Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Starbucks in Tianjin. Photo: Zhang Peng/LightRocket/Getty Images

Few have successfully challenged Starbucks anywhere in the world. But now there is Luckin Coffee, a brazenly cool, VC-funded startup in China that, in an astonishing nine months, has swollen to more than 650 locations, a $1 billion valuation, and lots of buzz.

The quick take: We are talking a breakneck coffee war. Chic is Starbucks' greatest asset everywhere, but it is facing a determined rival in the homegrown Luckin, which wants to transform the uppity $5 latte into a more chill, mass-market product.

Why it matters: In both the U.S. and China, Starbucks is losing its mojo. Store traffic in the U.S. was down 2% in the last quarter, and Chinese sales dropped by the same percentage. In the U.S., the answer has been to raise prices. But in China, its drinks are already priced sky-high, and it will have to beat the plucky Luckin in product and service alone.

The latest: Determined to survive and hold onto its clear lead in the world's premier growth market, Starbucks last week announced a high-profile alliance with China's greatest e-commerce behemoth — Alibaba.

  • The alliance is meant to attack Luckin at its strength — fast delivery.
  • Luckin often delivers coffee to offices in 18 minutes, or even faster.
  • Starbucks says Alibaba's Ele.me food delivery affiliate will deliver within 30 minutes.

It's not clear that brute force will be sufficient in a market where once-stout brands can vanish when homegrown rivals prove they know China better. Think eBay and Uber, both of which were eclipsed by local Chinese brands. But Starbucks is going to try — and it starts out with serious advantages.

  • Since launching in China in 1999, Starbucks has grown to around 3,400 locations and captured some 80% of the market, per market research firm Euromonitor International, meaning that almost everyone in big cities knows about it.
  • "For me and my friends, we don’t go to Luckin Coffee as often as we go to Starbucks," a 16-year-old Chinese girl told Axios by email, not wishing to identify her city. "I think that Luckin Coffee is more for people who are working and they want their coffee to be prepared fast."
  • She added, "True, Luckin Coffee is non-expensive compared with Starbucks but that’s not critically affecting the fact that many people don’t know Luckin Coffee if they don’t drink coffee. My parents never liked coffee but they know Starbucks."

The big thing: Starbucks was where many Chinese consumers were introduced to coffee in the first place, and "it's still the brand people look for and crave," says Humphrey Ho of Hylink Group, China's largest digital advertising agency.

Still, the Chinese coffee market is embryonic: Chinese consumers drink about three cups of coffee per person per year, Euromonitor says. Compare that to 363 for Americans and 250 for Britons. That leaves plenty of room for upstarts.

  • Coffee sales grew 400% in 2016 — and experts think the trend will continue, Euromonitor's Michael Schaefer tells Axios.
  • And Starbucks cannot necessarily count on its image. Yi Hao, a 21-year-old Chinese college student from Beijing, tells Axios, "I don’t find Starbucks to be really cool. In terms of whether it is fashionable, the designs on their coffee mugs are pretty, but that’s really it."
  • "To me, it’s just an ordinary coffee shop. There are many other brands of coffee like Costa," a U.K. brand.

What to watch: After rumors spread of the Starbucks-Alibaba alliance, Luckin announced that it had accelerated plans to deliver light snacks — at cut-rate prices compared with those of an unnamed competitor.

Go deeper

7 hours ago - World

Over 170 Palestinians injured in clashes with Israeli police in Jerusalem

An injured man is carried away as Israeli security forces clash with Palestinian protesters at the al-Aqsa mosque compound in Jerusalem. Photo: Ahmad Gharabli/AFP via Getty Images

At least 178 Palestinians have been injured in clashes with Israeli police in Jerusalem, Reuters reported late Friday.

The big picture: The clashes come amid growing anger over the threatened eviction of Palestinians from their homes on land claimed by Jewish settlers in East Jerusalem. Tensions have also escalated in the occupied West Bank in recent weeks.

Updated 9 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: Coronavirus cases hit a seven-month low — Majority back vaccine proof requirements for travel, schools and work — The race to avoid a possible "monster" COVID variant.
  2. Politics: Oklahoma secures $2.6 million refund for hydroxychloroquine purchase — Why Biden's latest vaccine goal is his hardest yet.
  3. Vaccines: Pfizer begins application for full FDA approval of COVID-19 vaccine — Moderna says its COVID booster shot shows promise against variants.
  4. Economy: U.S. adds just 266,000 jobs in April, far below expectations — Americans' return to the skies could benefit smaller airlines.
  5. World: WHO authorizes China's Sinopharm COVID-19 vaccine for emergency use — Mixed response in Europe to Biden's vaccine patents bombshell.
  6. Variant tracker: Where different strains are spreading.

Ohio GOP censures Rep. Anthony Gonzalez over Trump impeachment vote

Photo: Bill Clark/CQ-Roll Call, Inc via Getty Images

The Ohio Republican Party on Friday censured Rep. Anthony Gonzalez (R-Ohio) and called for him to resign for voting to impeach former President Trump in January, Reuters reports.

The big picture: Gonzalez is the latest Republican lawmaker to be punished for voting to impeach the former president on a charge of inciting the deadly Jan. 6 insurrection.