Lucky raises prices, Kudi “sells rice”

Written by/Connected Insight Wang Huiying 

In 2025, Ruixing and Kudi have embarked on two paths.

In January this year, sharp-eyed netizens discovered that Lucky had quietly increased its prices. ldquo; Raw coconut latte has risen from 29 yuan per cup to 32 yuan. Netizens in Chengdu, Shaoxing, Shenzhen and other places said that several pieces of Lucky’s products have increased by about 3 yuan on average since the beginning of this year.

However, some netizens found that Ruixing coffee is not the same price across the country. The original price of coffee in different stores is different. For example, the original price of ordinary lattes in some stores is 26 yuan for a cup, while some stores are 29 yuan.

Although there is no official response from Lucky to this price increase, this is not the first time Lucky has raised prices. In 2020, Ruixing’s entire line of products was raised by 2-3 yuan.

This also means that Lucky, which once claimed that the 9.9 yuan marketing campaign will last for at least two years, is quietly bidding farewell to the 9.9 yuan era.

In contrast, Cudy is still adhering to the 9.9 yuan strategy.

On February 13, Cudi announced a comprehensive upgrade plan at your fingertips, launched a convenience store model, and entered the convenience store industry. At this point, the upgraded Kudi has three store types: coffee shop, convenience store and store-in-store.

The next day, at a media communication meeting, when Cudi CEO Li Yingbo was asked about the 9.9 yuan promotion, Li Yingbo responded that Cudi had already entered a profitable state in May 2024, and the 9.9 yuan promotion could last for a long time.

Lucky and Cudi, who were once anxious about the price war of 9.9 yuan, now bid farewell to 9.9 yuan and embark on the road of price increases; even if they increase their product layout, they must adhere to the low price of 9.9 yuan.

In fact, such changes are not difficult to understand.

For Ruixing, as a listed company, Ruixing must consider its performance in the capital market. At present, as global coffee bean futures prices continue to rise in recent years, Lucky’s operating capabilities are also rising. The continued price war has made Lucky unable to do so.

For Cudi, 9.9 yuan was once a drainage tool for his first entry into the coffee market. While ensuring profitable cash flow, the continuous 9.9 yuan promotion will help him attract more consumers and attract more. The joint venture helps him expand its scale.

This war over coffee will not end, it will only become more and more intense.

1. Lucky raises prices, but Kudi still refuses to let go”

9.9 The event lasted less than two years, and Lucky began to wave goodbye to the 9.9 yuan era of coffee.

At the beginning of 2025, the news of Lucky’s price increase caused quite a stir among coffee lovers. Consumers have found that the original price of some Lucky products has been raised by about 3 yuan. For example, the original price of raw coconut latte of 29 yuan has increased to 32 yuan, and the price of American coffee of 23 yuan has increased to 26 yuan.

At the same time, the threshold for using the once-popular 9.9 yuan coupon has also been greatly increased. Only one coupon can be received per week, and the scope of application has been reduced to specific products. In the live broadcast room, Lucky no longer regards 9.9 yuan as its main promotional selling point, replacing it with products priced at 11.9 yuan and 12.9 yuan.

Lucky’s price increase has almost become the consensus of the outside world. Behind abandoning the large-scale 9.9 yuan promotion, Lucky must be responsible for its own costs.

It cannot be ignored that the global rise in coffee bean prices is a key factor in Lucky’s price increase.

On February 11, the Arabica coffee futures price on the Intercontinental Exchange of New York (ICE) exceeded 430 cents per pound, setting a record high in 47 years, with an increase of 118.57% in the past year. According to Wind data, in 2024 alone, the cumulative increase in US ICE coffee futures will reach approximately 70%.

When upstream raw materials are transferred to downstream, the cost of raw materials for a cup of coffee will naturally increase. Since the beginning of this year, many coffee brands, including South Korea’s Starbucks, have announced price increases.

