Recently, the coffee market can be described as full of gunpowder, the shadow of the price war of nine pieces and nine almost enveloped the entire market, Cudi is like a catfish as a rapid layout, when Luckin has no support to withdraw from the war group, Cudi announced the extension of the subsidy policy, can Cudi who wants to fight with Luckin for another two years do it?
1. Cudi Coffee wants to extend the subsidy policy?
According to Jiemian News, Cudi Coffee announced that the current store subsidy policy will be extended to December 31, 2026, covering existing stores and new stores in the future, different stores can receive different amounts of subsidies according to different factors such as rent and competition, and the maximum single cup can be subsidized to 14 yuan.
Cudi Coffee told Jiemian News that the extension of the subsidy policy for the associated stores will further ensure and improve the profitability of the stores.
This means that Cudi Coffee intends to continue the price war for two more years. The timing of this point may be due to the fact that Guo Jinyi, chairman and CEO of Luckin Coffee, announced at the performance communication meeting in the second quarter of 2023 that he would normalize the 9.9 yuan activity and "decided that this activity will last for at least two years".
But at present, the attitude of the two brands, Cudi and Luckin, towards the price war of 9.9 yuan seems to have changed. After resuming work after the Spring Festival holiday on February 18, Jiemian News reported that Luckin Coffee's weekly "9.9 yuan coffee" promotion launched in May last year is decreasing, and there are only 10 products that can use 9.9 yuan coupons on the APP. The topic of "Luckin 9.9 yuan a cup of activity shrinks" once appeared on Weibo hot search.
Subsequently, Cudi Coffee reacted quickly to this. On February 26, 2024, Cudi Coffee announced the launch of the "Good Coffee 9.9 Unlimited" promotion for three months as the number of stores worldwide reaches 7,000. During the event, except for a few stores such as transportation hubs and tourist attractions, all other stores will have a 9.9 yuan promotion for drinks, with no restrictions on categories and quantities.
2. Can Cudi, who wants to fight Luckin for another 2 years, do it?
In today's competitive coffee market, Cudi Coffee's announcement of the extension of its current store subsidy policy until December 31, 2026 has undoubtedly made waves in the industry. Cudi Coffee's move seems to be intended to engage in a more protracted price war with rivals such as Luckin Coffee in order to achieve a bigger breakthrough in market share. However, after fighting with Luckin for another 2 years, can Cudi Coffee really stand out in this fierce competition?
First of all, Cudi Coffee's decision to extend the store subsidy policy until the end of 2026 may seem aggressive, but in fact it contains a well-thought-out marketing strategy. As a new project of the former team of the founders of Luckin Coffee, Cudi Coffee has a strong competitive color from the beginning, trying to find its foothold in the market that Luckin has explored. The similar operating models and market strategies of the two make this "battle for the same door" particularly intense. Cudi's continuation of the subsidy policy is a reference to Luckin's successful experience on the one hand, and on the other hand, it is also an attempt to quickly attract and lock in user groups and build brand loyalty through price advantages in the context of market saturation and intensified competition.
Secondly, the current Chinese coffee market is in a stage of rapid growth, but at the same time, it is accompanied by a high degree of competition. Luckin's phased retreat and Starbucks' proactive response reveal that the market is undergoing a profound change. For new entrants such as Cudi Coffee, direct participation in the price war is not only to compete for market share in the short term, but also to establish brand influence in the market and build its own moat. Although the price war is a double-edged sword, before the market has formed a stable oligopoly pattern, attracting traffic through subsidies can be an effective means to quickly increase popularity and user base.
The peculiarity of the coffee market is that it is both a daily consumer product and a lifestyle embodiment. Therefore, for consumers, price wars are not only about economic interests, but also about consumer experience and brand identity. By continuing the subsidy, Cudi Coffee is essentially cultivating consumer habits, and once a stable consumption habit is formed, even if the subsidy is gradually reduced in the future, it can maintain a certain degree of customer stickiness.
Third, the key to maintaining a long-term subsidy policy is whether Cudi Coffee can effectively control costs and optimize the supply chain. A cup of coffee of 9.9 yuan may seem difficult to make a profit on the surface, but in essence, it is an extreme challenge to the company's supply chain integration ability and cost management efficiency. Cudi needs to achieve the ultimate cost savings in all aspects of raw material procurement, logistics and distribution, store operations, etc., while ensuring that product quality does not deteriorate, which requires the company to have a strong supply chain management system and refined operation capabilities.
Supply chain optimization may include working directly with the coffee bean originator to reduce intermediaries; Adopt an advanced inventory management system to reduce wastage; and predicting demand through big data analytics to avoid overproduction and inventory overstocking. In addition, the construction of an efficient logistics system is also an important part of reducing costs, which can ensure the rapid delivery of products and reduce logistics costs.
Fourth, from the consumer's point of view, the price war has undoubtedly brought benefits, making coffee, a beverage that was originally regarded as a light luxury, more accessible. However, a long-term low-price strategy can also have some negative consequences. On the one hand, consumers may question the image of the brand, believing that low price equals low quality, which is not conducive to the shaping of brand image. On the other hand, price wars may lead to excessive competition in the market, affect the healthy development of the industry, and ultimately damage the interests of consumers, such as the decline in product quality due to excessive cost compression by enterprises.
Therefore, the extension of the subsidy policy for Cudi Coffee is a challenging decision. While engaging in price wars with competitors such as Luckin Coffee, Cudi Coffee needs to continuously improve its supply chain and cost control capabilities, only in this way can it ensure that Cudi Coffee has the last laugh in the price war. #记录我的2024#