China’s largest coffee chain Luckin Coffee establishes exclusive coconut island in Indonesia

China’s largest coffee chain Luckin Coffee has signed an agreement with Indonesia’s Banggai Islands Regency, making it the exclusive premium origin of coconut milk for its flagship Coconut Latte.

The memorandum of understanding it signed with the regency provides Luckin Coffee and its partners with exclusive rights to procure coconuts from the region, the firm announced earlier this month. The Banggai Islands are among the world’s top coconut-producing regions.

According to Global Times, the islands will be named “Luckin Exclusive Coconut Island ” under the agreement.

The chain intends to source roughly one million tons of raw coconut materials, which comply with its quality standards, over the next five years.

Li Shan, senior director of the firm’s supply chain center, said the region’s high-quality coconut will bolster the company’s supply chain.

Luckin Coffee, headquartered in Xiamen, a port city in southeastern China, was established in 2017 and grew rapidly before it was discovered to have falsified half of its 2019 sales. The scandal led to its delisting from Nasdaq and subsequent filing for bankruptcy protection in the U.S. in 2021, Reuters reported.

It has since made a strong comeback and now dominates China’s coffee market with over 21,000 stores nationwide as of September, outselling U.S giant Starbucks.

It has also been expanding overseas, setting up its first Southeast Asian store in Singapore in April 2023 and later increasing its number of outlets in the city-state to 38.

According to Nikkei Asia, it opened its first two stores in Malaysia this January and plans to have 200 outlets there in the next two years.

Since its launch, Luckin has sold over 1.2 billion Coconut Lattes as of January.