Luckin Coffee brews up new craze in China with low-alcohol Moutai latte

19 Sep 2023 --- Luckin Coffee and Kweichow Moutai, two of China's most prominent beverage companies, have joined forces to launch an innovative alcoholic latte which captured the attention of both coffee and liquor enthusiasts. The Moutai Latte, which officially debuted earlier this month, has already taken the Chinese market by storm.

The Moutai Latte complements Luckin Coffee's strategy of innovating coffee products tailored for the Chinese market, offered in their tech-driven retail locations. 

The cream-topped, caffeinated blend contains less than 0.5% alcohol, ensuring a milder and more approachable flavor profile tailored to the tastes of Chinese Millennials and Gen Z.

Jinyi Guo, chairman and CEO of Luckin Coffee, says, “The starting point of the strategic cooperation between the two companies is to provide consumers with products and services of higher quality and a better experience. This will be the first sip of alcoholic latte for a lot of young Chinese people.” 

According to Luckin Coffee, 5.42 million cups of the unique drink were sold on the first day of its launch, with the sales of the single product topping RMB 100 million (about US$13.9 million), setting a new sales record for the coffee chain. 

The product quickly became one of the most-discussed topics on multiple Chinese social media platforms, with hashtags related to the limited-edition drink racking up tens of millions of views on the popular Weibo and Red (Xiaohongshu).

Shifting drinking culture
Moutai, often hailed as ”the national liquor” in China due to its rich historical and cultural significance, has long been associated with luxury and high prices. However, the company behind this esteemed drink has been challenged, as have other alcohol companies, in recent years with a shift in trends and preferences by younger generations. 

Much like many Western countries, the decline in youth drinking is remarkable and widespread in China. 

As the traditional allure of liquor gradually wanes, a noteworthy transition is unfolding. Coffee shops are now emerging as vibrant social hubs, especially among the younger generation.

5.42 million cups of the unique drink were sold on the first day of its launch.Despite its historical lack of a robust coffee culture, over the past 15 years, China has experienced a surge in coffee consumption. This coffee craze has been largely brewed by Millennials, who have been influenced by Western trends and are increasingly embracing coffee as a daily ritual.

At the forefront of this coffee revolution is Luckin Coffee, a pioneering innovative giant in the Chinese food and beverage industry. 

In a significant milestone, Luckin Coffee surpassed Starbucks in 2023 to become the largest coffee chain brand in the country. This achievement underscores the company's approach and its ability to resonate with the changing preferences of Chinese consumers.

Being tired of what they perceive as “the old-fashioned drinking culture”, Chinese Gen Z consumers increasingly explore alternatives to traditional alcoholic drinks. This includes low- and no-alcohol options. 

Evolving preferences
The strategic collaboration between Moutai and Luckin Coffee is among one of the many attempts by the beverage company to meet the evolving preferences of Chinese consumers, with a particular emphasis on the younger demographic. 

Xiongjun Ding, chairman at China Kweichow Moutai Distillery, emphasized this objective, stating, “Our aim is to enhance the pleasure of consuming alcoholic product and meet the expectations of the majority of young consumer groups.” 

In order to resonate with younger consumers, Moutai Coffee positions itself as an affordable, lower-alcohol alternative infused with the prestige of traditional Moutai liquor. 

Priced at under RMB20 (US$5) on the online stores, this beverage becomes an accessible and alluring choice for a wide spectrum of consumers. 

By Sichong Wang