Malaysia’s coffee chain war escalates with Luckin entry

This column was first published on The Malaysianist, a weekly guide to understanding Malaysia’s current affairs that focuses on money and power. It was edited to reflect Tech in Asia’s editorial guidelines.

There’s a brewing battle for market share between international and local coffee chains in Malaysia.

The latest to throw its hat into the ring is China-based Luckin Coffee. The writing was on the wall for Malaysian players that one day they’d have to reckon with competition from China.

Luckin will be partnering with a Bursa-listed partner to enter the Malaysian market, according to The Edge, which stopped short of revealing said collaborator.

Who is this partner? Industry sources point to businessman Eddie Ong, who controls a number of publicly listed entities under the Hextar Group. Ong declined to comment when asked about the partnership.

Luckin’s entry into Malaysia points to how this mushrooming of coffee brands in the country isn’t just about coffee. It’s also a play on pricing, convenience, location, and merchandise.

Luckin charm

Luckin’s foray into Malaysia comes at a time when the China-based firm is looking overseas to expand. Just like Malaysia’s, China’s coffee scene is hypercompetitive but at a crazier scale.

Malaysia will be Luckin’s second Southeast Asian country after Singapore, and with that ambition brings the terror of aggressive expansion.

Founded in 2017, Luckin operates 18,590 stores worldwide, excluding unmanned machines, as of March 31 this year. Its rival Cotti has about 7,000 stores globally.

After listing on the Nasdaq in 2019, Luckin would be exposed for fabricating sales figures, leading to its subsequent delisting and its founders being fired. The company would declare bankruptcy, but it then restructured and achieved net profit in 2022.

And if things couldn’t get any more extraordinary, in 2023, Luckin surpassed Starbucks as the largest coffee chain in China.

Expansion favorite

Wither differentiation?