21st Century Business Herald reporter Liu Meilin reported from Beijing
August 7, Rishu.
Determined to lose weight in the autumn, Wutong (pseudonym) could not contain his enthusiasm for the "first cup of milk tea in autumn" (referred to as: "autumn cup") and ordered a cup of milk tea. After getting the milk tea, Wutong immediately took a picture with his mobile phone and posted the photo of the milk tea in the circle of friends with text.
Like Wutong, thousands of netizens posted photos of milk tea with the relevant text of "Autumn Cup" on social platforms. "Drinking the first cup of milk tea in autumn is not because you want to drink milk tea, but because of the activity of 'autumn cup'," Wutong told the 21st Century Business Herald reporter. ”
On this day, the scene of the milk tea shops was hot, and the stores of the head brands such as Michelle Ice City, XiCha, and Naixue's Tea said that they were "bursting orders", "too many customers", and "the clerks were too busy to even sit down". There is a long queue of nearly 100 meters at the entrance of the milk tea shop, just for a cup of milk tea that can be delivered by order.
However, the milk tea market is not hot every day. On the contrary, tea giants such as Hey Tea and Naixue's Tea are no longer lined up, and many small and medium-sized milk tea shops have also closed down due to high operating costs and difficult revenues. Ai media survey shows that in 2020, 28,000 new milk tea shops in the country have been added, 31,000 have closed, 90% of the milk tea shops can hardly make money, and less than 20% can survive for a year after opening a store.
If "Autumn Cup" is a carnival ceremony in the Chinese tea drinking industry, after this ceremony, how the milk tea market has developed is more intriguing.
< h1 class="pgc-h-arrow-right" > "Autumn full" incident settlement</h1>
On August 7, "The First Cup of Milk Tea in Autumn" once again became a phenomenon-level network event on Liqiu Day, and related topics such as "Autumn Cup" contributed more than 2.5 billion Weibo views on the same day.
Where does the stem of "the first cup of milk tea in autumn" come from? In fact, "autumn cup" is not a topic born specifically to stimulate milk tea consumption. In September 2020, on the roof of a unit in The Yonghewan Community in Dazhou, Sichuan, a woman wanted to take her own life, and the local police impressed her and successfully rescued her on the grounds of drinking the first cup of milk tea in autumn. Then, the "first cup of milk tea in the autumn" was widely spread on the Internet, but most people do not remember where this slogan-like phrase originated, but instead became the topic of marketing for milk tea merchants and the reason for consumers to achieve "milk tea freedom".
Today, the popularity of this internet event in the autumn of 2020 has not decreased but has risen, and it has become a larger-scale national carnival. The Baidu index shows that on August 7, 2021, the search index of "the first cup of milk tea in autumn" increased by 7691% month-on-month.
"It's like being enchanted, and on this day everyone is drinking milk tea." It doesn't matter if I order a drink myself, I can still spend the holiday with everyone. Sycamore said frankly.
On this day, consumers have different ways of "celebrating the holiday". Some people even lined up in long lines to spend hours buying a cup of fruit tea; there were also couples who gave each other red envelopes, saying that "they will drink a little sweet in autumn"; some video anchors rubbed the heat of "autumn cup" and made milk tea in various ways...
If "Autumn Cup" has become a carnival for young people beyond milk tea itself, tea drinking companies have accurately captured the "intention" of young people for milk tea and accurately launched a series of marketing activities to push this carnival to a climax.
Compared with the unexpected popularity of the "Autumn Cup" in 2020 and relying on consumers to drive themselves, this year's event has obviously had more marketing preparations. On the day of Liqiu, Michelle Ice City launched the "punching the first cup of milk tea in autumn" punch card activity, Xicha also invited consumers to taste the special tea drinks of its stores through "Autumn Cup", and the milk tea shops such as Shuyi Xiancao and CoCo Duke also published Weibo posts on related topics.
<h1 class= "pgc-h-arrow-right" > the size of the tea market has doubled 9 times in five years</h1>
Behind the "autumn cup", it highlights the vigorous development of the entire Chinese tea market.
According to the data of China Insight Consulting, the retail sales of China's tea market reached 410.7 billion yuan in 2020, and the CAGR (compound annual growth rate) in 2015-2020 was 9.8%; of which the retail sales of ready-made tea drinks were 113.6 billion yuan, and the CAGR in 2015-2020 was 21.9%. From 2015 to 2020, the retail scale of China's tea market has nearly doubled.
