The war between tea and coffee entered the second half.
Issue 2886
Zhai Bin, the owner of the restaurant company, | wen
Milk tea shops collectively invaded the coffee market
When we want to have a cup of coffee to refresh, "Starbucks" may not be the first choice.
In the past year, more and more milk tea brands have begun to sell coffee. Nesher's tea and hey tea menus include the "raw coconut latte" that is hot this summer; Yihetang and CoCo have added a new "chestnut latte" after autumn and "osmanthus oat latte" with Baili sweet wine; in addition, brands such as Yidian Dian, Ancient Tea, and Seven Points Sweet have also launched "creative coffee" with their own characteristics.
"Milk tea collective selling coffee" is no longer simply "brushing the sense of existence", but a substantial challenge to the coffee brand. According to the Meituan App, in Beijing's top five traffic changyang tianjie business district, Neixue's tea and CoCo's "American coffee" have been on par with Luckin, Tims and Costa in terms of takeaway orders.
Sales of Nesher's tea "American Coffee"
After Starbucks and Tims, it ranked third in the business district
Milk tea's "wild hope" for coffee does not stop there:
● Mi Xue Bingcheng's sub-brand "Lucky Coffee" opened its franchise last year and continued to deepen the sinking market;
● CoCo café has covered nearly 3,000 stores at the end of April this year, accelerating the transformation to the "tea + coffee" model;
● Among the 350 new stores opened by Nesher Tea this year, the vast majority of Naisher PRO stores are "Tea & Coffee";
● In July, Heytea invested in the domestic specialty coffee brand "Seesaw" and actively laid out the coffee track...
"Milk tea invading coffee" has become an indisputable fact, and milk tea and coffee, which were originally good for each other, have now become more and more "intolerable".
Sea water on one side, flames on the other
There are two deep-seated reasons behind the product competition and penetration on the track, and the "tea coffee war" is about to break out:
From the perspective of milk tea: the stock game, the inner volume is serious
According to the "2021 New Tea Beverage Research Report" released by the China Chain Store and Franchise Association, from 2017 to 2020, China's new tea market ushered in explosive growth, and the revenue scale increased from 42.2 billion yuan to 83.1 billion yuan; but in the next 2 to 3 years, the growth rate of new tea drinks will slow down in stages, and it is expected to fall back to 10% to 15%, and the era of high growth will come to an end.
Source: 2021 New Tea DrinkIng Research Report
In addition to the poor growth rate expectations, the high cost of rent, labor, food and other materials has also greatly limited the development of the industry. In the "Operation situation and profit warning for the third quarter of 2021" disclosed by Naixue's tea, Naixue's third-quarter performance was "turned from profit to loss" for the first time in the year, and the continuous decline in profits also led to the conversion of more "standard stores" into smaller "PRO stores"; and the milk tea top stream tea Yanyue also officially announced on November 10 that "seventy or eighty stores will be temporarily closed in Changsha".
With high costs and slowing growth, the milk tea market has entered the stage of "deep stock game", and the industry urgently needs to find new growth points.
From the perspective of coffee: the growth rate is gratifying, and the future can be expected
According to the London International Coffee Organisation, Coffee consumption in China is growing at a rate of 15% per year and well above the global average of 2%. By 2020, the size of China's coffee market will exceed 300 billion yuan, and it is expected to reach 1 trillion yuan in 2025.
Source: Dongxing Securities Research Institute
Compared with milk tea, "life-sustaining energy water" makes coffee have a stronger "addiction" and a richer "scene", and in the past two years, coffee can be described as "a bright scene of money".
In the first nine months of 2021, VCs spent more than 5.6 billion yuan in the coffee market, and brands such as Manner, Seesaw, M stand, and Santo and a Half have received huge financing. The most indicative is Luckin, which was forced to delist because of financial fraud, and was once "looked down" by the media, but the hot coffee market helped Luckin "land safely" and completed the counterattack in the second quarter of this year.
With seawater on one side and flames on the other, the anxiety of milk tea contrasts with the calmness of coffee, and the contrast is obvious.
The second half of the "Tea Coffee Wars"
Crowd overlap, capital blessing, products are becoming more and more homogeneous, "tea coffee war" is inevitable. But this is not a "parity" war, milk tea shows more "aggressive"; while coffee, although on the defensive, has more "latecomer advantage".
The two have attacks and defenses at the three levels of "market, product and supply chain", and the competition also shows different appearances.
