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Food tech

Luckin Brews Up a Storm in SEA’s Crowded Café Scene

Aileen Lor
Last updated: February 12, 2024 1:48 pm
Aileen Lor
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3 Min Read
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  • China’s Luckin Coffee expands into competitive Singapore café market.
  • It brings formidable scale, but local chains counter with hyper-local appeal.
  • Combining global supply, distinctive local flavors and smart tech will determine winners.

Contents
Entrance into SE AsiaCompetition in Southeast AsiaTechnology + Human Touch

China’s high-flying Luckin Coffee expands into Singapore, heating competition in Southeast Asia’s bustling modern coffee shop scene.

But can deep tech integration and appeal to local tastes help retailers stand out?

Entrance into SE Asia

Luckin touched down in Singapore months after homegrown Indonesian chains Fore Coffee and Kopi Kenangan. But its 24 outlets within weeks dwarfed the duo’s handful of stores amid the island’s 130 Starbucks and 70-plus Toast Box and Ya Kun outlets.

The ambitious pivot follows Luckin’s rebounding from scandal to book $153 million in profits of nearly $2 billion in revenue in 2022.

With more China stores than Starbucks, analysts say saturation drives the discount giant abroad.

Southeast Asia’s large ethnic Chinese diaspora offers cultural inroads alongside the region’s youthful demographics and bubble tea craze echoing Luckin’s ascent.

Competition in Southeast Asia

According to research firm Momentum Works, annual consumer spending around modern cafés here reaches $3.4 billion. No wonder venture-funded local chains are increasing, like the Philippines’ tech-powered Pickup Coffee.

But while Luckin doesn’t offer boba drinks, rivals are responding by doubling down on hyper-local integration.

Indonesian pair Fore and Kenangan showcase native milk coffee flavours using palm sugar. And they trumpet sourcing beans directly from smallholder farmers.

Their grab-and-go store models also ride the food delivery wave, expanding faster than franchise titans ever could. Kenangan hit 868 outlets in 15 years, whereas Starbucks took 12 years to open 200 Indonesian stores.

Yet supply chain and pricing reside largely at global commodity markets’ whim regardless of provenance. Rival Cotti Coffee, created by ousted Luckin founders, also uses Yunnan alongside Colombian and Ethiopian beans.

Malaysian chain Koppiku strangely lacks local beans, instead opting for Brazilian and Papua New Guinean blends.

Technology + Human Touch

Most crucially, pure technology can’t replace hospitality’s human touch when selling a lifestyle. Software and hardware should instead enhance the experience, says First Move VC Audra Pakalnyte.

Her Koppiku investment shows that seamlessly merging digital and in-person will help retailers surface insights for smarter inventory and locations. But it’s still the quality cup keeping people coming back.

So, while Luckin brings a formidable scale, inefficient operators saw casualties like the sudden collapse of Flash Coffee’s 11 Singapore shops. Price wars may also squeeze originality.

The victors in this caffeine clash should combine global supply aptitude with hyper-local appeal and smart automation as an experience booster for staff and guests.

If Fore and Kenangan get that recipe right, their distinctive palm sugar coffees might give them an edge to outlast deep-pocketed rivals.

TAGGED:div5

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