Luckin Coffee’s Moutai-infused Latte Hype in China

Photo from: Luckin Coffee’s Weibo account

In a groundbreaking collaboration that has left China buzzing with excitement, Luckin Coffee and Kweichow Moutai have taken the beverage world by storm with their innovative “Soy Sauce-flavoured Latte”, called Jiangxiang Latte in Chinese. This intriguing concoction, blending the allure of coffee with the fiery spirit of Moutai baijiu liquor, has taken the country by storm. Within hours of its launch on 4 September 2023, this unique beverage had coffee lovers lining up for hours and social media buzzing with discussions and hashtags.

On the day of its debut, the Soy Sauce Latte sold a staggering 5.42 million cups, catapulting Luckin Coffee into the record books. This unprecedented success dwarfed previous hit launches, including a cheese latte that managed 1.31 million cups and a coconut cloud latte that reached 660,000 cups. The beverage, initially priced at CNY38 (approximately US$5.23), was offered at a 50% discount on its launch day, causing a frenzy as coffee aficionados raced to get a taste.

Photo from: Luckin Coffee’s Weibo account

The Soy Sauce Latte is a marriage of coffee and the iconic Chinese spirit, Moutai baijiu, known as the national liquor of China. With a distinct flavor reminiscent of soy sauce, it has sparked curiosity and intrigue among consumers. Despite a bottle of Moutai liquor contains 53% alcohol, this Moutai-infused drink only contains less than 0.5% alcohol, making it accessible to a wide range of enthusiasts.

Recently, China has witnessed a phenomenon known as “consumption downgrading.” As the country’s economy evolves and growth patterns change, consumers are becoming increasingly cautious about their spending habits. This shift in consumer behavior is particularly pronounced among young people. They are seeking more affordable options for indulging in luxury or traditionally expensive items. The Jiangxiang Latte, often referred to as “young people’s first cup of Moutai” for tasting Moutai with starting price of CNY1,500 or US$205 a bottle,  aligns perfectly with this trend.

Luckin Coffee’s journey has been a rollercoaster since founded in 2017, from unicorn status to a public scandal. However, the brand has been making a spirited comeback, expanding its offerings to include tea lattes and now the Moutai-infused sensation. In the second quarter of 2023, Luckin opened 1,485 new stores, showing signs of a resurgence. This collaboration with Kweichow Moutai has further fueled their revival.

As the most valuable listed company in China, Kweichow Moutai is worth an impressive $322 billion in market capitalization. Traditionally favored by middle-aged consumers in formal settings, the brand is now striving to connect with younger generations. The cost and high alcohol content of Moutai baijiu, which usually contains 53% alcohol and starts at a price of CNY1,500 or US$205, have limited its appeal to the youth. This challenge is exacerbated by high youth unemployment and a slow recovery in China’s consumer market. The “Soy Sauce Latte” collaboration represents a strategic move to introduce a new audience to its flavors and make Moutai more approachable for the younger generation.

Notably, this is not the first time that Kweichow Moutai has ventured into exciting collaborations with other food and drink makers. Just last year, it partnered with mainland dairy giant Mengniu to create Moutai ice cream, a delectable treat that garnered significant attention. Priced at CNY60 (approximately US$8) per serving, this unique ice cream allowed consumers to savor the essence of Moutai in a delightful frozen form. It was another example of Kweichow Moutai’s commitment to innovation and expanding its product offerings beyond traditional boundaries.

The impact of the “Soy Sauce Latte” collaboration reached beyond the beverage itself. On 5 September 2023, Luckin Coffee’s stock price surged by an impressive 5%. This surge was a testament to the incredible success and market impact of their unique creation. It not only resonated with consumers but also with investors who recognised the significance of this partnership.

The “Soy Sauce Latte” is more than just a beverage; it represents the convergence of tradition and innovation. It’s an enticing glimpse into the evolving tastes of China’s young consumers and a testament to the power of collaboration between iconic brands. As social media continues to buzz about this unique concoction, the future looks promising for both Luckin Coffee and Kweichow Moutai. Whether you’re a coffee lover or a baijiu enthusiast, this fusion of flavors is a must-try, all while fitting into the trend of “consumption downgrading” in China, showcasing the creativity of Kweichow Moutai through its innovative collaborations, and boosting and re-energising the stock price of Luckin Coffee.