At the end of May, reports began to circulate that China’s leading coffee chain, Luckin, had dropped its prices from 9.9 RMB (1.37 USD) with coupons to as low as 6.9 RMB (0.96 USD), the lowest price available with coupons. Rumours also spread that Luckin had been backed into a corner by Cotti Coffee amid their fierce price war.
Later, Luckin Coffee responded to a media enquiry that the 6.9 RMB pricing was in fact a promotion for the Dragon Boat Festival and Children’s Day, and not an overall price reduction. The coupons will be given away throughout the 3-day long weekend.
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Luckin is under pressure despite a successful Q1, generating 8.87 billion RMB (1.23 billion USD) of revenue, up 41.2% year-on-year. Competition from the likes of Cotti and Starbucks has put much strain on both product development and operations. A reduction in price is an obvious way to stand out, however, it is likely not sustainable for the chain.