In addition to raw material costs, Lucky’s operating costs are also rising. Lucky’s third-quarter 2024 financial report showed that its store rents and other operating costs increased by 60.3% compared with the same period in 2023, distribution expenses increased by 57.9% year-on-year, and material costs increased by 24.9% year-on-year.

Under the dual pressure of raw material costs and operating costs, price increases have become a means for Lucky to maintain profits.

You know, although the two-year price war of 9.9 yuan allowed Lucky to grab more orders, even if it used scale effects and supply chain cost reduction and efficiency increase in the early stage, in the long run, the fierce price war still gave Lucky risks in financial indicators. This price increase is tantamount to preparing for a rainy day.

Regarding the coffee price war of 9.9 yuan, Lucky’s attitude was very firm.

In April 2023, at the second-quarter earnings conference, Lucky CEO Guo Jinyi said that Lucky decided to carry out the 9.9 yuan gratitude reward activity on a regular basis. This activity will last for at least two years to benefit consumers.

At that time, a 9.9 yuan coupon was first issued to the Luckin Coffee store near the newly opened Cudi Coffee store. Later, after the scale of 10,000 stores was opened, each user could buy a cup of Luckin coffee for 9.9 yuan a week.

How powerful is the magic of 9.9 yuan?

In the second quarter of 2023, Lucky fought a turnaround. The quarterly financial report showed that Lucky’s paying users hit a new high, and its revenue in a single quarter exceeded Starbucks for the first time. The parent’s net profit was 999 million yuan, turning a profit. The low price not only did not affect Lucky’s profitability, but also brought more transaction volume.

As the protagonist of this price war, Cuddy also received a dividend of 9.9 yuan that year.

Looking back at Kudi’s price war posture, he initially entered the market with a large opening promotion of 8.8 yuan/cup, and then entered the market with a low price of 9.9 yuan. The lightning speed of opening stores allowed Kudi to attract many consumers and associates. The scale effect supported by the associates has become an important support for Kudi’s 9.9 yuan strategy.

Tuyuan Kudi Weixin Official Accounts

On February 14, at the Cudi media communication meeting, Li Yingbo mentioned that a large part of Cudi Coffee’s income comes from Cudi’s income from service fees.

“Cudi’s 9.9 yuan strategy does not rely on external blood transfusions, but achieves positive cash flow through cost control and large-scale operations. This is also the reason why Cudi can adhere to the 9.9 yuan strategy for a long time. rdquo;

The reason why we adhere to the 9.9 yuan strategy is that in Cudi’s view, 9.9 yuan is already an important price band for national coffee consumption and plays a crucial role in popularizing coffee consumption and improving the penetration rate of coffee products.

This division in the direction of the road began to emerge as early as last year. In May last year, Cody said that he was ready to provide a three-year promotion of 9.9 yuan.“” In contrast, at an internal communication meeting in Lucky in December last year, Guo Jinyi said: Whether it can be sold for RMB 9 depends on what product it sells, what scenario it sells, and what cost structure it sells.“ Under a reasonable price structure, some products can be sold for 9.9 yuan.& rdquo;

Two years have passed, Lucky has sought growth and maintained performance through price increases, but Cudi has embarked on a more determined path to price wars. This competition, which on the surface is a price war, but in essence is a war of scale and supply chain, may also have a new direction.

2. Going to coffee + mode, Cody wants to take another risk?

“Risky and radical are words that are often mentioned when outsiders compare Kudi. After breaking through the scale of 10,000 stores, Cudi still maintains a radical shop opening style.

In October 2024, when Cudi officially launched the Coffee at Your Touch Program, Cudi shouted the goal of achieving a total of 50,000 stores by the end of 2025.

Not long ago, Cody reiterated his goal of opening 50,000 stores in 2025. Combined with the move to break through 10,000 stores in October 2024, Cuddy wants to achieve this goal. He will open nearly 40,000 stores in the next 10 months, and more than 100 stores will be opened every day.

