Luckin Partners With Americana Group in First Overseas Venture
Shares in the coffee chain, which seeks to outnumber Starbucks' locations in China, jumped 7 percent on the announcement of its overseas growth.
Luckin Coffee Inc. (Nasdaq: LK) announced it has taken the first step to grow overseas in a partnership with a Kuwait-based company in the Middle East and India, sending its shares up more than 6 percent, to $21.35 apiece, on Monday afternoon in New York.
The Xiamen-based coffee chain has signed a deal with Kuwait Food Company Americana K.S.C.C., the largest food provider in the Middle East, to collaborate in a joint venture on the establishment of the coffee business, with both Chinese and Arab government officials in attendance.
Jenny Zhiya Qian, the chief executive of Luckin Coffee, said the deal marked the company's first step in expanding outside China with its products.
In contrast to Luckin's two-year operating record, Americana Group has been around since 1964. The giant owns 1,900 restaurants in 13 markets and 25 food production sites across the UAE, Saudi Arabia, Kuwait and Egypt.
"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," Kesri Kapur, the chief executive officer of Americana Group, said in a statement.
He also stated, "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.
Qian added, "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."
The Arabs' preference toward coffee can be illustrated by a classical Arabic Abd al-Khadir ode to coffee, which calls it "the beverage of the friends of God."
There are more than 9,084 branded coffee shops in the Middle East, with Turkey having the most locations in 2018, according to Allegra World Coffee Portal. Starbucks, Dunkin' and Coca-Cola-owned Costa Coffee are the three largest chains throughout the Middle East market.
Luckin's rival, Starbucks (Nasdaq: SBUX), operated 453, 186 and 166 stores in Turkey, UAE-Dubai and Saudi Arabia, respectively, in the fourth quarter of 2018.
Luckin completed its initial public offering in New York on May 17, raising $561 million.