Stretching the time dimension, it will be found that although the Chinese milk tea market started late, it is iterative fast and the development is strong. In the 1990s, the first similar drink imitating Taiwanese bubble tea appeared in Chinese mainland. Since then, the concept of fresh milk tea has gradually been promoted and practiced, and China has successively had milk tea chain stores (such as Happy Lemon, CoCo, etc.). Around 2016, tea companies represented by Heytea and Naixue's tea opened and led the "new tea era".
In the past thirty years, China's tea drinking enterprises have developed from the "milk tea powder mixed with water" imitating Taiwan's milk tea to the era of traditional tea brands with chain stores, and then to the new tea drinks that mainly promote natural raw materials and high-quality tea, and the business philosophy and the main milk tea category have undergone tremendous innovation. As of September 2020, there are more than 340,000 ready-made tea stores in China, generating hundreds of millions of dollars in daily turnover.
At present, tea drinks can be subdivided into low-end (customer unit price 5-10 yuan) and mid-end (customer unit price 10-25 yuan) tea brands facing the sinking market, as well as high-end (customer unit price 25-45 yuan) tea brands with first- and second-tier cities as the main consumer groups. In the mid-range and low-end tea markets, there are brands such as Little Point, Happy Lemon and Honey Snow Ice City, with unit prices mostly not exceeding 15 yuan, mainly for low-tier cities and student groups. The new tea drinks represent Xi Tea, Lele Tea and Naixue's Tea, which are typical representatives of high-end tea drinks, mainly for white-collar workers working in first- and second-tier cities.
Li Yu, investment director of Qingtong Capital, said in an interview with the 21st Century Business Herald reporter that in the high-end tea drinking track, Xicha and Naixue have been run, forming a duopoly competition pattern, leaving few opportunities for new brands.
Among them, low-end brands mainly rely on the franchise model to expand stores rapidly, and have run out of the head brand of Michelle Ice City, relying on scale effects and supply chain advantages to obtain customers at low prices, and it is difficult for new brands to win by fighting price wars. However, some low-end brands have also had the problem of higher store density, difficulty in adjusting the unit price of customers, and making no money in takeaway, which led to difficulties in profitability and high store closure rate in some areas.
Mid-range brands (new brands such as Gu Ming, Shu Yi Yan Xian Cao, Yi He Tang, Shanghai Auntie, Liu Li Jing, etc.) The market characteristics are regional kings, and each competes. Although the concentration of the industry is also increasing, the mid-range tea market is not yet saturated and is still in the incremental stage. Especially considering that more and more low-end tea brands have begun to make sea business, to open up markets that are still unclear, such as Southeast Asia, the mid-range tea market still has a lot of potential market space.
In fact, the future development of tea companies in various grades also has different considerations. In Li Yu's view, the key to high-end brands lies in whether to create brand potential. The key to low-end brands lies in whether they can rely on scale effects and supply chain advantages to gain price advantages and win at low prices. Whether the regional mid-range tea brand expansion can successfully become a well-known national brand, the key lies in the supply chain + product + brand + store model optimization of 4 points.
Specifically, supply chain capability refers to being able to keep up with the pace of product development and renewal while maintaining low procurement costs. Product strength is whether it has both high price and differentiation, it is necessary to be able to predict consumption trends in advance, and use regional differentiated products + differentiated pricing + coffee, desserts and other comprehensive coverage of consumption scenarios. Brand potential refers to the formation of a brand moat, and the competition brand in the recognition of the gap, to seize the consumer's mind.
Finally, the ability to control stores and franchisees is also an important part. "Most mid-range tea brands adopt the franchise model, and the training of franchisees, including new product training and SOP standardization production process, will ultimately determine the efficiency of store operations." Especially in sinking markets such as the county sector, the contribution of takeaway to sales increase is limited. Whether offline stores can achieve large-scale expansion is more important for revenue generation. Li Yu said.
<h1 class="pgc-h-arrow-right" > Heytea mode vs Michelle Ice City mode</h1>
Recently, Honey Snow Ice City was successfully marketed with the theme song of "Honey Snow Ice City Sweet Honey", and the whole network became popular. As of press time, the official theme song MV of Michelle Ice City has been played 18.173 million times on Station B.
