Luckin started its test run in January and has opened 525 stores in 13 cities across China, including Beijing, Shanghai, Guangzhou and Shenzhen. (Photo: VCG)
Luckin Coffee announced the completion of the Series A round of US$200 million financing on Wednesday in Beijing, while this round of fundraising brought its total value to $1 billion, reaching unicorn valuation status. Centurium Capital, Joy Capital, Singapore's sovereign wealth fund GIC and Legend Capital participated in the financing.
The on-demand coffee delivery start-up was founded by Qian Zhiya, the former COO of the Chinese car services firm UCAR. Luckin started its test run in January and has opened 525 stores in 13 cities across China, including Beijing, Shanghai, Guangzhou and Shenzhen.
Luckin has now become the second-largest coffee chain in China, promoting a brand strategy it calls "Any Moment" to cover all consumer scenarios from flagship stores to takeaways, as well as online and offline orders. It has been a fierce rival of the coffee giant Starbucks in Chinese market, and sued Starbucks for monopoly in May.
The coffee chain ensures product quality through close cooperation with the world's top coffee suppliers such as Schaerer, Franke, Fabbri, Fonterra and others for raw materials, equipment and production processes.
Qian, the founder and now CEO of the company, said "Luckin Coffee always adheres to the principle of quality first, and strives to provide Chinese consumers with a good cup of coffee that is affordable and drinkable. By using this round of financing, we will mainly focus on research and development of products, technique innovation and business expansion. We are confident that we can achieve the best match between product quality, cost-performance ratio and buying experience through mobile internet and big data."
According to a report from the International Coffee Organization (ICO) in London, China's coffee consumption stood at about 70 billion yuan ($1.04 billion) in 2015. By 2025, the market is expected to reach the trillion-yuan scale. Goldman Sachs, the international investment banking firm, has a report saying that Luckin Coffee has adapted to the "millennial" consumer demands, resulting in its rapid growth.
Zhu Danpeng, a Chinese food industry analyst, commented that Luckin Coffee has grown rapidly and that its Series A investment completion owes credit to three favorable elements: China's upgraded consumption, the booming coffee industry and the management team's rich experience.