Luckin Coffee(US:LKNCY)2025-10-13 01:00Summary of Key Points from the Expert Call on China's Freshly Made Drink (FMD) Market Industry Overview - The discussion focused on the freshly made drink (FMD) market in China, particularly the performance of brands like Luckin, Cotti, and Chagee in Guangdong province [1][2]. Core Insights Sales Performance - Cotti: Experienced a 50% sequential drop in delivery volume due to normalization of platform subsidies, particularly from JD [1][7]. Current daily order volume is approximately 350 cups, down from around 500 cups in May-June [9]. - Luckin: Saw sequential order volume growth in Q3, supported by participation in the Pin Hao Fan channel since July, despite a decline in average selling price (ASP) to RMB 10-11 per cup from approximately RMB 13 last year [1][8]. - Chagee: Maintained a stable daily volume of around 600 cups, with a net profit margin of 10%-15% [1][10]. Profitability Trends - Cotti: Net profit margin dropped significantly to below 15% from 25% when volumes were higher [9]. - Luckin: Net profit margin declined to 8%-10% from 10%-12% in June due to a higher delivery mix [1][8]. - Chagee: Profitability remained stable as the brand did not engage in subsidy activities [1][10]. Brand Comments - Luckin: Noted for its strong digital operation capabilities, including flexible discounting and precise ingredient preparation, contributing to its better performance compared to Cotti [1][8]. - Cotti: Faces challenges due to low customer loyalty and lack of hit products, with an estimated 10% of its stores operating at a loss, potentially leading to closures [1][9]. - Chagee: Experiencing pressure from declining product momentum and increased competition, but plans to keep stores open as long as they remain profitable [1][10]. Additional Insights - Subsidy Trends: The normalization of subsidies has impacted profitability across brands, with JD's per order profit declining to levels similar to Ele.me due to reduced subsidies [1][7]. - Market Competition: Intense price competition persists, but the expert believes current prices may be at the bottom, with no further declines expected as the off-peak season approaches [1][13]. - Future Store Openings: The expert expressed reluctance to open new stores due to intensified competition, preferring to consider Mixue stores if opportunities arise [1][12]. Conclusion - The FMD market in China is experiencing divergent performance among key players, influenced by subsidy normalization, competitive pressures, and brand-specific operational efficiencies. The expert's insights highlight the need for brands to adapt to changing market dynamics to maintain profitability and market share [1].