At the beginning of 2021, Michelle Ice City announced that its stores exceeded 12,000, becoming the only tea beverage company in the country to break through 10,000 stores. Although the number of mid-range tea companies such as Xiaodian and CoCo is not as large as that of Mixue Ice City, it has also been maintained at 3,000-4,000 for a long time, which is still huge.
If it is said that low-end tea drinking enterprises win with quantity and sell high profits, then high-end tea drinking enterprises rely on concept marketing, centralized stores and exquisite categories to win the favor of consumers and capital. According to the data of the Guojin Securities Research Institute, the monthly revenue of the directly operated stores of Heytea and Naixue Tea is 1 million and 850,000, respectively, far more than that of Mixue Ice City (700,000-130,000) and a little (20-400,000).
Taking Xicha as an example, there are only 695 stores in Xicha nationwide, and the price of single products is more than 25 yuan, so it is difficult to play the low-cost multi-sales brand of low-grade tea drinks. However, because Heytea docks with the consumption end of white-collar workers in first- and second-tier cities, the income of this group is stable and the consumption capacity is guaranteed - the data of Insight Consulting shows that 61% of the consumers of new-style tea drinks are white-collar people. According to the survey data of the First Financial Business Data Center, 49% of the new tea consumers have a monthly disposable income of more than 8,000 yuan, which means that most of the consumer groups of new tea drinks have stable and guaranteed incomes - making Heytea able to quickly obtain a large amount of profits from consumers. According to the "Heytea 2020 Annual Report", as of the end of 2020, the "Heytea GO" WeChat Mini Program has more than 35 million members, and more than 13 million new members have been added throughout the year, and the rapid gathering of members has made the revenue of Heytea a step further.
From the queue of Xicha to the queue of Michelle Ice City, what kind of psychological changes do Chinese milk tea consumers reflect? Li Yu believes that rather than the change in consumer mentality, it mainly reflects the importance of digital marketing for new tea brands. "This year, with the release of brainwashing Divine Comedy, Michelle Ice City has greatly enhanced the brand potential, harvested a group of users, and also spread the brand IP by the way, strongly creating a consumer mind."
In addition, in addition to advertising and brand IP production, the framework of brand cross-border cooperation and private domain traffic pool can also add value to the brand. In her view, brand cross-border cooperation aims to create the brand's social attributes and innovate consumption scenarios, including cross-border products, such as tea + roasting brands, tea + coffee brands, etc., as well as cross-border joint names of peripheral products, such as Heytea ×Contigo straw cups. In addition, private domain traffic operation is also an important part. By opening up the front desk cashier system, middle office system and procurement system, establish a membership system and accurately predict user preferences, so as to adjust inventory, increase sales and repurchase rate.
<h1 class="pgc-h-arrow-right" > hidden worries surfaced</h1>
Just as people's attitudes towards milk tea swim between love and jealousy, the tea market is both a dividend for the limelight, but it is always a difficult one: too many problems are gathered here and need to be solved.
In July, there was news that Xicha would acquire Lele Tea, and Nie Yunchen, the founder of Xicha, directly debunked the rumors in the circle of friends, saying that the news was untrue, and that there had been a period of contact after being introduced by the intermediary, but after in-depth understanding of the internal situation, business data and conditions, it had been completely, completely and resolutely abandoned. Subsequently, Lele Tea said that the business operation status is healthy. In addition, Heytea has also been confirmed to have invested in the tea beverage company Seesaw. This seemingly deliberate topic marketing has sparked other discussions: Is the tea company doing well?
In recent years, Lele Tea has been caught in the storm of plagiarism. A few years ago, Lele Tea was accused of imitating The drink of Xicha, and its famous product "Dirty Bag" was also identified by netizens as "plagiarizing the Korean brand our bakery"; Heytea was also accused of plagiarism by Naixue's tea, and in 2018, Naixue's tea founder Peng Xin posted in the circle of friends, angry at Xicha for plagiarism.
The plagiarism incident is inconclusive, but the quality of some stores has become a fact. Michelle Ice City tampered with the date label of the kaifeng ingredients and used overnight milk ice cream and milk tea to make drinks; Heytea has also been exposed to microbial contamination in 4 batches, which has a high food safety risk. For the dietary industry, food safety problems are almost sentenced to "death penalty".
