The price increase of Luckin is just the beginning

Luckin is now ending the 9.9 - yuan coffee empire it built by itself.

The "9.9 - yuan" concept is disappearing from Luckin Coffee's marketing language. The 9.9 - yuan anniversary coupon that could be redeemed once a week originally now seems more and more useless. In the "9.9 yuan per week" section, there are almost only three coffee products, namely Americano, Latte, and Oat Milk Latte, that can be purchased at 9.9 yuan. Popular classic products like Coconut Latte are not included.

In its brand's live - streaming room, the hosts also don't mention 9.9 yuan at all. The most cost - effective product in the shopping cart, the "Value - Pack Purchase", has become a 10 - time card worth 125 yuan.

Why did Luckin, which brought down the coffee price, push it back up?

01 Luckin's price increase is not the first time

For only 9.9 yuan, you can choose one from Americano, Latte, Coconut Latte, and Jasmine Snow Tea Coffee. With additional discounts, you can even get it for 8.8 yuan. Besides the single - cup 9.9 - yuan coffee, there is an even more affordable 9.9 - yuan breakfast set, which includes an Americano (or pure tea) with a piece of baked goods. With discounts, it can be bought for 8.9 yuan.

In fact, Luckin's "9.9 - yuan strategy" has only been implemented for less than two years.

02 The price increase is not just because of raw materials

Behind Luckin's price increase is a global background that has to be mentioned: the sharp rise in coffee bean futures prices.

For example, on November 25, 2024, the futures price of Arabica coffee in the New York market rose to $3.1280 per pound, reaching a new high in 27 years.on November 28, the futures price of Arabica coffee soared to $3.26 per pound, reaching a new high in 47 years.

As of February 11, 2025, the futures price of Arabica coffee on the New York Intercontinental Exchange broke through the high point of $4.3 per pound, continuously setting new highs in 47 years. In the past year, the increase in coffee futures prices has been as high as 118.57%.

The news of the "price increase" one after another makes people reasonably think that the increase in raw material prices has led to the price increase of Luckin Coffee.

However, in the view of Wang Zhendong, an expert in the coffee industry and the chairman of Shanghai Feiyue Investment Management Co., Ltd., Luckin's "price increase" is just a coincidence.

Wang Zhendong pointed out that according to industry experience, the futures price of coffee beans will fluctuate continuously due to changes in coffee bean production. However, big brands often sign agreement prices with the origin. Fluctuations in the futures price within a certain range do not affect the agreement price, and the futures price is only for reference.

"Even if the futures price does have an impact on the purchase price, companies often have a hedging mechanism to control prices. For example, when the price of coffee beans is low, they buy futures contracts. When the price rises, the profit from the futures contracts can offset the increase in the cost of spot purchases," said Jiang Han, a senior researcher at Pangoal Institution.

More importantly, the cost of coffee beans in a cup of coffee is not high.

China Merchants International calculated in a research report in December 2024 that taking Luckin's Coconut Latte as an example, among the cost components, coffee beans account for only 3.6%, while milk accounts for 21.6%, and the proportion of the coffee cup is close to that of coffee beans, at 3.2%.

Wang Zhendong mentioned that according to the coffee bean purchase price of 120 yuan per kilogram, the amount of coffee beans used in a cup of coffee is about 18 grams. Calculated with a loss of 20 grams, the cost of coffee beans in a cup of coffee is 2.4 yuan. So even if the cost increases by 20%, it is less than 0.5 yuan, which is not enough to make the selling price of coffee increase significantly.

Jiang Han also cited the research of Guojin Securities, saying that the rent cost of coffee brands accounts for more than 25%, and the human - related costs (administration, labor, operation) are close to 30%. These two are the key factors determining the bottom line of coffee prices.

This can also be easily seen from Luckin's latest released third - quarter financial report in 2024. Among the increased costs, the raw material cost increased by 24.9% year - on - year, while the store rent and other operating costs increased by 60.3% year - on - year, and the distribution cost increased by 57.9% year - on - year. Obviously, the increase in coffee bean costs is not that "significant".

If the purchase price of coffee beans is really rising continuously, then the brand should continuously increase the price of raw materials sold to stores. Interestingly, while raising prices, Luckin also released a new policy for raw materials: On December 27, 2024, Luckin announced a reduction in the supply prices of a series of raw materials, which took effect on January 1, 2025, covering more than 80 products including coffee beans, coconut milk, and milk. The price of coffee beans dropped by 16.8%.

On one hand, the futures price of coffee beans is rising, and on the other hand, the supply price of raw materials sold to stores is decreasing. Behind this completely contradictory information points to the fact that there are "other hidden reasons" for Luckin's price increase.

03 The price increase is just the first step

Since 2024, the quarterly financial reports of Luckin Coffee have shown its "weaknesses".

