prices, sinking into the lower-tier markets, and launching new products through joint ventures, each one becoming more popular each time.

Of course, in recent years, there are many boutique coffee shops that add alcohol to coffee, and there are also many new tea drinks and alcohol co-branded. But the difference is that Cha Cha Wu's Baileys Cocoa and Nayuki's Luzhou Laojiao co-branded coffee pay more attention to the innovation of taste, while only Luckin Coffee, as a designated product for humble workers, has become an emotional product.

Someone imitated Luckin Coffee and said to Mixue Bingcheng, which is jointly owned by Postal Service, "Xue, although you found a boyfriend with a regular job, I don't envy you because I married into a wealthy family." After entering the system and the wealthy family, what young people drink is not coffee, but themselves.

It is foreseeable that in the two years of normalizing the 9.9 yuan activity, Luckin Coffee may continue to test the strategy of 9.9 yuan for a large latte, combined with a small price increase, to achieve the goal of making money and grabbing market share at the same time.

However, apart from Moutai, which is uniformly recognized as a Chinese luxury product, what else can Luckin Coffee add to achieve a painless price increase?

How long will the "aftertaste" of the sauce-flavored latte last is the answer that Luckin Coffee will give next.

Author: Huang Xiaoyi

Source public account: Business Data Party (ID: business-data).