Luckin Coffee Signs Agreement for Joint Venture

Luckin Coffee (LK) is looking to expand to the Middle East and India in the chain’s first foray outside of its home market of China.

Beijing-based Luckin, which raised $571 million in a May initial public offering, said on Monday that it signed a memorandum of understanding with Kuwaiti food company Americana Group under which they will create a joint venture to launch a retail coffee business in the greater Middle East and India.

Luckin, which was up 5.1% in afternoon trading, said Americana is the largest integrated food company in the Middle East.

“This collaboration represents Luckin Coffee’s first step toward bringing its leading products from China to the world,” said Chief Executive Jenny Qian Zhiya. “We look forward to further expanding the freshly brewed coffee market internationally as we realize the incredible growth opportunities available to us through our innovative business model.”

Two-year-old Luckin has grown to be the second-biggest coffee shop chain in China, rivaling Starbucks (SBUX) with smaller outlets focused on pick-up options and mobile applications for customers. The company has said it has more than 3,000 stores across 40 Chinese cities, and it plans to open more than 4,500 stores by the end of the year to make it the country’s largest coffee chain.

‘We at Americana believe this MoU will revolutionize the food and beverage retail industry in the Greater Middle East and India, regions that provide promising prospects for new retail growth and expansion,” said Americana CEO Kesri Kapur. “We have worked with many leading and revolutionary food and beverage brands over our history and believe that Luckin Coffee’s superior products, experience and services will deliver success in these regions.”

Luckin is planning to boost its customer base in the young demographics sector by launching more than 10 tea-based drinks, the Xinhua News Agency reported on July 8.

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