File photo/Lan Suying (NBD)

July 9 (NBD) -- Newly listed coffee startup Luckin Coffee (Luckin) on Monday announced its entry into the tea drinks market as the company seeks to grab a bigger share of China's domestic beverage market.

The coffee chain said it decided to start selling tea-based beverages at its 3,000 stores across China since July.

National Business Daily (NBD) noticed that Luckin is not the first brand to unite coffee and bubble tea. Heytea, one of China's most heavily hyped bubble tea brands, started to offer coffee-based drinks earlier this year, in a bid to diversify its product line.

Also on Monday, news media reported that Heytea is about to close a new round of financing led by tech giant Tencent and venture firm Sequoia Capital and the deal pushes the beverage maker's valuation up to 9 billion yuan (1.3 billion U.S. dollars).

Both Tencent and Sequoia Capital have declined to comment. When reached by NBD for comments, Heytea said, "No further information is available now."

In recent years, the so-called new tea drinks, which integrate different ingredients such as juice, cheese and milk, became very popular among the young generation.

The new tea sector posted sales of 40.8 billion yuan last year, representing a year-over-year surge of 29.7 percent, a report from research institution Qianzhan.com showed. As of the third quarter of 2018, the number of tea drink shops in China rose to 410,000, up 74 percent year on year.

The two major new tea drinks brands Heytea and Nayuki have been expanding rapidly, looking to have 400 stores respectively across China by the end of this year. Apart from speeding up deployment in first-tier cities such as Beijing and Shanghai, they are accelerating their presence in second-tier cities.

As Luckin, a company boasting 3,000 outlets across China, makes foray into the tea drinks market, will it pose a major threat for current players?

Industry insiders held there would be certain direct competition but Luckin and other tea drinks brands target different customer groups.

Though Luckin has more outlets, it still targets workplace consumption scenarios. Tea drinks brands like Heytea and Nayuki are more focusing on winning over young people aged between 18 and 25.

Email: gaohan@nbd.com.cn