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Exploring the thirst for drink collaborations in China

China’s beverage market is highly lucrative, with revenues projected to reach 504.1 billion RMB in 2023. It is also estimated to achieve an annual growth rate of 9.91% between 2023 and 2027.

The market has evolved from primarily tea and traditional drinks to a multifaceted industry that encompasses a wide range of products, including carbonated soft drinks, fruit juices, coffee, and tea. In recent years, there has been an increasing number of drink collaborations in China. In particular, coffee laced with alcohol has created a buzz this summer. Famous coffee chains Luckin Coffee and Manner Coffee hopping on the trend. These collaborations leverage the strengths and appeal of multiple brands to create unique products, experiences, and marketing campaigns.

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The appeal of spiked coffee

The concept of spiked coffee, which blends the rich and comforting flavors of coffee with the bold and spirited notes of alcohol, has gained significant traction in the Chinese drink industry. This fusion has captured the attention of consumers and inspired beverage chains to explore innovative ways to create enticing products.

Luckin x Moutai

The collaboration between Moutai, the biggest Chinese liquor company, and the fast-growing Luckin Coffee, exemplifies the trend of combining coffee and alcohol. On the 4th of September 2023, Luckin Coffee released a Moutai-flavored latte (酱香拿铁) in its 10,000+ locations all over China. It was sold for 38 RMB but available at half-price with a coupon. This partnership capitalizes on the strengths and expertise of both brands to create a unique offering.

Source: Radii, Moutai x Luckin Coffee collaboration

The highly expected collaboration created buzz online ahead of and after its release. On Chinese social media, netizens posted pictures of themselves holding their cups of Moutai Latte. They also shared their opinions – for the most part negative – about the taste of the unconventional beverage. The collaboration also led to a growth in Baidu searches for ‘Luckin Coffee’ starting from the day of the release. This illustrates the impressive increase in online traffic that the collaboration created.  

Source: Baidu index, search for “Luckin Coffee” from August 2023 to September 2023

Luckin Coffee shares soared while Moutai remained unshaken

Offline traffic surged as well. On the afternoon of the release day, many Luckin stores in Shanghai and Beijing had already sold out of Moutai latte. Overall, the collaboration resulted in impressive sales for the coffee chain. They sold more than 5.4 million cups on Monday, which resulted in more than 100 million yuan in sales, a new record for a product launch. Beyond increasing searches for Luckin Coffee, the collaboration led to Luckin’s US shares value increasing by more than 5% on the day after the release, reaching its highest value in more than three years. Moreover, the trading volumes skyrocketed, reaching more than 300% of the three-month average.

However, while Luckin Coffee profited from this launch both financially and through customer engagement, Moutai’s shares were not impacted significantly by the collaboration.

Manner x Jim Beam

Luckin Coffee is not the only one hopping on the spiked coffee trend. Last month, the Chinese coffee chain Manner announced the launch of two limited-edition coffee beverages in collaboration with Jim Beam, the famous bourbon and whiskey company. The two Americano-style drinks were available from August 30th to September 10th, 2023, in Manner’s 300+ locations. One of the drinks does not contain alcohol while the other does, selling at 15 RMB and 20 RMB respectively. On top of these special drinks, 100,000 Manner x Jim Beam limited edition glasses were given away to customers who purchased both drinks. However, some netizens pointed out that the timing of this launch was poor considering that all the buzz went to the Luckin x Moutai collaboration.

daxue-consulting- drink collab - manner x jim beam
Source: FoodTalks, Manner x Jim Beam collaboration

Manner x Winona

On the 11th of September 2023, Manner released yet another special drink, this time in collaboration with the Chinese cosmeceutical company Winona (薇诺娜). The new drink, a Yunnan-wine flavored osmanthus latte, is sold at 20 RMB and available from September 11th to September 17th throughout China. A Manner x Winona gift box with sample of skincare products will be given for free with the purchase of the limited-edition coffee.

In the afternoon of the release, many Manner stores had already sold out of the special latte. This collaboration is an opportunity for Manner to leverage the spiked coffee trend while showing its support of a fellow local brand. For Winona, whose revenue increase slowed down by a third from 2022 Q1 to 2023 Q1, this collaboration could be an attempt at mitigating its losses. 

Source: WeChat, Manner x Winona collaboration

Other noteworthy collaborations

Collaborations with fashion brands 

Collaborations between beverage brands and fashion brands can be a creative way to blend two distinct industries and create unique offerings for consumers. This past year, the Italian luxury brand Fendi collaborated with the tea chain HEYTEA on a limited-edition drink containing passion fruit and mango, served in a recognizable yellow cup. The collaborations blew up on Chinese social media, with the dedicated hashtag #喜茶fen di联名# (#HEYTEA Fendi collaboration#) accumulating over 45.9 million reads on Weibo.

Source: Marketing-Interactive, HEYTEA x Fendi collaboration

On the 28th of August 2023, Luckin Coffee announced yet another unexpected collaboration with Victoria’s Secret ahead of the release of the lingerie brand’s feature-length film at the end of September. For this collaboration, the coffee chain offers a baby pink cup holder with wings and a paper bag, an homage to the brand. This collaboration is a bold move from Luckin Coffee, given the controversial nature of Victoria’s Secret.

