COTTI COFFEE’s rapid rise in China and its potential impact on the coffee industry

The Chinese coffee market is currently experiencing a surge in popularity due to changing dietary preferences, with the emergence of new brands, the market is projected to grow at an impressive rate of 27.2%, reaching 1 trillion RMB by 2025. While Luckin Coffee currently holds a dominant position in the market, the entrance of new players like COTTI COFFEE (库迪咖啡) is expected to intensify competition and give it a run for its money.

Born from the founder of Luckin Coffee

On October 22, 2022, former Luckin Chairman Lu Zhengyao and former Luckin CEO Qian Zhiya announced in WeChat the highly anticipated launch of COTTI COFFEE’s first store. Instead of shying away from its association with Luckin, the new coffee shop brand proudly acknowledges its origins in the brand story, stating that it was formed by Ms. Qian Zhiya, the founder of Luckin Coffee, along with members of Luckin Coffee’s initial core team.

In a remarkable turn of events, Luckin Coffee, founded in 2017 by a core team led by Lu Zhengyao and Qian Zhiya, achieved rapid success and even went public on the US stock exchange within two years. However, this success was marred by controversy when, on January 31, 2020, a well-known short-selling organization alleged financial misconduct by Luckin Coffee. In April, Luckin admitted to wrongdoing and was eventually delisted from the US stock exchange. As a result, the founding team of Lu Zhengyao and Qian Zhiya were removed from the company.

In light of these challenges, Lu Zhengyao and Qian Zhiya once again joined forces to create COTTI COFFEE.

cotti coffee

Graph Source: Analysis on GeoHey, designed by daxue consulting, Distance distribution between COTTI and other coffee brands (by the first half of 2023)

The brand strategically positions its shops in close proximity to its main competitor, Luckin Coffee, as it aims to attract consumers from its rival. In fact, the average distance between COTTI and Luckin is just 241 metres, while the distance between COTTI and Manner coffee shops exceeds 500 meters. Moreover, both Luckin and COTTI share a common objective of expanding into lower-tier cities.

Leverage low-price strategy to grab market share

Nowadays, domestic consumers’ awareness and knowledge of coffee is still relatively limited, with a greater emphasis on cost-effectiveness rather than a refined taste profile. In light of this, Luckin Coffee’s rival decided to adopt a low-price strategy to attracts a large number of new customers. On May 11, 2023, the Chinese coffee chain launched the “Summer Ice Drink Season, 9.9 RMB a Day” promotion, which lasted until July 30 and involved around 5,000 shops. During this campaign, customers were offered 9.9 RMB all-day drink coupons. The initiative was aimed to create buzz, enhance brand awareness, and attract new customers.

The secrets behind COTTI COFFEE’s successful marketing

In 2022, COTTI COFFEE dared to bet on the World Cup by sponsoring the Argentina national football team. Since the 2022 World Cup began, the Argentina team, led by Messi, has been generating buzz on Chinese social media, drawing attention to the coffee shop chain. Capitalizing on this momentum, the Chinese coffee chain introduced a limited-edition coffee inspired by the Argentina national football team, which quickly became a trend on Little Red Book, a popular social media platform. Many netizens expressed their excitement about watching the World Cup, while enjoying the Argentina national football team limited-edition coffee.

As a result, when Argentina football team won the World Cup championship, COTTI COFFEE experienced a surge in popularity. Since then, Luckin Coffee’s rival has continued to support sporting events, including the 2022 Chengdu Marathon, thereby further amplifying the brand’s presence and resonance with its audience.

argentina football team x cotti
Source: Weibo, COTTI sponsoring the Argentina national football team

Collaborations with popular Chinese IPs

On February 28, 2023, COTTI COFFEE embarked on a co-branding collaboration with the Chinese well-known mobile game Honor of Kings. Drawing inspiration from 5 popular IP characters in Honor of Kings, the Chinese coffee chain integrated brand characteristics elements and launched limited-edition coffee products.

cotti coffee x honor of kings
Source: Weibo, COTTI partnership with Honor of Kings

Having set a record of 100 million daily active users in 2020, Honor of Kings. By June 2022, the game had surpassed 160 million daily active users. Recognizing the immense reach and appeal of Honor of Kings, the coffee shop chain made the strategic decision to collaborate with the game, targeting its young user base and aiming to capture their attention. Li Yingbo, co-founder and CMO of COTTI COFFEE, further emphasized that as a rapidly emerging coffee brand, it prides itself on maintaining a youthful and fashionable brand identity, coupled with innovative product concepts.

Synergy between several online channels

COTTI COFFEE places a strong emphasis on Douyin marketing, while also utilizing Xiaohongshu, Weibo, and WeChat channels to supplement its marketing efforts.

To generate buzz and increase product visibility, the Chinese coffee shop chain partnered with over 10 KOLs and famous esports players of Honor of Kings. In addition, Luckin Coffee’s rival capitalized on distinctive visual and taste features, such as the use of pink and peach elements, to leave a lasting impression on customers. These elements aim to deepen customers’ memories and foster a connection with the brand.

COTTI COFFEE leverages the power of Douyin livestreaming as a powerful tool for to convert potential customers into actual buyers. Through real-time engagement with the audience, the brand effectively showcases the unique features of its products, resulting in successful sales conversions. This approach has yielded impressive results, with the coffee chain’s new products achieving a Gross Merchandise Volume (GMV) of over 30 million RMB on Douyin within a two-week period. Additionally, the brand received more than 3.3 million orders and garnered a short video exposure of over 345 million.

COTTI COFFEE: a fast-growing Chinese coffee chain

  • COTTI COFFEE is a rapidly rising brand that has the potential to change the market landscape, which is dominated by Luckin Coffee for now. However, It was actually formed by Luckin founder Ms. Qian Zhiya and members of Luckin Coffee’s initial core team.
  • The Chinese coffee chain has been leveraging low-price strategy to grab market share, as domestic consumers’ knowledge of coffee remains limited, and their requirements for product taste are not so high, prioritizing price over quality.
  • Successful marketing is crucial to the fast growth of the Chinese coffee chain, which attracted a large number of consumers by sports sponsorship, collaborations with Chinese popular IPs, and integration of online and offline channels.

Author: Lyu Ai

Read about sustainable fashion in China

Sustainable fashion in China cover image