A few things on my radar #18
Luckin, Yunnan Coffee and PDL
Another episode was written on my iPhone, without images or source links. Sorry about that. The missing content will be added after I finish my travels. ✈️
Luckin ☕️🇺🇸
Luckin's first US store will open soon, despite tariff headwinds
Tariffs haven't impacted Luckin's overseas expansion plans. Luckin is currently hiring in the US and preparing stores for opening in NY.
Notably, Luckin has now surpassed Starbucks in domestic revenue, boasting an enormous store network and matching Starbucks's 8%–10% net profit margin.
To understand Luckin, we must set aside our preconceptions. The image of "low-price, low-quality" has caused many to overlook their powerful business model.
I see Luckin's model as analogous to TikTok — large-scale, high-density, low-cost store networks (big data) with data-driven and continuously evolving product development methodology (algorithms) and consumer-centric products (dopamine content)
You might wonder: how can coffee products be developed using the TikTok model? How does that work? It sounds like tricky propaganda.
Actually - when it comes to traditional coffee, such as Americano, latte or flat white, which relies on the inherent flavors of coffee beans as an agricultural product, it's impossible to use the TikTok model for product development. This is because the trend amid this sector is usually dominated by agricultural suppliers rather than consumers.
Even if new ideas emerge from the data, they're constrained by long growing cycles, and unpredictable weathers, meaning only a select few ideas can be implemented. Not to mention many farm owners today even stick to their own aesthetic preferences and end up educating consumers rather than the other way around.
However, Luckin's creative coffee beverages aren't centered around coffee flavors but rather on the synergy of multiple ingredients. This gives them a much broader, almost unlimited supply chain options - fruits, syrups, juices, tea, alcohol, carbonated drinks, almost any food ingredient can become part of their formula, as long as the final product tastes good.
In this model, consumers have regained their voice over green beans suppliers. When big data reveals consumer tastes and preferences, Luckin can quickly source the corresponding ingredients and develop matching recipes. Through continuously evolving data models, their innovation methodology and final product quality keep improving, allowing them to constantly meet and even exceed consumer expectations.
This explains why Luckin's flagship products aren't traditional coffee, but always creative coffee beverages — where consumer side has more influence. This isn't to say Luckin doesn't understand traditional coffee; on the contrary, their classic products rival Starbucks, but since this doesn't showcase their core competency and differentiation, it's not their main focus, at least for now.
Clearly, Luckin has already created its own game — it's the TikTok of the coffee world, an extremely data-driven brand, not a mini or cheap version of Starbucks as many perceived.
In the end — I advise all Luckin’s competitors, including Starbucks, not to imitate Luckin, at all, just as one shouldn't try to copy TikTok - it's futile. Unless they can fundamentally disrupt TikTok's underlying logic, or resort to robbery directly like Trump, merely catching up and superficial imitation will never lead to victory in the game Luckin has created.
Yunnan Coffee ☕️ 🇨🇳
The Gems of Yunnan CoE pilot will be held in Yunnan this May
The Cup of Excellence (CoE) is the most prestigious and widely recognized auction program for specialty coffee. Operated by the non-profit Alliance for Coffee Exellebce since 1999, CoE auctions now operate in 17 coffee-producing countries and represent the industry's most rigorous and internationally respected competitions.
This Yunnan CoE pilot is China's first adoption of the CoE mechanism, aligning Yunnan with international standards for green coffee evaluation and auctions, and paving the way for future official CoE in the region.
“Anyone asking whether Chinese coffee can compete internationally is a few years too late,” Jake, a guy working in Yunnan Roasters, says. “It already is.”
Compared to established coffee regions, Yunnan's soil conditions are less than ideal. As a traditional tea region, its coffee often carries an earthiness that impacts taste quality.
However, thanks to ongoing improvements in soil conditions, bean cultivation, and processing techniques, I've noticed some quality Yunnan beans emerging since last year. When properly roasted and brewed, some beans produce quite enjoyable cups—featuring prominent sweetness and distinctive tea-like notes. While such high-quality beans remain the minority and require careful selection, their emergence signals meaningful progress.
Think large — This reveals what makes China's coffee industry unique — besides having a rapidly growing consumer market and coffee brands that rival Starbucks, it's also about to have world-class coffee-growing regions. I don't think I've seen any other country that has all of these assets simultaneously.
PDL 🥬🥩
PDL now shares sales data on its website making its operations more transparent
PangDongLai (胖东来, or PDL) is a regional grocery retail with an excellent reputation for its honest business practices, unbeatable product, service quality and employee welfare and is one of the best-known retailers in China.
PDL, whose model many people want to learn but is perceived almost impossible to replicate eventually, has recently begun making its operational information more transparent, further strengthening its reputation for integrity and transparent management — everyone now can find sales data, employee turnover rates, and management philosophy on its official website » https://www.azpdl.cn
PDL is a business miracle born in Xuchang, a fourth-tier city in China's interior.
In a country struggling with deception, distrust, and food safety issues, this extraordinary company has remarkably won consumers' hearts through honesty, transparency, quality, and values centered on love and freedom.
Most astounding is PDL's unconventional profit distribution model: despite annual revenue exceeding 10 billion yuan, the company gives 95% of profits to employees and offers an average of 40 days annual leave. This might explain why it can't be easily replicated — such love and freedom values aren't mere slogans but principles put into genuine practice, which contradicts the common private business philosophy of maximizing shareholder value.
Like the Luckin is like TikTok mental model. I have similar thoughts on them, but did not come up with such a clever name!