Text | AI Finance and Economics Wei Yining
Edit | Song Han
On December 1, according to the credit China website, Beijing Neixue Catering Management Co., Ltd. was fined 28,000 yuan for providing untrue statistical information and violating the Statistics Law of the People's Republic of China. According to the illegal facts pointed out in the fine, the total salary index of employees in "Naixue's Tea" in 2020 has made a big mistake.
In June this year, as the "first stock of new tea drinks", Nesher was listed in Hong Kong, China, but the stock price broke down on the first day, falling to HK$17.12 per share, and has been falling since then. At present, There are two major problems in Neixue, one is the frequent occurrence of food safety problems, and the other is insufficient profitability, and it is expected to lose money throughout 2021.
On December 1, Nesher's share price fell slightly, from HK$9.35 per share to HK$9.26. Today, Nesher's stock price is almost waist-high compared to the opening. Nowadays, Xicha has also been rumored to be listed repeatedly, but the decline in Neixue's stock price has made the new tea drinks that were once sought after by investors begin to be tested and questioned.
Nesher has many problems of her own
Before being fined this time, Nesher's tea had been exposed to food safety problems many times.
In June 2019, law enforcement officers of the Shenzhen Municipal Regulatory Department found that some employees of Neixue did not wear masks as required, and the food lockers in some stores could not be closed, which posed certain safety risks. In August 2021, Xinhua News Agency reported that Naixue's Beijing Xidan store and Chang'an shopping mall store had problems such as dirty sanitary environment and deterioration of raw materials, which aroused public concern.
On various third-party complaint platforms, there are also many complaints about Nesher, including hair, plastic, confetti and other issues in drinks.
For new teas that focus on fruit, dairy and tea combinations, food safety can easily go wrong. The new tea production relies on fresh milk and fresh fruit, and if the supply chain is weakly managed and problems arise, the store will be implicated. At the same time, the juice stains produced by cutting fruits need to be wiped in time, and the dishcloth that is not disinfected in time can easily lead to excessive beverage colonies.
The exposure of food safety problems in stores will seriously affect the credibility of the brand, reduce the willingness of consumers to consume, and thus affect the stock price.
The initial performance of Nesher's tea listing was less than expected because of the real situation revealed in Naixue's prospectus: despite the growth of Nesher's revenue, losses have remained high, and costs and expenses have been too high, resulting in gross profits that are much lower than Starbucks.
Neisher focuses on high-end tea + soft European bag mode, combining tea drinking and baking, while imitating Starbucks' "third space" model, that is, the third social and office space outside the home and company, to create an "all-weather urban waiting room". Social occasions and bakery products require a larger shop area, and the average rental area of Nesher's tea shop is about 200 to 300 square meters. At the same time, bakery products need more employees, with an average of 20 to 25 people per Nesher.
The store area and the number of employees have increased the cost of Naixue, and Naixue is constantly expanding new stores, "sinking" from first-tier cities to second-tier cities, even if Naixue has been trying to launch new explosive products, it is still unable to make up for huge losses.
In 2020, the asset-liability ratio of Nesher was as high as 108.17%, and it was already insolvent. However, Nesher's cash flow has been positive for a long time and still has its own hematopoietic ability. In this case, Nesher had to adjust the operation, using prefabricated baking products in the central kitchen, simplifying the store process, reducing the store area, compressing costs, and increasing profit margins.
Challenges with new tea drinks
Nesher's current situation has both its own problems and the problems of the entire industry.
Fresh tea drinks represented by Neixue's tea, Xi tea, and Lele tea hope to reproduce Starbucks' "third space" model, but compared with coffee, the frequency of consumption of fresh tea is lower. The consumption scene of coffee is mainly work and breakfast, while fresh tea drinks lack clear consumption scenarios, and these places are often incomplete office supporting facilities such as sockets, and the refreshing effect of fresh tea drinks is not as good as coffee, so the user stickiness is poor and the consumption frequency is lower.
Fresh tea is different from coffee, coffee has higher requirements for raw materials, coffee bean ratio has a certain technical threshold, and the technical threshold of fresh tea drinking is low, mainly relying on the mixing of tea, juice and cheese milk cap and other accessories, which is easy to copy, therefore, the new tea drink is originally quite inward-volume Red Sea market.
At present, after a long period of competition and elimination, the high-end ready-made tea track has only left three major brands of Xicha, Naixue and Lele Tea, in order to improve customer loyalty, the ready-made tea brand must create characteristics. However, in addition to drinks, the added value that freshly made teas can provide is nothing more than social occasions, peripheral products, stores and cup design.
Nai Xue from the beginning of the audience positioning in 25-35 years old female white-collar workers, in order to attract female customers, store and cup design are focused on the sense of fashion, in line with female aesthetics, in order to facilitate one-handed teacup selfie, Nai Xue specially designed a slim shaped teacup, widely welcomed by female customers.
However, these advantages of Nesher are not enough to make it form a unique product barrier and occupy an advantage in the competition with Heytea and Lelecha. Although Naixue is replacing faster, trying to quickly launch new products and seize the attention of consumers, in terms of taste, the gap between Naixue and Xicha and Lele tea is not large, and Lele Tea is also rapidly expanding, launching the sales model of "tea drink + soft European bag", and gradually seizing the market with Naixue.
In terms of capital, the valuation of Heytea has surpassed that of Nesher. In June 2020, before the listing of Naixue's tea, the valuation only reached 30 billion yuan, and although Xicha stated that it would not be listed during the year, after completing the C round of financing, the valuation had reached 60 billion yuan, surpassing Naixue.
In addition, the business model of Xicha is different from Thatcher, Heytea stores are smaller, which can effectively control operating costs, and also surpass Nesher in terms of marketing capabilities, Heytea has repeatedly linked up with well-known IP such as Baijieling, Nike, Jiangnan Baijingtu, etc., and constantly tries cross-border cooperation, launching joint milk tea, peripheral products, etc., and the brand awareness is higher than that of Naixue.
In the 2020 Q2 China New Tea Industry Consumer Brand Awareness Survey, the highest consumer awareness is Xicha, which accounts for 43%, the second and third are the mid-range ready-made tea brands CoCo Duke and Luckin Deer Tea, and Naixue only ranks fourth, accounting for 28%.
Xicha has been exposed by the media to be listed, although Nie Yunchen, the founder of Xicha, personally debunked the rumors, saying that there is no listing plan in 2020. The breakdown of Naixue's listing has led to Heytea being more cautious on the listing issue, temporarily not choosing to list, and developing with peace of mind at a high valuation.
At present, the popularity and profitability of Heytea are stronger than that of Nai xue, who tries to reduce costs by prefabricating in the central kitchen and reducing the size of the store, but this transformation may not satisfy users who are fond of freshly baked soft European bags and large social areas, so whether Nai Xue can turn losses into profits through these adjustments needs further observation. If the two pain points of food safety and profitability cannot be solved, Neisher's stock price will continue to be depressed.
This article is originally produced by AI Finance and Economics, an account of Caijing Tianxia Weekly, without permission, please do not reprint it on any channel or platform. Violators will be prosecuted.