The coffee war between Luckin and Cotti has escalated to the upstream supply chain.

Such massive production capacity forces Jiahe Foods to secure key buyers. Cotti fits the bill perfectly. Under its joint-operation model, Cotti has expanded rapidly—by August 8, it had opened over 5,000 stores, representing enormous demand. In contrast, Luckin—whose store count surpassed 10,000 as early as June—opted to build its own upstream channels. Its second roasting factory is located in Kunshan, Jiangsu Province. The project carries a planned total investment of $120 million and is expected to roast and process 30,000 tons of green coffee beans annually, with operations slated to begin in 2024. Once all factories are fully operational, Luckin’s theoretical annual roasting and processing capacity for coffee beans will reach 45,000 tons. Assuming each cup of coffee uses 15–20 grams of beans, and a mature Luckin store consumes approximately 2,800 kg of beans per year, 45,000 tons could support over 16,000 stores. This significantly limits Luckin’s need to purchase roasted beans externally. Thus, Jiahe Foods turned to Cotti. Extending the battle to the farming level It should be noted that even further upstream—at the raw coffee bean production stage—the rise of brands like Luckin has already exerted influence. Pu’er in Yunnan Province is China’s largest coffee-growing region by both planting area and output, and serves as the nation’s primary trading and distribution hub. Nestlé has accordingly established a coffee center there. According to media reports, new domestic brands—including Luckin—have launched price wars against Nestlé in Pu’er. Specifically, while Nestlé ties its farmer purchase prices closely to international futures markets, newer brands have opted to pay premiums above Nestlé’s quoted prices. There are objective reasons behind coffee brands’ scramble for Yunnan beans: First, sourcing Yunnan beans helps reduce costs. Most ready-to-drink or premium instant coffee brands blend roasted beans to achieve complex flavor profiles. Since Yunnan beans are cheaper than imported beans from Africa or the Americas, incorporating them into blends effectively lowers overall costs. Second, Yunnan beans offer logistical and distribution advantages: green beans can be shipped nationwide from Kunming as a transit hub to roasters; roasted beans and instant coffee products can be distributed across China via e-commerce platforms—reducing exposure to international disruptions, shipping delays, and tariffs, and enhancing supply-chain control. Amid Luckin’s and Cotti’s rapid expansion, Yunnan beans—which enable swift fulfillment—have become highly coveted. Currently, Nestlé remains relatively well-positioned to withstand pricing pressure. As reported by industry sources covering both upstream and downstream players, daily fluctuations in coffee futures prices are extreme, causing significant cost volatility for new entrants during their bean-buying sprees—leading them occasionally to…

‘Bet’ or ‘Cut Losses’? Nestlé’s Yunnan Coffee Quotation for the New Harvest Season Is Out—Prices Plunge 15%! Who Suffers Most?

Nestlé’s quotations stand at RMB 53.56/kg for Grade N and RMB 51.69/kg for Grade I—roughly 15% lower than last week’s market price (RMB 60–61/kg), reverting to its traditional pricing rule of ‘New York futures price minus a discount of 10–15 U.S. cents.’ 2. Contrary to last season’s opening trend, this season’s year-on-year price drop is steep. The opening-day purchase price this season (approx. RMB 51/kg) is far below last season’s end-of-season level of RMB 60/kg—and sharply diverges from last season’s ‘strong opening,’ when the first-day price stood at RMB 42.07/kg. Last year’s opening price was high—and continued rising through season’s end. 3. Who suffers most? Traders! Large corporations—with their own factories and retail outlets—can absorb higher bean prices internally. Small roasters, holding minimal inventory, merely watch from the sidelines. The hardest hit are pure traders who stockpiled large quantities of expensive beans, hoping to profit from arbitrage. Now they’re stuck mid-air: selling means cutting losses; holding means cash-flow paralysis. 4. Traders may refer to historical patterns—stockpiling now to seize future price windows. Last season (2024/25), Nestlé’s purchase price rose over RMB 18/kg from its opening-day level—suggesting potential price rebound opportunities toward season’s end this year. However, stockpiling demands working capital; without it, traders risk missing the optimal timing. 5. Holding on is also a viable strategy. Last season provides precedent: the closing price nearly doubled the opening price. Hence, some financially resilient traders may choose to hold onto their beans—betting on a price recovery later.

Nestle Considers Lowering Coffee Prices as Bean Costs Drop

Jun 30, 2026

Nestle executives indicated they may reduce retail coffee prices as raw bean costs decline from record highs, though industry experts estimate a nine-month lag before savings reach consumers.

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