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China's Luckin Coffee is making it's first overseas move, opening coffee shops in the Middle East and India after it raised $561 million in May in a U.S. IPO. $LK aims to unseat Starbucks as the No.1 coffee chain in China

Luckin

Luckin said the company on Monday signed a memorandum of understanding to set up a joint venture with Kuwait’s Americana Group to launch the business in the Greater Middle East and India regions, without providing further details. “This collaboration represents Luckin Coffee’s first step toward bringing its leading products from China to the world,” Luckin Coffee’s Founder and CEO, Jenny Qian Zhiya, said in a statement.

Market Reaction > Luckin Coffee Inc - ADR NASDAQ: LK 20.33 USD +0.28 (+1.40%)

Market Reaction > Starbucks Corporation NASDAQ: SBUX 90.63 USD +0.33 (+0.37%)

Kesri Kapur, CEO of Americana Group which operates 1,800 restaurants and 29 food production sites in the Middle East, said the Greater Middle East and India regions provided promising prospects for expansion. Luckin in its initial public offering in May raised around $645 million through its US listing, according to data from Refinitiv.

The Middle East is a major market for Starbucks which has 202 stores in Dubai, 191 in Saudi Arabia, and 151 in Kuwait. The Seattle-headquartered chain also has 146 stores in India, where it has partnered with one of the country's biggest conglomerates, Tata. Luckin plans to open 2,500 stores in China this year, hoping to caprture some loyalty backlash from America's Starbucks who are the number one coffee chain in China.

The company spent the proceeds to offer lower prices, discounts, speedy delivery and promotions on social media, which saw Starbucks repsond to form a tie-up with Chinese tech giant Alibaba ($BABA) to deliver coffee to customers. Luckin has also expanded outside coffee, offering customers other beverages such as grapefruit cheese jasmine tea and food items, including Sichuan cold noodles with pulled chicken via its app.

Source Luckin, Reuters

From TradersCommunity Research

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