TMTPOST -- Mixue, the Chinese beverage giant behind the ubiquitous ice cream and tea shops across Asia, is gearing up for its second act: coffee.
The Henan-based company is preparing to roll out its coffee brand, Lucky Cup, in Southeast Asia, beginning with five outlets in Malaysia. For Mixue, Malaysia could become the first testing ground for a bold international expansion — one that aims to replicate the company’s home-market success by betting on ultra-low prices.
In China, Lucky Cup has been pitched by founder Zhang Hongfu as “the next Mixue.” At home, the brand has already taken off in lower-tier cities with its 6.6 yuan ($0.90) freshly brewed coffee, undercutting even discount rival Luckin Coffee. With more than 7,000 stores already operating, Lucky Cup has become the country’s fourth-largest freshly brewed coffee chain in just a few years.
But in Southeast Asia — a region with its own deep coffee culture, entrenched local players and fierce price competition — analysts say Lucky Cup faces a far more difficult “away game.”
In Malaysia, Lucky Cup will not only face Starbucks and Luckin Coffee, but also an army of homegrown discount challengers.
Among them is ZUS Coffee, founded in 2019, which has ballooned to more than 580 outlets and markets itself as a tech-savvy, affordable brand with a strong delivery and app ecosystem. Competitors like GIGI Coffee, Bask Bear, and Koppiku have also adopted Luckin-style models with cheap prices, mobile ordering, and grab-and-go formats.
Indonesia and Singapore have their own homegrown versions, too. Jakarta-based Fore Coffee, backed by East Ventures, has over 200 outlets and is preparing for an IPO. Flash Coffee, once a Singaporean unicorn that raised $70 million, aggressively expanded across Southeast Asia before collapsing last year under the weight of weak unit economics and poor product execution.
“Every Southeast Asian country already has its Luckin lookalike,” said one retail analyst in Singapore. “Lucky Cup won’t be able to rely solely on cheap coffee. It needs stronger branding and localized products.”
Southeast Asia’s fragmented markets add another challenge. Unlike China’s unified consumer base, each country has its own established coffee traditions — from Malaysia’s sweet white coffee to Vietnam’s strong drip brew and Thailand’s black coffee, known locally as oliang. The diversity of tastes has allowed local brands to thrive, often tailoring menus to cultural preferences.
Mixue’s overseas coffee push comes as Luckin Coffee itself takes a cautious approach to international growth.
After years of rapid expansion in China, Luckin entered Singapore in 2023 with modest ambitions, opening 47 stores to date. That makes it the city-state’s third-largest coffee chain, trailing Starbucks’ 140-plus stores and Coffee Bean & Tea Leaf’s 70 outlets.
But unlike its domestic market playbook, Luckin has avoided aggressive discounting overseas. Instead, it has focused on brand recognition and premium positioning.
Flash Coffee’s collapse has become a cautionary tale: it expanded too quickly into Indonesia, Thailand, and Hong Kong but struggled with logistics, quality control, and consumer retention. Similarly, newcomer Cotti Coffee — founded by former Luckin executives — has stumbled in Singapore, closing all three of its outlets within months of launch.
“Flash Coffee proved that you can’t just copy-paste the Luckin model abroad,” said an analyst with Momentum Works, a Southeast Asia consultancy. “Mixue will need patience, not just price cuts, if it wants Lucky Cup to survive.”
Where Lucky Cup may have an advantage is in Mixue’s formidable supply chain.
Mixue has already conquered Southeast Asia with its low-cost ice cream and milk tea outlets, expanding from scratch to over 2,600 stores in Indonesia and 1,300 in Vietnam within just three years. The brand became known as the “angel that occupies empty shops” for its ability to quickly open outlets in underutilized retail spaces.
Much of that success is driven not by franchise fees but by supply chain integration. Mixue makes money by selling equipment, ingredients, and logistics services to franchisees. The more stores it opens, the more it earns.
Lucky Cup can plug into that same system. In China, Lucky Cup’s ultra-cheap coffee is made viable by leveraging Mixue’s warehouses and logistics network. The company even opened its Lanzhou distribution hub to Lucky Cup, helping it reach remote areas like Qinghai.
In Southeast Asia, Mixue has already built distribution channels in Indonesia and Vietnam that Lucky Cup can tap into, significantly lowering its per-store costs compared with competitors.
Still, questions remain over whether Southeast Asia’s coffee consumption is large enough to support the dozens of chains jostling for position.
According to Momentum Works, Indonesia’s coffee market is worth about $947 million, while Thailand’s is around $807 million. Combined, that is less than 5% of the Chinese market.
Even Luckin Coffee is losing money overseas. In the first three quarters of 2024, its Singapore revenue reached 91.4 million yuan ($12.6 million), but expenses hit 167.7 million yuan ($23.1 million). Luckin has acknowledged it must “reach considerable scale” before international operations turn profitable.
For Mixue’s Lucky Cup, success may not hinge on store-level profits alone. As long as it can expand its supply chain footprint, it can still generate income from equipment and ingredient sales to franchisees, a model that has fueled Mixue’s own explosive growth.
Ultimately, Lucky Cup’s international strategy looks set to replicate its Chinese playbook: expand fast, undercut rivals, and capture market share through scale.
In China, Lucky Cup underpriced Luckin Coffee’s 9.9 yuan ($1.35) lattes by launching 6.6 yuan ($0.90) versions, sparking a new round of price wars. That strategy allowed the chain to become the country’s No. 4 coffee brand without even entering first-tier cities like Beijing and Shanghai.
Analysts say a similar strategy could work in Malaysia, where Lucky Cup’s sub-$1.50 coffee would undercut rivals like Starbucks, Luckin, and even local players such as ZUS Coffee.
But the brand faces a tougher challenge in terms of marketing and consumer loyalty. Unlike Mixue’s ice cream and lemonade, which thrive in hot climates and appeal across age groups, Lucky Cup doesn’t yet have blockbuster products or strong brand recognition.
“Low prices alone won’t win Southeast Asia,” said a Kuala Lumpur-based consumer analyst. “People here already have affordable coffee options. Mixue has to localize, innovate, and create buzz, otherwise Lucky Cup risks being just another budget chain.”
Mixue’s ambitions may not stop in Malaysia. Analysts believe Southeast Asia could serve as a springboard for global expansion, especially as rivals like Luckin eye the U.S. market and Cotti Coffee looks to Japan, South Korea, and the Middle East.
For now, Lucky Cup’s Malaysia launch will be closely watched by investors, competitors, and franchise operators alike. If Mixue can replicate its tea-and-ice-cream miracle in coffee, it could cement its reputation as China’s most formidable global food-and-beverage brand.
“Mixue has already proven it can scale faster than anyone else in Southeast Asia,” one analyst said. “Now the question is whether Lucky Cup can do the same in coffee, or whether the region is already too crowded with copycats.”
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