According to the financial reports of the first to third quarters of 2024 released by Luckin, although the total revenue is constantly increasing, considering the factor of store expansion, the same - store sales of its single store are not optimistic. For example, for its directly - operated stores, looking at the year - on - year data of the same quarter, the same - store sales of directly - operated stores in the first to third quarters all showed negative growth, which were - 20.3%, - 20.9%, and - 13.1% respectively. However, in the three years before 2024, the same - store sales of its directly - operated stores were in continuous growth.

In short, the new situation in 2024 is that, on average, coffee can't be sold well in a single store.

According to the data from GeoHey Brand Monitoring as of February 13, 2025, the proportion of 

Luckin's encrypted stores (with two or more stores within a certain area) is quite high. For example, within a 500 - meter range, the proportion of encrypted stores in first - tier cities reaches 79.87%. When the range is expanded to 1000 meters, the proportion reaches 92.71%.

Since the beginning of 2025, many consumers like Wang Kang have found that Luckin has quietly raised its prices, with an increase of about 3 yuan.

The Interesting Report observed that the price increase is reflected in two aspects: one is the "list price" that consumers often ignore, that is, the price before discount. Some stores have increased the list price. For example, the price of Coconut Latte has increased from 29 yuan to 32 yuan.

This is even more true in Luckin's live - streaming room. Zhao Qing, who often visits the live - streaming room to stock up on coupons, found that in 2024, she could stock up on many 9.9 - yuan "choose - one - from - N" group - buying coupons. But later, the "N" kept decreasing, and there were very few products participating in the 9.9 - yuan offer. Now, "9.9 yuan" has almost completely disappeared from the live - streaming room. The lowest price of the "choose - one - from - N" is 11.9 yuan, the regular price of the 10 - time card is 125 yuan, and the lowest price is 109 yuan.

"If coffee is your necessity, then the price increase of Luckin is obvious to the naked eye. No one can ignore it," said Zhao Qing.

Indeed, the Interesting Report observed that Luckin began to withdraw from the "9.9 - yuan game" as early as the beginning of 2024. On one hand, on the Luckin Coffee App and mini - program pages, the "9.9 yuan per week" was placed in the secondary menu and could not be ordered automatically. On the other hand, the "9.9 yuan per week" menu shrank, with nearly 8 products available, among which there were only two signature products, Coconut Latte and Velvet Latte.

The Interesting Report visited and found that there are more than one Luckin Coffee in many shopping malls in Beijing. For example, there are 2 Luckin Coffee stores on the first floor and the sixth floor of Xitieying Wanda Plaza respectively, and there are also 2 Luckin Coffee stores on the first floor and the basement floor of 合生汇 respectively.

Since it's difficult to further encrypt stores in high - tier cities, Luckin has to "pioneer" in the sinking market. According to the "China Coffee Industry Report 2024" released by the World Association of Chinese Cuisine, the cumulative proportion of stores in the top five cities in terms of the number of stores (Shanghai, Guangzhou, Beijing, Chengdu, and Shenzhen) decreased from 23% in September 2022 to less than 19% in September 2024. The penetration rate of the coffee market in third - tier, fourth - tier, and fifth - tier cities is increasing.

However, Wang Zhendong also has concerns. He previously visited and investigated the sinking market in inland counties such as Shanxi and found that "white - collar" consumers in local government - related and corporate industries have not formed the habit of drinking coffee. "Educating the market takes time, and the sinking market is often more sensitive to prices."

At present, the mainstream coffee - consuming population is still concentrated in first - tier cities. The "2023 - 2024 China Coffee Industry Annual Development Report" released by Canbao Store shows that in terms of the population density of coffee shops, the top ten cities are all first - tier cities such as Hangzhou, Shanghai, and Guangzhou. Among them, Hangzhou has 3.95 coffee shops per 10,000 people, and the population density of coffee shops has exceeded that of Shanghai. In addition, the number of coffee shops per 10,000 people in Shanghai, Guangzhou, and Xiamen also exceeds 3.

However, the key lies in whether Luckin Coffee has established a strong enough brand influence and whether consumers have developed loyalty to the brand.

Li Weihua, an expert in chain operation, said that in the era of popular milk coffee and flavored coffee, it may be difficult for consumers to truly distinguish the quality differences of different coffees. "Just like drinking tea, after such a long - time market education, the public still has difficulty easily tasting the quality differences."

In addition, besides existing large competitors in the affordable market such as Cotti and Xingyunkafa, tea - drinking brands such as Nayuki and COCO have also joined the competition.

"Luckin may have forgotten why everyone chose it in the first place. Wasn't it because of its high cost - performance ratio?" Li Weihua said.

After successfully educating the market with 9.9 - yuan coffee, Luckin Coffee is about to usher in the second - round education - 12.9 - yuan coffee. Whether this can be equally successful, consumers will vote with their feet.