Nasdaq-listed Luckin Coffee announced plans today to split off its tea-based beverage line known as Xiaolu Tea, or “Fawn Tea” in English, as an independent operation.

Officially known as Luckin Tea, the new unit will boast its own branding and physical stores.

Luckin will also launch a separate app as well as mini-program for online orders and delivery.

Why it matters: The move coincides with the Xiamen-based beverage giant’s expansion into China’s lower-tier cities.

Luckin has been looking for ways to steal a march amid intensifying competition with Starbucks.

The firm is also looking to tea-based beverages to diversify revenue streams and find new growth.

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