What happened
Many young Chinese people are tasting their first cup of luxury liquor — Kweichow Moutai — at domestic café chain Luckin Coffee.
The two beverage giants partnered up to co-create a new flavor of latte, Moutai Latte (酱香拿铁), which was released today. The collaboration was an instant hit, with long queues forming outside the 10,000-plus Luckin coffee shops distributed across China, and several related hashtags topping Weibo’s Hot List, each with over 100 million views. For instance, the Luckin Coffee Real Moutai (瑞幸 真茅台) hashtag has amassed over 120 million views on Weibo to date.
According to the official online release, ‘Moutai Latte’ is made with a liquor-flavored milk that contains Kweichow Moutai. The level of alcohol in the beverage is less than 0.50 percent, making it acceptable for young cohorts trying it for the first time.
Price-wise, the tie-up is pocket-friendly. A cup costs 38 RMB ($5.3), and if paired with coupons as little as $2.6 (19 RMB), which widens the beverage’s appeal.
The surprising partnership has taken Chinese social media by storm. Weibo user @Yuexiwu commented that her WeChat’s Friend’s post feeds “are dominated by this Moutai Latte.”
The Jing Take
Kweichow Moutai, produced by state-owned Kweichow Moutai Company, is a high-end liquor, traditionally beloved by middle-aged and older people, and usually served at important gatherings. However, young Chinese are rejecting these baijiu, or white spirit brands believed to be more for seniors rather than the young. Instead, coffee is becoming the favored beverage by young consumers.
Through the partnership with Luckin Coffee, Moutai is using a fresh way to popularize its product’s taste and brand among China’s younger demographic. More than a PR stunt, the collaboration is a shrewd strategy for Moutai to lay the foundation for future sales.
On the one hand, Kweichow Moutai Company has bigger ambitions. The spirits giant hopes to expand from the alcohol category to the food industry. Since setting foot in the ice cream sector in 2021, when it collaborated with homegrown diary label Meng Niu, Moutai-flavored ice cream has been sold in over 160 Chinese cities. In May this year, the chairman of Moutai group, Ding Xiong Jun, claimed sales of Moutai ice cream had hit nearly 10 million cups, priced at $9 (66 RMB) per cup.
Meanwhile, in 2023, Luckin Coffee surpassed Starbucks’ sales in China for the first time, thanks to its rapid expansion. Luckin reported an impressive 88 percent year-on-year increase in revenue in the second quarter of 2023, amounting to $862 million (6.2 billion RMB), surpassing Starbucks’ sales by more than $27.5 million (200 million RMB). No wonder Moutai chose Luckin to engage China’s young consumers.
The collaboration seems to be a winning formula for both. The high-low partnership has tapped China’s guochao trend, offered surprise, delight, and nostalgia for consumers, and earned both brands new virality.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.