Break down the floor price, bubble disappearance!
Text | Liang Liang
If you ask which industry has been the most volatile in the past few years, the coffee chain must have its own name.
Since Luckin led the industry with parity and inclusiveness and rapidly cultivated and expanded the entire coffee consumption market, the Chinese market, which was once regarded as lacking in coffee consumption potential, has become the most potential consumer market in the global coffee industry, and has also become a must for coffee brands to compete for "gunsmoke".
In the past May, the launch of a product once again pushed parity and inclusiveness to a new level. It was Luckin who challenged.
【Luckin breaks the curse of high price of oatmeal latte】
Milk coffee, especially lattes, has always been a favorite category among Chinese consumers.
Oatmeal lattes are the most special lattes in the world. It replaces the milk in the traditional latte with oat milk, and infuses the mellow coffee with a subtle cereal aroma, capturing the hearts of young consumers with its unique taste.
More importantly, it solves the pain points of a large number of lactose intolerant people in China when drinking traditional milk lattes, and is a blessing for "lactose intolerant" coffee lovers.
According to Meituan's China Coffee Consumption Insights, from 2021 to 2022, oatmeal lattes have always ranked among the top 10 in the sales list of takeaway coffee.
However, due to the influence of various factors such as production process, raw material cost, brand premium, etc., the price of oat milk, which is a "coffee CP", remains high, usually about 3 times higher than the price of ordinary milk. Among all the oat milk brands, OATLY is the one with the higher price.
As a result, the price of oatmeal lattes has also risen, and the price of oatmeal lattes on the market is generally not less than 20 yuan, with an average price of about 30 yuan. The high price discouraged many consumers, and the oatmeal latte became synonymous with middle-class menus for a time. Major coffee brands have always been happy to see it because of their profits, and no one wants to burst the "high-priced bubble" of oat milk.
▲Other brands of oatmeal lattes on the market are basically 25-40 yuan/cup
Last month, Luckin finally made a move on the oatmeal latte - officially launched the oatmeal latte in cooperation with OATLY, and directly included it in the "Weekly 9.9" event menu. This move brought the price of oatmeal latte to 9.9 yuan, directly breaking through the bottom price of the industry, and such a "high-profile" way of entering the game quickly attracted the attention of consumers and peers.
"Luckin really understands me too well!" Xiaoxiao held a cup of oatmeal latte that had just arrived and said with a smile, because she was allergic to milk, and the oatmeal latte on the market was relatively expensive, she usually only ordered a cup when she especially wanted to drink it, "Now you can really drink it openly, and the price of nine yuan nine is too fragrant."
There are many oat latte lovers like Xiaoxiao, as soon as Luckin's oatmeal latte was launched, it attracted a large number of early taste oat latte lovers, and social media was also swiped by various tasting evaluations and fancy check-ins, and there were tens of thousands of notes on Xiaohongshu about "Luckin Oatmeal Latte", and netizens called - "Finally waiting for you".
A Xiaohongshu netizen said after "checking in" Luckin oatmeal latte: Rich oat milk + awakening coffee, the taste is cold and silky, and the oat milk is mixed with the flavor of coffee, and the aftertaste is endless...... This is her "natal latte"! Another netizen said that a cup of love is not inferior to several other brands of oatmeal latte in taste, and Luckin's oatmeal latte has become her new choice for a while.
Luckin's oatmeal latte has become everyone's "favorite" this summer, and Luckin has not only achieved an effective supplement to its own product category through price breakthrough, but also took the opportunity to circle a wave of oat latte lovers. Consumers' enthusiasm for this product is also a testament to Luckin's success in product pricing and marketing strategy.
Some people may ask, can an oatmeal latte of 9.9 yuan taste good?
In fact, Luckin is a dimensionality upgrade blow this time, and the quality can be compared to the oat latte with an average price of 30 yuan +. After tasting Luckin's oatmeal latte, many "oatmeal stars" said that the quality of the 9.9 yuan oatmeal latte is not worse than the average price of 30 yuan.
At present, most of the oat lattes on the market use the combination of OATLY oat milk + coffee beans, and the proportion of oat milk and coffee is slightly different in different brands of oat lattes, and there are slight differences in taste.
Luckin's oat latte uses gold award coffee beans, plus OATLY champion oat milk, the combination of the two, stable production and the ultimate price, can bring a high-value new consumption experience to loyal consumers of oat latte.
In other words, who doesn't love "affordable and high-quality" oatmeal latte?
"What the taste is for the time being, just for this price, Luckin will win." Xiao Li, a programmer who works in Zhongguancun, Beijing, said that even he, who has never liked to drink lattes, was amazed when he drank his first sip of oatmeal latte, "Luckin's oatmeal latte is delicious."
Zhang Zhang, a researcher at an investment institute in Beijing's International Trade Center, also said that Luckin's oat latte balances the mellow aroma of oat milk and the burnt aroma of coffee, and "it feels better than twenty or thirty glasses."
That being the case, why can Luckin hit the price of the same quality oatmeal latte to 9.9 yuan?
[Luckin is playing comprehensive hard power]
It's good and cheap, it seems to be a contradiction, but it's actually a test of the comprehensive strength of the really strong.
In the past, the price of coffee was often more than 30 yuan due to its natural premium of imported products, space premium, service premium and social premium, and it became a drink for only a few people to taste and consume.
A few years ago, the emergence of Luckin took the lead in breaking the "middle class" premium of freshly ground coffee and opening the door to the "affordable" coffee market for consumers.