Part 1 Market Level: Milk Tea Sells Coffee – "I Bet Now on Tomorrow"
Previously, there was a view in the media that "milk tea and coffee must have a war", but this statement is actually not completely accurate, because "tea coffee" has obvious "dislocation competition" in "time and space".
Source: 2020 New Tea Drinking White Paper &
Insight into the consumption trend of coffee life of Chinese youth in 2021
First of all, from the perspective of "space", coffee "mainly attacks the first and second lines", and milk tea is "sinking to the king".
Because the Chinese people's drinking habits of coffee have not yet been formed, the market penetration rate of coffee is low, and the main market is still dominated by first- and second-tier cities. Taking Starbucks as an example, it has been 20 years since it entered China, but the total number of stores has just exceeded 5,000, and it is basically dominated by second-tier cities; 80% of The popular fried chicken Manner's stores are also concentrated in Shanghai, where the coffee market is most mature.
In the short term, coffee brands are still in the process of "improving the chain rate and cultivating consumption habits", and the first- and second-tier markets are enough to digest for a while, so downward penetration is not the primary goal.
In contrast, in the milk tea market, except for a few head brands such as Xicha and Naixue, the vast majority of brands are scattered in cities below the second tier. And due to factors such as brand positioning and cost structure, it is difficult for mid-waist brands with low unit prices to survive in first-tier cities with fierce competition and high costs (tea is a typical example). Therefore, from the current stage, coffee and milk tea can still achieve "their own well", and the local "gun" is more like a "strategic temptation" between a small number of head brands.
Secondly, from the perspective of "time", the strategy of milk tea is to "exchange time for space".
In the future, with the gradual maturity of coffee consumption and the sinking of the market, the majority of cities below the second tier are bound to become the focus of coffee and milk tea competition. Compared with milk tea, coffee has a higher "addiction and repurchase rate", so when the cost-effective "fast coffee" is attacked, milk tea is fake. The "milk tea collective selling coffee" seen at present is actually milk tea "exchanging time for space", that is, instead of waiting for the coffee brand to harvest, it is better to preemptively cultivate user consumption habits and loyalty.
One sentence to sum up: coffee is looking at the "present of milk tea", and milk tea is aimed at the "future of coffee".
Part 2 Product Level: The Second Half of the Tea And Coffee War - The "FlavorEd Drinks" Controversy
At the beginning of this year, With a niche fruit from the Chaoshan region, "oil orange", NaiXue set off a summer "tea drink innovation war", and then joined the battle of "yellow skin, green ti, etc." to raise the level of "seasonal limit" by several notches.
In April, Luckin launched the "raw coconut latte", which soon became a "super single" with a monthly sales of more than 10 million cups, helping Luckin out of the "financial quagmire" in one fell swoop.
Whether it is "domineering jade oil orange" or "raw coconut latte", today's milk tea and coffee have long broken the stereotype in the public's mind. The combination of "tea + coffee" and "tea + fruit" does not violate the sense of harmony at all, if you are not a heavy brand preference, you can almost "choose without difference", because from the perspective of flavor, "coffee flavored tea" and "tea-flavored coffee" are essentially not much different.
Under the trend of "innovation and integration", the boundary between milk tea and coffee is becoming more and more blurred, which has also created a new species - "flavored drinks".
But behind the seemingly common destiny, milk tea and coffee have different product logics.
Let's talk about milk tea first: It is true that the serious inner volume of the industry is the main driving force for milk tea to approach "flavored drinks", but "fresh tea" may be the underlying logic that promotes the popularity of "flavored drinks".
Since entering the era of "freshly made tea", milk teas have been forced to "go all the way to black" in innovation. "Tea + fruit", "tea + coffee" has no freshness, "+ ginseng, + glutinous rice, + braised noodles...", now milk tea has become more and more bottomless in innovation. The original intention of the "fresh tea model" was to break up and combine the products through "tea as the base and fruit as a small ingredient", so as to increase the unit price of customers while maintaining freshness. But now it is getting more and more biased, except for a brief diversion through gimmicks, the repurchase rate is not high.
Look at coffee again: compared with milk tea's passive choice of "flavor drinks", the "milk tea" of coffee is more like intentional.
As the coffee market becomes more mature, coffee brands face a more obvious problem of "consumption classification". On the one hand, the repurchase rate and stickiness of the "professional coffee consumer population" are higher, but the formation of consumption habits is a long-term project, which is urgent; and it is relatively easy to "drink" coffee, after all, ordinary consumers are more concerned about the flavor of coffee than the origin of coffee beans (some data show that more than 75% of consumers are not aware of the characteristics of Arabica, simply put, "can't drink"). Therefore, the "improved" "fruit coffee and milk tea coffee" is actually more suitable for our "Chinese stomach".
