Are Luckin and Starbucks really rivals in the coffee market? This may have been a "game" in the first place. There is actually nothing to say about the fraud itself. At the same time, the methods of increasing revenue and costs, the impact on the reputation of Chinese companies, and the business logic behind it has been repeatedly questioned. Many articles have given in-depth analysis. But I have read most of the articles, when talking about Ruixing, it is inevitable to pull Starbucks in for comparison.
Even when discussing the business model in the second half of the Muddy Waters report, the Starbucks model and data are used as benchmarks to demonstrate that Luckin is not good enough. After seeing the structure of the coffee market and a series of behaviors of Ruixing's early touching of Starbucks, I really don't think Ruixing and Starbucks are real rivals. This job title email list may have been a "game" in the first place. So this time, starting from the coffee market, let’s talk about whether there is any opportunity in the market that Ruixing has entered, and whether Ruixing’s opponent is really Starbucks? 1. Market Opportunity: Is it a Bubble or a Brick? Is there any opportunity in the domestic coffee market? Ruixing said "very big". Muddy Waters said "no".
01 Let's take a look at Ruixing's statement first Luckin’s executives have mentioned the following digital logic on different occasions: "In Asian countries, Japan and South Korea are 180 cups of coffee per capita per year. In contrast, the per capita coffee consumption in mainland China is only 4-5 cups per year, and the potential is huge. " But how does this 4-5 cups per capita work out? I found an industry report  from 18 years , showing the following data:Based on the data released by the USDA, China's coffee imports have averaged 125,200 tons per year in 10 years, with a total population of 1.4 billion. So it is calculated that the average person drinks 90 grams of coffee per year, and then estimates that each cup contains 20 grams of coffee, and then divides it to get the result of 4.5 cups per person. But the 10-year average import volume is a period data.
If we look at the "status quo", it is actually closer to the concept of a point in time. For example, look at the difference in per capita coffee consumption between China and the United States and Japan in 2019 to assess "how much is the difference now". During the 10-year period, the coffee import/consumption in the United States and Japan is basically stable, while China is growing rapidly. If the 10-year average is used, the difference between the average and the peak value of the US and Japan will not be very large. But for China, it is clear that the average will be lower than the actual value of the last year. Moreover, the import volume of coffee is not necessarily equal to the consumption volume. For example, Japan does not produce coffee beans itself, and basically relies on imports, and its consumption volume is basically equal to the import volume. China both imports and produces coffee beans and exports instant coffee. In fact, China consumes more coffee than it imports .
Also according to USDA data  , domestic coffee consumption in 2017 was 182,700 tons, and in 2018 it was 189,300 tons , both higher than the 125,200 tons in the table. Therefore, if we use the consumption of 182,700 tons in 2017, and each cup of coffee drink contains 15g of coffee to estimate (refer to Internet discussions, Starbucks coffee production standards, and muddy water report speculation), the annual number of cups per capita in China should be 9 cup or so . Of course, the main contributor to the result of getting 4.5 cups is "Dafa per capita". Basically, as long as any industry is divided by 1.4 billion, we can get a result that is far lower than that of Europe, America and Japan. For example, the per capita ownership of automobiles in China is almost 0.18, and that in the United States is 0.8, which is about 1/4.
However, the growth rate of domestic auto sales in 2018 has begun to decline, and the industry generally believes that it has entered the stage of stock competition. Therefore, comparing the average annual consumption of 4.5 cups in China with the 180-270 cups in the United States and Japan, it does not make much sense except to look bluffing. If we can reach 200 cups per capita, we will basically consume 86% of the world's coffee beans... Even if the number of cups of coffee we consume per capita is indeed much lower than that of our neighbors in Europe, America and East Asia. But the crux of the matter is how much this number can grow from 9 cups per capita. Unfortunately, judging from the growth rate in the past few years, the domestic coffee consumption market does not have such an explosive growth trend: