Luckin Coffee's dream of overnight success shattered amid investor anger. -01- A Company Designed by Capital Luckin tells a good story. Since its inception, every move has repeatedly excited the market, blowing colorful dream bubbles that are fragile and burst on touch. From the moment Luckin aggressively entered the coffee industry and declared war on Starbucks, it was destined to become a star enterprise with its own brilliance. Letting consumers enjoy higher-quality, lower-priced coffee was the first story Luckin told the market and investors: "Coffee freedom for all Chinese." With crazy subsidy price wars, high-traffic celebrity endorsements, and all-around exposure in subway elevators, the little blue cup quickly became a hit among urban white-collar workers in first- and second-tier cities and in the social circles of young people. Luckin's first battle was well fought, advancing with high morale and widespread acclaim. Even Starbucks, which had quietly cultivated the Chinese market for decades, panicked and partnered with Alibaba to start delivery services, breaking its proud insistence on the "third space." But the coffee industry, when infused with internet flowers, still needs to consider investment and profitability. This is precisely where Luckin has been questioned and criticized. Continuous loss-making subsidies raise doubts that this is not a coffee catering project but rather a pure investment project. How does this project make money? Luckin's second story was to lower coffee prices through new retail, expand market scale, and thus achieve profitability. The most valuable asset here is "traffic." It draws an analogy to projects like Didi Chuxing: if subsidies can cultivate user habits, why not coffee? With China's vast coffee market, when the time comes to harvest traffic, profits will pour in. This second story seemed to make some sense as Didi's subsidy war ended and user stickiness continued to rise. At this point, the ending of Luckin's story was that a cup of coffee in everyone's hand was not a dream. After completing user accumulation with seemingly impressive data, Luckin began its third new story: expanding categories and venturing into unmanned retail. At this moment, Luckin not only followed new tea drink brands like Heytea and Nayuki, starting the Xiaolu Tea business, but also grandly announced the launch of unmanned coffee machines and vending machines, telling the grand ideal of "starting from coffee, making Luckin a part of life." Seemingly about coffee, it had actually deviated from the coffee track. Luckin's DNA remains that of an aggressive internet company. -02- The Impact of Luckin's Disruption on China's Coffee Industry Although the dream shattered overnight, Luckin's entry into the Chinese coffee market reveals the ambitions of similar capital and entrepreneurs lurking behind it. Why did Luckin enter the coffee industry? This also reflects the restlessness of China's coffee market. Many investors and entrepreneurs have rushed into this market, and in recent years, it has reached a climax. Data shows that China's coffee consumption market is growing rapidly, but its global market share remains extremely small, and per capita annual consumption is still far below the global average. Indeed, China's coffee market has huge capacity and is still in its early development stage. If anyone can establish a foothold in this field, this blue ocean market will surely offer generous returns. Although Luckin's original team came from the background of founding China Auto Rental and had no achievements in the coffee industry, it did not prevent the coffee business, as a tempting opportunity, from quickly attracting capital's attention, with large sums of money spent without hesitation. Luckin's rapid expansion path has indeed had a positive impact on the industry and provides lessons that cannot be ignored. Is coffee a worthwhile business? Of course. But Luckin's entry at least shows one thing: the education of China's coffee market is far from sufficient. Luckin is mostly harvesting the existing market and has not changed Chinese consumers' habits. Regarding coffee's development in China, Nestlé and Starbucks should have the most say. They entered China in the 1980s and 1990s and have cultivated the market for decades. They can still steadily operate not because they lack ambition or fail to see the market's potential, but because extensive data support and consumer surveys lead them to follow industry development laws and not rush. Industry insiders say: "The explosive period for the coffee market is far from coming. The current market heat is mostly short-lived. The distorted development history of coffee in China has caused an imbalance in the current coffee market format. The aggressive path is not advisable." -03- The Cold Reality Beneath the Boom in China's Coffee Industry Most data in the coffee industry contains bubbles, lacking professional industry data. It is understood that China's coffee market size is expected to reach 300 billion yuan by 2020, but is this forecast of 300 billion yuan really because more people are drinking coffee? For promoting the popularization and mass development of the coffee industry, Chinese coffee brands have done too little so far. Although brand owners are still striving to make coffee a mass consumer product rather than a luxury, the market for freshly ground coffee is still concentrated in first- and second-tier cities, while lower-tier markets are basically insulated. The opportunity for instant coffee is no longer a trend, and the café format, with its low entry barriers, low industrialization, heavy assets, poor profitability, and non-standard management, makes the coffee industry a paradox: huge potential but chaotic. In addition, the penetration of the catering and convenience store industries into coffee, fierce competition, and insufficient inclusiveness have delayed the emergence of a unicorn in the industry. Overall, beneath the apparent prosperity of the coffee market, the ice has not yet melted, and the growth trend in consumption is not obvious. Coffee companies still have a long way to go. Cultivating and polishing their internal strengths is the only effective medicine to drive the market forward. As for Luckin, suffering such a blow within less than a year of listing will inevitably drain its vitality. Its future development is no longer the version seen in the stories. Tips for reports will be paid 400-2000 yuan upon adoption.