On the other hand, "flavored coffee" is not entirely the product of competition with milk tea, but also the "collective consensus" of Chinese coffee practitioners. According to the "Shanghai Coffee Consumption Index" released in 2021, Shanghai has become the city with the largest number of cafes in the world with 6913 cafes, which also indicates that China's coffee culture has stood at a critical point. Therefore, it is urgent and logical to grow "Chinese coffee" with a local style. Nowadays, in the menus of major coffee brands, the domestic original Dirty series has been "divided into three worlds" with Italian and American styles. "Fruit coffee, thick milk, milk tea", after some localization transformation, the "creative coffee" with "sweet, fresh and fragrant" flavor is redefining "Chinese coffee".
One sentence summary: In the second half of the "tea coffee war", "flavored drinks" will be a deep water area for both sides to compete, and in product iteration, "active change" coffee seems to have more advantages than "passive innovation" milk tea.
Part 3 Supply Chain Level: Coffee's "Anti-Fragility" VS Milk Tea's "Anti-Standardization"
"The rise depends on traffic, life and death supply chain", the same sentence applies to milk tea and coffee, but the stage and problems faced by the two are not completed.
Coffee – "Growing Pains"
From the beginning of this year to the present, although the futures price of Arabica coffee has risen by more than 50%, for coffee brands, due to the low proportion of raw materials in the overall cost, the impact on coffee brands is not large.
The problem is the "security" of the supply chain. Compared with Starbucks' nine major coffee bean planting support centers around the world, whether it is Luckin or Manner, it only has its own upstream supply chain in Yunnan, the supply chain is too single and fragile, and it lacks the ability to hedge cost risks like Starbucks, and the uncertainty of the supply chain will increase greatly in the future as the international trade situation becomes more and more complex.
Not only are there problems with basic raw materials, but the shortcomings of the supply chain are also reflected in logistics. When stores in first- and second-tier cities have enjoyed complete and efficient supply chain services, a large number of third- and fourth-tier cities that cannot be covered by cold chain transportation are still worried about the lack of fresh milk.
Therefore, the supply chain problem of coffee brands comes more from the contradiction between "high-speed growth" and "insufficient basic support".
Milk Tea - "The Death of Standardization"
The new tea brands represented by Xicha and Naixue have long begun to lay out the source supply chain and ensure the stability of the supply of raw materials through the acquisition of tea gardens, so there is no "insecurity" such as coffee brands for basic raw materials.
The problem with milk tea is the "explosive strategy". First of all, the "seasonally limited" model puts forward very high requirements for the flexibility of the milk tea supply chain. For example, in order to ensure the "continuous and stable" supply of Xicha, its explosive succulent grapes use the alternating supply of summer black and jufeng; secondly, a large number of new products also put forward higher requirements for "product standardization", like this summer's hot "oil citrus", due to the instability of the juice rate, Naixue's cup of "domineering jade oil citrus" to use 66 pieces, and Shenzhen's "mixed juice" claims that a cup with 33 pieces can be thick to burst juice...
Image source: Nai Xue's tea official Weibo
The non-standardity of "flavored drinks" brings more problems than this, Naixue's tea CEO Peng Xin once said that due to a large number of new products, the process is too complicated, so "can't remember SOP" has become one of the reasons for the high turnover rate of store employees; and because of the use of a large number of fresh fruits, the store's irregularities in handling rotten and spoiled fruits and storage conditions are also frequently exposed by the media.
In a word: coffee is paying tuition for rapid growth, while milk tea is going further and further on the road of "reverse standardization".
brief summary
According to Deloitte's "2021 China Freshly Ground Coffee Industry White Paper", 49% of users have the habit of consuming American/cold extract, an increase of 25% compared with 3 years ago, and the "addictiveness" of coffee makes more and more urban youth choose "morning C evening A".
Some time ago, behind the hot discussion of "100,000 budget back to the county to open a café", it reflects not the sudden love of small town youth to drink coffee, but the huge demand for cafes - this "social scene".
"Addiction = high repurchase", "scene = high stickiness", no matter how you look at it, coffee is an excellent category. It's just that on the route, Coffee chooses to "be a friend of time", while Milk Tea chooses Coffee as "a lifelong opponent".