This is an English adaptation of a FoodBud historical article originally published on August 15, 2023.
Cotti Coffee has opened its first Indonesia store in Jakarta's Kuningan City Mall, adding Southeast Asia to an overseas rollout that had just begun in South Korea.
The move puts another Chinese coffee chain into the region. Luckin Coffee entered Singapore in late March 2023 and had opened about 12 stores there by mid-August 2023. Cotti, meanwhile, was reported to be targeting 400 stores in Indonesia in 2023.
Cotti Coffee was founded in October 2022 by Luckin Coffee co-founders Lu Zhengyao and Qian Zhiya, together with former core Luckin team members. In just over nine months, it had opened 5,000 stores in China. Its first overseas store opened recently in Seoul, followed one week later by the Indonesia debut.
At the Jakarta store, all drinks were priced at IDR18,000, about RMB8.5. Cotti also launched an Indonesia app for ordering. New users could receive coupons, with a reported first-cup price of IDR2,000, about RMB0.95. Customers inviting friends to register and place a first order could receive a free coffee.
Cotti's stated priority markets include Japan, South Korea and Southeast Asia. Its second South Korea store was under preparation, its first Tokyo store was also preparing to open, and it was recruiting partners in Thailand and Singapore. Overseas, Cotti was reported to be using a mix of directly operated stores, joint-operation stores and regional partner models.
Indonesia's coffee market has clear demand-side momentum. A Fitch Solutions report cited in the source article projected Indonesian consumer spending on coffee to grow at an average rate of 8.2% in the coming years, from US$1.7 billion in 2020 to US$2.2 billion in 2024.
Local consumer habits also support the category. Elisa Suteja, an Indonesian previously interviewed by 7.5 Degree, described coffee as one of the country's most common drinks: instant coffee was common at home, Starbucks became aspirational during university, and fresh-brewed coffee became a daily habit after entering the workforce.
Cotti still faces a broad competitor set. Starbucks held the largest share of Indonesia's coffee-chain market, at more than 45%. As of August 2022, Starbucks had more than 500 stores in Indonesia across 36 cities, making Indonesia its 10th-largest global market.
Local and regional competitors include:
A Jakarta-based Chinese resident using the pseudonym Leo said Indonesia already has a strong coffee culture, including cheap street coffee at around IDR4,000, or about RMB2, per cup. Indonesia also has distinctive local formats, including coffee served with heated charcoal.
Fore Coffee CEO Vico Lomar told 7.5 Degree that Starbucks' gross margin in Indonesia could reach 72%, while most Indonesian coffee players were below 60%, leaving room for improvement. For Cotti, the open question is whether a low-price strategy can preserve enough margin in a crowded market.
Cotti's Indonesia opening extends its competition with Luckin from China into Southeast Asia, although the two had not yet met head-to-head in the same overseas market.
Luckin opened two Singapore stores in March 2023, entering trial operation. Singapore was its first city outside China. By mid-August 2023, it had about 12 Singapore stores. Cotti had not yet opened in Singapore, but recruitment staff said a Singapore store was being prepared.
Leo, who had also lived and worked in Singapore, argued that Indonesia may be a better fit for Chinese coffee chains: the market is larger, the consumer base is broader, and coffee spans a wider price range, from IDR4,000 to IDR50,000, about RMB2 to RMB25. By contrast, he saw Singapore as more mature and fixed, with fewer open opportunities.
The price positioning differs by market. In Singapore, Luckin's regular listed price for a coconut latte was around SGD6.4, about RMB34, aside from opening and app-referral discounts. Cotti's drinks in Indonesia and South Korea were generally priced around RMB8.
Operating models also differ. Luckin's Singapore stores were self-operated. Analysts cited in the source article said this could help protect product quality and long-term brand image. Cotti, by contrast, was reported to be combining direct operation, joint operation and regional partners overseas while recruiting overseas joint operators and regional partners.
Luckin remained the larger player in China. According to its financial report, Luckin passed 10,000 stores in June 2023. As of June 30, 2023, it had 10,836 stores: 10,829 in China and 7 in Singapore at that reporting date, later rising to about 12 Singapore stores. Its network included 7,188 self-operated stores and 3,648 partnership stores.
By the end of 2022, Luckin had become China's largest coffee-chain brand by store count, clearly ahead of Starbucks China, which operated about 6,090 stores.
Cotti, however, was expanding faster in its early stage. It had already reached 5,000 domestic stores, implying more than 550 new stores per month on average. By comparison, Luckin opened a new store every six days on average in 2022; in its own early years, it reached more than 2,000 stores after one year and took about two years to reach 5,000.
Analysts cited in the source article attributed Cotti's rapid growth partly to a lower-priced alternative-to-Luckin positioning. New Cotti stores offered promotional drink prices of RMB9.9, later generally moving to RMB15-20. Luckin's pricing was generally around RMB15-25.
Cotti's joint-operation model also lowered the barrier to expansion. Unlike a conventional franchise or direct-operation model, it did not charge fixed franchise or brand-use fees, but instead shared profits with operators. The source article said this was similar to Luckin's partnership model, which charged service fees based on store gross profit. Cotti's model also included equipment buyback for operators exiting the partnership, lifetime cooperation terms and managed services.
The speed has drawn scrutiny. Analysts questioned whether Cotti could sustain its growth rate and whether rapid expansion could hurt product and service quality, damaging brand image and future growth.
Luckin responded to competition by launching a new partnership recruitment plan at the end of 2022. Self-operated stores accounted for about two-thirds of Luckin's network and were concentrated mainly in first- and second-tier cities, while partnership stores focused more on lower-tier cities. Luckin also introduced a long-term RMB9.9 promotional strategy, which analysts described as aimed directly at Cotti's low-price route.
For operators watching Southeast Asia, the key issue is whether Cotti can translate its China playbook into Indonesia while maintaining economics, consistency and partner execution in a market already served by global chains, strong local brands and low-cost informal coffee sellers.
Note: forward-looking store targets, market-growth projections and IPO/valuation-style references are historical figures from the August 15, 2023 source article.