Source: Dao Insights, Luckin Coffee x Victoria’s Secret collaboration

On Chinese social media, Chinese netizens had mixed reactions, with some calling this collaboration “absurd”, some sharing their surprise and others their enthusiasm.

daxue-consulting- drink collab - Luckin x VS weibo
Source: Weibo, comments on Luckin x Victoria’s Secret collaboration

Collaborations with video games

Collaborations between beverage brands and video games have overall been received positively by Chinese consumers. At the beginning of August 2023, HEYTEA collaborated with the famous action role-playing video game Genshin Impact to release limited-edition drinks, merchandise, packaging and specially decorated stores. In September 2022, the tea chain had already collaborated with the game by releasing special beverages featuring two of the game’s characters. This year, the collaboration featured two different characters, which gave the incentive for customers to purchase a limited-edition drink to get collectible cups. HEYTEA x Genshin Impact was once again a success, with around 3 million cups sold in the country three days after the launch.

Source: CQN, HEYTEA x Genshin impact collaboration

Drink collaborations in China with celebrities and KOLs

Collaborations involving celebrities and Key Opinion Leaders (KOLs) are common in the beverage industry and can be highly effective in reaching and engaging with specific target audiences. However, they also come with certain risks, as exemplified by the backlash of Cha Bai Dao’s collaboration with Diandi Lahai (垫底辣孩), a Douyin celebrity with 12.6 million followers. In the summer of 2022, the Chinese tea chain announced its collaboration with the influencer, who is in high demand to endorse global brands. Since the young influencer is famous on Douyin for his costume-changing videos, Cha Bai Dao released related promotional pictures featuring Diandi Lahai with the iconic hairstyle that appears in his video and a more “polished version of him in a suit.

Source: Dao Insights, Cha Baidao x Diandi Lahai collaboration

Despite Diandi Lahai’s internet fame, netizens were quick to criticize the choice of collaboration, pointing out the celebrity’s “ugly” looks. While some commented harshly on his appearance, others pointed out that his fame does not originate from his looks and the influencer does not deserve to be attacked. Due to its controversial nature, this collaboration garnered over 450 million views as of the 21st of August 2022.

Source: Weixin, comments on Cha Baidao x Diandi Lahai collaboration

This collaboration highlights the delicate task that beverage brands face when choosing a collaboration partner. The brands also need to be aware of the strict beauty standards in China.

The appeal of drink collaborations in China

Drink collaborations in China, еxеmplifiеd by Luckin Coffее and numеrous othеrs, havе provеn highly attractivе, lеvеraging comperative advantagеs tailorеd to this markеt. Thеsе advantagеs еncompass flavor innovation, buzz gеnеration, cross-promotion, and thе facilitation of markеt еxpansion.

Collaborations with other entities can allow coffee and tea chains to create innovative products that cater to Chinese consumers’ thirst for novelty. Given the beverage industry’s projected expansion, players are looking for a way to grab market share, and collaborations are one of them. For example, Moutai latte allowed Luckin to reach an older customer base than its original target market, mainly consisting of young white-collar workers. Likewise, through this collaboration, Moutai had the opportunity to reach a younger customer base and get them familiar with the brand.

Apart from being a market expansion method, both parties can also benefit from the cross-promotion. They can collaborate on marketing initiatives to enhance the visibility and engagement of their individual brands, particularly on social media platforms. Finally, the beverage chain and the other parties can also benefit from buzz creation that precedes and follows the launch of a new drink. Co-marketing campaigns, limited-edition releases, and celebrity endorsements associated with collaborations can attract considerable attention from Chinese consumers, especially among the younger demographic. They often lead to increased media coverage, social media discussions, and word-of-mouth marketing, boosting brand visibility.

Challenges and risks

Beyond their undeniable appeal, drink collaborations in China present challenges. In certain cases, they can lead to brand dilution for one or both partners. When two brands with distinct identities come together, it can confuse consumers and weaken the clarity of each brand’s message. It is therefore essential to carefully manage how the collaboration is presented to maintain brand integrity. Furthermore, poorly executed, or ill-conceived collaborations can also lead to consumer backlash. If consumers perceive that the collaboration is inauthentic, opportunistic, or does not align with the values of the brands involved, it can result in negative sentiment.

What we can learn about drink collaborations in China:

  • Drink collaborations are a way for coffee and tea chains to reach more customers and create buzz in a very competitive industry. In recent years, all sorts of collaborations have been popular, like with fashion brands, celebrities, and video games. However, spiked coffee has been particularly well-received by Chinese consumers.
  • Luckin x Moutai and Manner x Jim Beam are two examples of coffee chains successfully collaborating with alcohol brands. Some other collaborations have been criticized, like the Luckin x Victoria’s Secret and the Cha Bai Dao x Diandi Lahai collaboration.
  • Drink collaborations in China have a certain appeal in terms of flavor innovation, buzz creation, cross-promotion, and market expansion. They also present the risks of brand dilution and backlash. Beverage chains have therefore the delicate task of choosing a collaboration partner that aligns with their brand image while keeping in mind Chinese consumers’ strict standards.