Tuyuan Kudi official website

This is undoubtedly a big project, and Cody once again confirmed his radical store store model. Focusing on this goal, Cudi has comprehensively upgraded the plan at your fingertips.

Specifically, Cody launched a new convenience store model. The convenience store type is characterized by that in addition to coffee sales, it will also cover traditional convenience store products such as Chinese pasta and bento.

Li Yingbo said in an interview that the logic of Cudi Convenience Store is to use coffee drinking traffic to attract convenience stores to shop, because coffee is a just-needed, high-frequency and stable business. If a convenience store is equipped with coffee as the theme, it will Directly bring huge private traffic to convenience stores.

Judging from the growth of convenience stores alone, this is also a good retail format. FMCG market monitoring data for December 2024 released by Nielsen IQ showed that among retail channels, large supermarkets and small supermarkets fell by 3.9% and 2.6% respectively, while convenience stores maintained a growth rate of 2.3%.

In terms of market size alone, the “2024 China Convenience Store Development Report” jointly released by China Chain Store Association and KPMG China shows that the total number of convenience stores in the mainland of China will reach 321,000 in 2023, a year-on-year increase of 7%, which has slowed down significantly compared with the previous growth rates of 31% and 18%.

This also means that Kudi joined a Red Sea market. As a cross-border player, it is unknown whether Cuddy can win the cake in the convenience store competition. On the other hand, in the past, consumers were used to buying coffee in convenience stores. Now that Cuddy opens a convenience store in coffee shops, it takes a long time to educate consumers ‘minds.

So far, Cudi’s store formats include three store types: coffee shops, convenience stores and store-in-store stores. Cody introduced that the coffee shop combines the functions of the original standard store and the express store; the convenience store has coffee as the theme and selects some product categories of the regular convenience store; the store-in-store will undertake the convenience store launched in May last year. The functions of the store are embedded in related chain formats, such as chain restaurants.

Various business formats seem to perform their duties, but the goal is the same, that is, to use the coffee + model to open more stores and attract more consumers.

Looking back on Kudi’s store strategy and product strategy in recent years, Kudi has made many attempts.

As early as January this year, there were media reports that Cudi Coffee reported that some stores sold bento: it sold hot bento breakfast noodles, including the 13.9 yuan Lion Head Rice Set Set, the 14.9 yuan Chicken Leg Rice Set, etc., but the business format was not widely rolled out.

In May last year, Cudi Coffee launched a store-in-store model, which is also a convenience store model. In October, it teamed up with companies such as Meiyijia, Wallace and Suning Tesco to implant mini Cudi stores in its stores. Continue to lay a place.

Kudi Convenience Store, Tuyuan Kudi Coffee official website

In terms of products, Kudi also continues to expand its boundaries while adhering to the low-price strategy.

According to Cudi, the upgraded coffee shops and convenience stores will add hot-selling categories such as ice cream, Western-style freshly made egg tarts, and Western-style roasted sausage. In addition, the convenience store will also sell regular convenience store hot food products including Chinese pasta and bento.

The core of expanding products is to cover more high-frequency scenarios. For example, breakfast pasta covers morning hours, and hot lunch lunches are aimed at lunch and dinner needs, complementing coffee consumption.

No matter which business format it is, what lies behind it is Kudi’s ambition to expand. What cannot be ignored is that in addition to rapid expansion, it is more important for Cudi to sort out the relationship between brands and associates.

At the end of last year, Kudi Convenience Store suspended its expansion due to store expansion problems. Li Yingbo also mentioned at this media communication meeting that when convenience stores were expanding, some did not have Kudi Coffee’s own door, and some store staff failed to master the coffee making process, resulting in consumer consumption. The experience and the company’s brand image have been affected. rdquo;

Especially in terms of the expansion of products and scenarios, from making coffee, to making lunchboxes, to making convenience stores, in addition to the transformation of the associate’s mentality and working ability, what also tests Kudi’s supply chain capabilities.

