China’s fastest growing coffee chain Luckin Coffee plans expansion to Middle East and India

It grew from nothing to a public company in less than 2 years and now it eyes markets beyond its home turf.

Photo: provided to company with the press release

Chinese beverage chain Luckin Coffee and Kuwaiti Food Company Americana agreed to jointly launch a new retail coffee business in the Greater Middle East region and India, according to Luckin’s press release.

Americana CEO Kesri Kapur said that he believes the collaboration will “revolutionize” the food and beverage retail industry in the Greater Middle East and India, regions that he thinks provide promising prospects for new retail growth and expansion. “We have worked with many leading and revolutionary food and beverage brands over our history and believe that Luckin Coffee’s superior products, experience and services will deliver success in these regions,” he says in the statement.

Americana is one of the largest organizations in the Middle East and North Africa with capabilities spanning manufacturing, distribution, and restaurant operations, said Luckin. Founded in Kuwait in 1964, Americana operates 1900 restaurants in 13 markets and 25 food production sites across the United Arab Emirates, Saudi Arabia, Kuwait, and Egypt.

Founded in 2017 and headquartered in Xiamen, China, Luckin Coffee operates over 3,000 stores across 40 cities in China. The company plans to open more than 4,500 stores by the end of 2019, which would make it China’s largest coffee chain.

The company raised USD 561 million in its IPO after selling 33 milion American depositary shares. Luckin also launched a tea brand called Xiaolu Tea to take advantage of cross-selling opportunities in China’s beverage market.

Although this still very young company has expanded at breakneck speed, it is still far from being profitable.

It incurred net losses of RMB 1.6 billion (USD 241.3 million) in 2018, then RMB 551.8 million in the first three months of this year, mainly due to high marketing spending, including offering steep discounts.