Quality explosion is not only a problem of a single storefront, but also highlights the hidden dangers of the supply chain. Because new tea drinks require a large amount of fresh milk and fresh fruits, once the supply chain system has loopholes, it is easy to cause food safety problems. "Supply chain capability is the decisive factor in the competition of tea brands." Li Yu believes that ensuring supply chain capabilities requires enterprises to establish a digital inventory management system, and improve the control and operational efficiency of raw material procurement and warehousing and logistics.
Specifically, in the procurement of raw materials, due to the high requirements for the freshness of products for ready-made tea, the supply chain production should be able to maintain stable quality, while relying on scale effect + origin collection to reduce production costs. In addition, the tea industry product update iteration speed is very fast, the supply chain needs to keep up with the speed of product development and update, while maintaining low procurement costs.
In the warehousing and logistics link, the general warehouse (owned by the headquarters) + the sub-warehouse (in the form of leased warehouse to establish a cloud warehouse), the own logistics team + a number of third-party cold chain logistics can create an efficient distribution model, and the products with short shelf life of fresh fruits can be directly delivered to the store. Li Yu suggested that the brand can consider establishing a central kitchen to radiate the whole country in the later stage to improve the efficiency of stocking.
<h1 class = "pgc-h-arrow-right" > the second half of the crisis</h1> organic
Although the capital side is optimistic about the tea market, it is still doubtful whether it can guarantee profits.
Taking Nai Xue's tea, which is the "first share of new-style tea drinking", as an example, from 2017 to 2020, it has received a total of nearly 1.3 billion yuan in investment, including many large investors such as PAG (Pacific Alliance Investment Group), Tiantu Investment, and IDG Capital. However, from the 2020 financial report, the unadjusted net profit is about a loss of about 200 million yuan.
On June 30, Nesher's tea landed on the Hong Kong stock market. On the opening day, Nai Xue's tea stock price was slashed a month later, from the original 19.8 Hong Kong dollars / share to 9.6 Hong Kong dollars / share, the market value shrank by nearly one-third, reflecting the secondary market's concerns about the efficiency of brand operations.
Almost in the same period, Heytea received a new round of financing of more than 60 billion yuan, but in the face of outside discussion about the possibility of its listing, Heytea responded quickly: denying listing, there is currently no listing plan.
Behind the operational crisis of Nesher's tea is mainly the declining profitability of single stores in the past three years. Li Yu believes that there are three main reasons for this phenomenon. First, the concept of "third space" in the tea category is still in the market education stage, resulting in a higher vacancy rate of Naixue's tea weekday than Starbucks in the same position, and large-scale stores have increased rental costs. Second, the on-site baking revenue generation capacity is insufficient, but it increases the labor cost of the store, further reducing the efficiency of the store and the return on investment. Third, the expansion speed is fast, and the revenue of old stores is diluted. Under the influence of operating leverage, the decline in single-store revenue will affect profitability. Although Nesher's tea launched the PRO store type, which improves the operational efficiency of a single store by canceling on-site baking and reducing the initial investment of a single store, the PRO store is facing competition from the Heytea GO store, and it will take time to verify whether the model can run through.
However, she also pointed out that the crisis of the head tea drinking enterprise only shows that Nai Xue's tea standard shop model has not yet run through, and does not affect the judgment of the capital market on the tea drinking track. "Among the low-end brands, brands such as Mi xue bingcheng and guming have been run out, indicating that the model of relying on scale effect + supply chain advantages + cost-effective products has been verified." Another high-end brand, Xicha, pays more attention to ping effect, adopting the model of hitting one or two cities with GO stores and hitting third- and fourth-tier cities with standard stores, which is not the same as the single-store operation model of Naixue Tea. ”
It is worth mentioning that in the past two years, the development of fresh yogurt and independent coffee tracks represented by Blueglass and Manner will impact the milk tea market? In this regard, Li Yu believes that there is no need to worry for the time being. The popularity of the fresh acid and coffee track has cultivated the consumption habits of users and provided a crowd base for the cross-border operation of the tea industry. On the one hand, tea is more educated than the coffee market, and coffee does not dominate. On the other hand, the cross-border business model of tea + innovates the product portfolio and opens the growth ceiling.
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Editor-in-charge: Li Wu
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