What’s your coffee brand of choice?
Me, as sophisticated as your favorite, stock-recommending gorilla is – a lot of the “fancy” stuff – just tastes burnt to me.
When it comes to coffee…
I’ll take the cheap stuff.
Guess you can take the gorilla out of the lowlands – but you can’t take the lowlands out of the gorilla.
That said…
Every once in a while – when the wind is right – I’ll drive through one of the big chain companies to get my hit of caffeine.
I tend to steer away from that popular Seattle chain…
Again, it’s too fancy.
And while I like Boston’s offering to the coffee world – there may be a few new choices we’re going to have to think about.
China’s getting ready to import its own coffee houses here in the US and there’s a battle for coffee dominance already brewing…
Just wait until the new challengers hit your neighborhood.
Who will you choose?
Let’s just jump into it…
Two of China’s biggest caffeine powerhouses – Luckin Coffee and Cotti Coffee – have just kicked off their bold expansion into the US – and they’re bringing more than just beans.
They’re bringing a pricing strategy so aggressive it might just give Starbucks (SBUX) a tension headache it can’t ignore.
These aren’t your typical boutique cafes…
Luckin, which shook off a financial scandal years ago to become China’s top coffee chain – and Cotti, founded by ex-Luckin execs – have grown into low-cost coffee empires across China by perfecting a brutal formula: cheap prices, creative flavors, and volume-based blitzkrieg expansion.
One of Luckin’s recent novelty drinks – an alcohol-infused latte – sold a staggering 5 million cups in a single day.
Now, both companies have set their sights on the US market…
Starting with New York City – where Cotti has already opened its first locations – and Luckin is prepping for launch.
But this isn’t just a cultural exchange…
It’s a full-blown pricing war.
Cotti kicked off its debut with 99-cent coffee deals for customers who downloaded their app – a loyalty play that Starbucks, with its beloved but higher-priced ecosystem – may not be thrilled to match.
In China, Luckin and Cotti have thrived by turning cost-cutting into an art form.
They slashed menu prices, used app-based ordering to cut down on overhead and rode a wave of digital payments and minimal seating layouts to scale rapidly.
But here’s the rub: US costs are different.
Rent, labor and regulatory compliance in major cities is significantly higher than in China…
Meaning their low-cost model might be tougher to pull off on American soil.
Still, consumer habits are changing – and if there’s one thing the
US market has made clear post-2020…
It’s that value wins.
If Luckin and Cotti can even half-replicate their Chinese playbook…
They don’t need to crush Starbucks – they just need to peel off price-sensitive customers – of which there are plenty in this inflation-heavy economy.
But…
Let’s not forget: this is not the first time Chinese companies have dropped in low and left a crater.
Just look at Temu and Shein – who blindsided Amazon (AMZN) and fast fashion retailers by undercutting prices, flooding social media and optimizing app engagement.
Neither turned immediate profits – but they bought market share fast – betting the long-term value would outweigh the short-term loss.
Luckin and Cotti are doing the same thing with coffee…
And as we’ve seen, cash-burning strategies work – until they don’t.
For now, though, they’ve got momentum, attention, and a freshly brewed war chest.
Starbucks, sensing the pressure – already announced price cuts in China to remain competitive…
But now, its domestic margins are in the crosshairs too.
The fact is – Starbucks can’t afford to play the 99-cent game without bleeding – but it’s going to have to if it wants to survive.
As an investor – I’m ready for it…
Competition means opportunity – and if you want to be in the driver’s seat when the Coffee Wars begin – then you might want to consider becoming a member of GorillaTrades.
Our trading strategy is simple – let the data and numbers tell us if a company is a profit opportunity or a lame duck.
We don’t care about hype or momentum – just the actual numbers behind the company. I’d love to explain how we do that – but it’s so much easier to show you.
Which is why I’m asking you to become a GorillaTrades member today.
If not, we understand…
Just keep in mind we’re always here if you need a little help.
Either way, keep your eyes on this coffee war that’s brewing…
It’s liable to get HOT!
“Disruption doesn’t ask for permission. It just shows up and takes your seat.” – Anonymous
