SHANGHAI (Reuters) - Food giant Nestle NESN.S on Thursday started selling Starbucks-branded SBUX.O coffee in mainland China, seeking to tap growth in a market where it says coffee consumption per capita remains low compared to global standards. Nestle last year paid $7.15 billion for exclusive rights to sell the U.S. chain’s coffees and teas globally, and began selling Starbucks-labelled products in Europe, Asia and Latin America in February. The world's largest food company will start selling 21 Starbucks-branded capsule and instant coffee products on Chinese e-commerce platforms like Alibaba's BABA.N Tmall and JD.com JD.O, as well as to offices and hotels in tier-1 cities, both companies said. “We believe China is the most exciting market in general but especially for coffee because... per capita cup consumption is quite low as compared to Asia,” said Rashid Aleem Qureshi, Nestle’s chief executive officer for the Greater China region. “Right now the overall soluble coffee in China is growing between 3-5% (a year) and we believe that by bringing this exciting new business opportunity we should be able to grow faster than that,” he said, referring to a category that includes capsule and instant coffee. Nestle’s move comes as the Swiss company experienced a slower first-half growth in China, its second-largest market, where other categories like mainstream baby foods have struggled compared to pricier options. China’s per capita coffee consumption is about 6 cups a year, compared to 400 in Japan and 300 in South Korea, Nestle said. The partnership with Starbucks would help Nestle add a premium coffee option to the range of products it already sells in China, such as Nescafe instant coffee range and Nespresso capsule coffees, Qureshi said. Starbucks China CEO Belinda Wong said the Nestle deal would open two new avenues to sell its products in China, where it has been investing heavily in its store network and delivery amid tougher competition from local startups.

Luckin continues to expand at jaw-dropping speed as it announced plans to open shop overseas for the first time. On Monday, the Starbucks challenger from China said it has signed a memorandum of understanding to set up a joint venture with Americana Group, a major international food group. The deal will see Luckin launch a new retail coffee business in the Greater Middle East region and India, said the company that in May took public its 18-month-old business. Its partner has a far longer track record. Founded in Kuwait more than 50 years ago, Americana owns the local franchises of KFC, Pizza Hut, Friday’s, Costa Coffee and other prominent casual dining brands across the Middle East and North Africa. Luckin did not provide further details of this new venture and a spokesperson for the company declined to comment when contacted by TechCrunch. But there’s still a lot to read into its international foray. For one, Chinese companies have had a growing presence in the Middle East and India in recent times as Beijing puts forward its Belt and Road infrastructure development and investment initiative. Notably, the MoU between Luckin and Americana was signed with both Chinese and Arab government officials in attendance. Chinese tech giants have already taken notice of the regions. Alibaba is active in the Middle East with its cloud computing business. Up-and-coming Chinese app developers such as ByteDance run the immensely popular TikTok and Helo in India. These countries are also blessed with emerging middle-class populations, the demographic that Luckin targets back home. In China, the coffee startup is known for shelling out large subsidies to lure millions of tea drinkers into trying its coffee beverages. Instead of attracting them to sit and relax at Starbucks-like retail stores, Luckin relies on a massive network of pickup points and delivery staff — which allows it to save on rent and take advantage of China’s relatively cheap labor — to complete orders. Luckin also owns a massive amount of user data, as all orders and payments take place over its app. It can be imagined how the Chinese startup sets out to replicate this digital-first model in places with booming internet populations. Like China, India is historically a nation of tea lovers that’s experiencing rapid growth for coffee consumption. The beverage scene is crowded with popular tea brands like Chaayos and foreign players that team up with local companies to gain an upper hand. Even international coffee behemoth Starbucks is no exception as it works closely with Indian conglomerate Tata to operate more than 130 stores. “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 Group chief executive officer Kesri Kapur in a statement. Luckin CEO Qian Zhiya noted that her company looks “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 startup has indeed recorded months of stunning growth, but it is also facing skepticism from investors who are put off by its continued cash burn with no plans to achieve profitability on the horizon. Luckin is aiming to double its China-based operations from just over 2,000 locations to 4,500 by 2019, and its new global ambition is set to even further test investor patience.

BEIJING (Reuters) - Chinese coffee startup Luckin is aiming to open 2,500 new stores this year and overtake Starbucks Corp SBUX.O as the largest coffee chain by number of outlets in the world's second-biggest economy, it said on Thursday. The firm, which only officially launched its business at the start of last year, has expanded at breakneck speed, propelled by a focus on technology, delivery, and heavy discounting even at the cost of mounting losses. “What we want at the moment is scale and speed,” Luckin’s chief marketing officer, Yang Fei, told reporters on Thursday at a presentation in Beijing. “There’s no point talking about profit,” he said, adding that subsidies to lure in more users would be an important part of the firm’s strategy for the next few years. Luckin said it was targeting a total of more than 4,500 stores by the end of 2019, which would take it past Seattle-based Starbucks that has long dominated China’s coffee scene and has over 3,600 stores in the country. Luckin’s caffeine-fuelled expansion is in stark contrast to Starbucks, which opened its first China store in 1999 and has spent two decades reaching its current store count. The U.S. chain, which spearheaded the growth of a coffee culture in China, started to see competition rise from smaller peers over the last 18 months, though Luckin has stood out as the most aggressive competitor. But Luckin’s rise has not come cheaply. The firm recorded a loss of 800 million yuan ($116.34 million) last year, which its chief marketing officer said was in line with expectations as it pushed to expand. Luckin, backed by Singapore sovereign wealth fund GIC Pte Ltd and China International Capital Corp Ltd 3908.HK, opened more than 2,000 locations in the last year, gaining a valuation of $2.2 billion after raising $200 million in a funding round last month. The firm’s chief executive, Qian Zhiya, told Reuters last year that Luckin aimed to outnumber Starbucks in China. Reuters previously reported that Luckin was also in early-stage talks with investment banks about an overseas initial public offering. The firm, however, declined to answer questions about IPO plans on Thursday.