Cudy revealed to Wired Insight that the supply chain is not a difficult thing for Cudy. Cody already has a complete convenience store product procurement team, including food research, hot food processing, factory management, etc. In addition, in terms of operations, we have built an Internet technology system as a grassroots architecture.

Over the years, Cody has been on the road of adventure. To complete the goal of opening 50,000 stores by the end of this year, Kudi still has 80% to go. How to expand its business while maintaining the core competitiveness of the brand and truly achieving the synergy effect of diversified development will be Kudi Coffee will face the core test in the future.

3. The battle of scale has reached a stalemate moment

From vigorously developing store-in-store to selling lunches and opening convenience stores, Kudi’s series of actions all point to scale expansion. This is also the most competitive area on the coffee track today.

The coffee market continues to expand. According to the “2024 China Urban Coffee Development Report”, China’s coffee market is developing rapidly and is expected to exceed 300 billion yuan by the end of 2024; and the annual per capita annual coffee consumption will increase from 9 cups in 2016 to 16.74 cups in 2023.

With the growing market size year by year, Wandian can no longer satisfy the ambition of coffee brands.

Although 50,000 stores may seem like a radical goal, Cudy believes the coffee market can accommodate this goal. Li Yingbo once said at the 36Kr WISE 2024 conference that after the past seven years of growth, the per capita annual coffee consumption in China has increased from 6 cups to 15 cups now, but Hong Kong is now 200 cups, and the per capita annual consumption in Europe and the United States is 400 – 600 cups. In the future, the mainland market in China will definitely reach the level of 100 cups and 200 cups, and the corresponding number of stores supported will definitely be in the order of one million. Currently, the total number of stores in the top ten coffee brands in China does not exceed 50,000.

You know, since its establishment, Cudi has tried to compete with established coffee brands such as Lucky in a short period of time.

Looking back at the growth in the number of Cudi stores, after the first store opened in October 2022, the number of Cudi stores exceeded 5000 in just one year; another year later, by October 2024, the number of Cudi stores has successfully exceeded 10,000.

Kudi’s wild run is also forcing Lucky to expand. In 2023, Ruixing added 8034 new stores throughout the year, almost doubling from 8214 stores at the end of 2022; in July 2024, it exceeded 20,000 stores.

Tuyuan Ruixing official website

The interesting thing about market competition is that you chase each other. After Lucky broke through 20,000 stores, the scale war in the coffee market has reached a more stalemate, and the pressure of the Kudi scale war is increasing.

This is also the reason why Cudi frequently widens borders. Compared with simply making coffee, diversified business formats can provide more profit points for associates, thereby attracting more associates.

In essence, the logic behind this is that if you want to attract associates, you must let them make money. Only after the associates make money can they become the basis for the brand to expand its scale.

Take Cudi’s launch of convenience store models as an example. This model combines coffee with convenience store business and provides more profitable categories for associates. Li Yingbo said that convenience stores are the core scene to meet users ‘immediate needs, and coffee, as a high-frequency just-needed consumer product, naturally fits in.

Through the combination of coffee + hot food + retail, Cody hopes to improve the efficiency of individual stores and cover consumers ‘all-day food and drink needs. For associates, this diversified business model can increase store traffic and sales, improve return on investment, and attract more people to join Cudi’s camp.

Looking back at Lucky’s price increase this time, market competition is also driving behind it.

Although Luckin has achieved certain advantages in store size and market share, as the market gradually becomes saturated, the space for growth solely by expanding the number of stores is becoming increasingly limited.

Tuyuan Ruixing official website

Therefore, Lucky has reached the moment of refined operations in the battle of scale. Compared with low-cost promotions, in the current era of product homogenization, through higher quality product quality and service quality, truly retaining customers is what Lucky needs to do at this stage.

Now Lucky and Cudi have embarked on two paths, which is because the two are at different stages of development. One wants markets and the other wants profits, but in the long run, the two have similar pursuit of scale. Entering a new stage is a big test for anyone.