Joint venture for juice: Louis Dreyfus Company and Luckin Coffee to develop co-branded business in China
26 Sep 2019 --- Louis Dreyfus Company (LDC) and Luckin Coffee (Luckin) have agreed to establish a joint venture to develop a co-branded Luckin Juice business in China. In a combined effort, LDC will produce not from concentrate (NFC) orange, lemon and apple juices. In the future, Luckin stores will contribute as sales outlets as well as market the juices via other channels.
“Each company brings specific expertise that will enable the joint venture to better manage the challenges right to the end consumer,” Murilo Parada, Global Head of the Juice Platform tells FoodIngredientsFirst. He identifies bottling, marketing and traceability as some of the challenges which monitoring a full value chain poses. Nevertheless, LDC’s business strategy is to move further downstream toward the end consumer.
Through the joint venture with LDC, Luckin aims to focus more on product quality control throughout the production process. Founded in 1851, LDC produces fruit juice products sourcing its sustainably-grown fruit from Brazil and other global suppliers.
The company has additionally been active in China for the last 40 years, with operations in grain, oilseed, cotton, sugar, rice and juice in nearly every province in the country.
“China is the fastest-growing NFC market globally and, together, Luckin and LDC see a significant opportunity to offer high-quality, sustainably-developed NFC juices to the Chinese consumer,” says Jinyi Guo, Luckin Senior Vice President and Co-Founder.
Luckin has invested in online marketing technology to reach customers outside of the coffeeshop. Its mobile app and presence on other third-party platforms offers customers a 100 percent cashier-less environment. Its store network is comprised of pick-up stores, relax stores, and delivery kitchens, which enables the company to maximize customers convenience, and achieve broader delivery coverage.
Headquartered in Xiamen, Luckin is China’s second largest coffee chain brand. However, the company plans to have more than 4,500 stores in total, thus becoming China’s largest coffee chain by the end of 2019.
James Zhou, LDC Global Vice President and Regional Head for LDC North Asia envisions this new joint venture as a “true win-win situation”.
“Our areas of expertise are totally complementary, with LDC’s know-how in managing a sustainable juice value chain and Luckin’s knowledge of the Chinese consumer, marketing and digital platform know-how, and established consumer base,” he concludes.
By Anni Schleicher
