Tencent and Alibaba Bring Their Battle for Supremacy to Coffee

(Bloomberg) -- Chinese internet giant Tencent Holdings Ltd. upped the ante on rival Alibaba Group Holding Ltd. in their race to corner the market for the country’s coffee drinkers.

Tencent signed a strategic partnership agreement with local chain Luckin Coffee Thursday, according to official WeChat accounts for the companies. The tie-up will explore robotic delivery of orders as well as payments using facial recognition. Tencent’s WeChat payment system will also be used at Luckin stores and orders online, according to the statements, which didn’t disclose the deal terms.

The partnership comes on the heels of Starbucks Corp. joining forces last month with Alibaba’s Ele.me unit to begin delivery of its drinks and baked goods in China. The global coffee brand is putting down big bets in China, wagering that it will triple revenue there over the next five years.

Luckin, a Beijing-based coffee upstart that opened for business this year, said it’s expanded to 1,000 stores in urban areas.

Tencent has more than one horse in the race. It also partners with Starbucks on mobile payments and social gifting on the coffee giant’s WeChat app.

©2018 Bloomberg L.P.