Among the coffee brands, Luckin has become the "catfish" that "disrupts the situation" for the first time.
Unlike the "high-end" persona of many coffee brands, Luckin's original intention was to make a cup of coffee that is more cost-effective. Relying on the continuous accumulation of product power and operation power, Luckin has reached a deep link with more consumers with cup of coffee, and has become the "first cup of coffee" for many young people.
The high cost performance of Luckin Coffee is unanimously recognized by consumers. The 9.9 yuan cup of oatmeal latte has made Luckin the "god of ancient Greece in charge of cost performance" in the mouth of many netizens.
The reason why Luckin can achieve high cost performance stems from its self-confidence in its own brand influence and bargaining power.
By the end of the first quarter of 2024, the number of Luckin stores had reached 18,590.
For chain brands, Wandian has always been regarded as a symbol of brand strength. Reaching 10,000 stores means that a brand has considerable popularity and scale effect, has higher bargaining power, and can buy raw materials at a lower price.
The growing number of stores and the scale of users have become the confidence of Luckin to improve its bargaining power, and with its own super high brand influence, Luckin can have more say in the negotiations with OATLY, so as to successfully bring down the price of "oat milk".
The coffee tastes good, and the green beans are eight points. In order to ensure that consumers drink a good cup of coffee, Luckin chooses to go deep into the source to escort the quality of coffee.
"I didn't have any concept before, but now I drink a lot, and I will know if the coffee beans are good or not." Ms. Su is a heavy user of coffee and drinks two or three cups a day. In her opinion, Luckin's production is still relatively stable, and the beans are a little fragrant.
A small cup of coffee may seem simple to make, but to ensure "consistent quality", you need a strong supply chain to back it up. To this end, Luckin "flies to the world to find good beans", builds its own roasting factory, optimizes the supply chain, strictly controls every link from green beans to roasting to stores, eliminates the unstable factors of quality control, and makes high quality not just a time and a place.
At the same time, relying on the efficiency improvement and cost advantages brought by the self-built supply chain, Luckin further lowered the price of coffee beans.
As a result, Luckin's high quality and low price can be both.
The 9.9 yuan oatmeal latte let consumers see the sincerity and strength of Luckin, and also made many coffee brands nervous.
Now, it's no longer the time to just fight for low prices.
【Luckin redefines a good cup of coffee】
Over the past year, the coffee market has been in a war for low prices.
The positive effect of the price war is that the price of "high-end" coffee has been brought down, so that more consumers can drink good and inexpensive coffee, and at the same time, the cake of the entire coffee market has been made bigger.
According to the "2024-2029 China Coffee Industry Market Development Status and Potential Analysis Research Report" released by the China Business Industry Research Institute, the average annual drinking volume of Chinese will rise to 16.74 cups in 2023, and the scale of the national coffee industry will reach 265.4 billion yuan. Analysts predict that the scale of China's coffee industry will increase to 313.3 billion yuan in 2024, with an average annual compound growth rate of 17.14% in the past three years.
In the process of the brand using low prices to quickly "stake the ground", there are also some chaos, such as vicious competition among peers, management out of control under blind expansion, shoddy coffee raw materials, product taste changes, etc.
"The price of some coffee has dropped, but the quality has also declined, and it doesn't taste like coffee." There are more and more complaints from consumers.
Behind the low-price competition, some brands deliberately reduce product quality and sacrifice user experience in pursuit of short-term profits. At present, the competition in China's coffee market is still in the early stage of "occupying", and it is far from the endgame, and the practice of losing money and making money is destined to be unsustainable, and the brand will eventually return to product strength.
As coffee brands explore more rational competition and sustainable models, consumers are also beginning to re-examine the true value of a cup of coffee.
The reason why Luckin's 9.9 yuan oatmeal latte is popular reflects the current young consumers' expectations for high cost performance and their aversion to high-premium products. The 9.9 yuan oatmeal latte, which seems to be a price war, is actually a revolution that leads the return of the value of the coffee market.
"In the past, everyone drank coffee to make a mood, but now it seems that more people care about cost performance." Mr. Zhang, who has been engaged in the coffee industry for more than 10 years, sighed, "Luckin's 9.9 yuan oatmeal latte actually taught us a lesson, quality alone is not enough, and the price alone is not practical, but we still have to find a balance between quality and price." ”
Luckin's 9.9 yuan entry into the oatmeal latte actually set an example for all players in the coffee market - how to deal with the relationship between scale advantage and profit, and how to make the value of coffee rational through healthy competition?
At present, Luckin is expected to attract a large number of oatmeal latte lovers to transfer through the 9.9 yuan oatmeal latte and realize the great migration of oatmeal latte users.
When the 9.9 yuan oatmeal latte becomes the norm, it will force coffee brands to re-examine their product operations and pricing strategies, driving a new round of evolution and reshuffle of the entire coffee market.
In this process, every link in China's coffee industry chain will benefit. Coffee brands can make the cake bigger and share more cakes, thereby promoting the healthy competition and sustainable development of China's coffee industry, and consumers can also drink a good cup of coffee at a more reasonable price.
Since its establishment, Luckin has continued to redefine coffee and coffee consumption. Oatmeal latte is just another redefinition of Luckin, and it is still unknown who the next product to be redefined will be.
But what is certain is that the redefinition of Luckin is accelerating the reshuffle of the coffee market again, making the direction of the coffee market more "certain".
(Image source: Xiaohongshu)
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