Wen | Author of "Finance and Economics" Weekly Yang Qiao
Editor| Yang Jie
After the tea color said that it would raise the price, the price of Xiangpiaopiao milk tea also increased.
On January 4, Xiangpiaopiao issued an announcement that due to the rise in raw materials, labor, transportation and other costs, Xiangpiaopiao will adjust the price of solid brewed milk tea products, ranging from 2% to 8%, and the new price will be implemented from February 1, 2022.
After the news was released, many netizens joked on social media, "This is good, will it be less around the earth"; some netizens were surprised to say that if it were not for this, they "have forgotten the brand of Xiangpiaopiao".
Xiangpiaopiao is no longer the head milk tea brand that "the cup can circle the earth 3 times". The solid brewed milk tea products on which it is famous have touched the ceiling; at the same time, Xiangpiaopiao has also been facing the dilemma of "increasing revenue without giving profits", in the first three quarters of 2021, the company's revenue was 1.974 billion yuan, but the net profit was less than 40 million yuan, down 11.45% year-on-year.
Xiangpiaopiao is also seeking a change, launching a variety of ready-to-drink products. However, it does not seem to win back the hearts of young people who love to drink milk tea.
Can the price increase "save" Xiangpiaopiao?
Can price increases bring moving profits?
On e-commerce platforms such as Taobao, 18 cups of classic Xiangpiaopiao products are priced at 60 yuan, and one cup is about 3.3 yuan. At the supermarket end, the weekly magazine "Finance and Economics" found that a cup of 80g of original classic fragrant piao piao milk tea retail priced at 4.3 yuan. According to the price increase of Xiangpiaopiao, a cup will probably cost 1 cent to 3 cents more.
But many consumers do not pay attention to this: "The sugar is too high, no one cares if it rises", "It doesn't matter, 5 yuan a cup of honey snow ice city is not fragrant?" ”
As soon as Xiang Piaopiao made her debut, she reached the peak. "A year can sell 300 million cups, cups can be connected to a whole circle around the earth", this advertising slogan, the popularity of that year, is no less than the current "honey snow ice city sweet honey".
In 2005, when Xiangpiaopiao was founded, in the domestic milk tea market, milk tea and milk tea cups were still sold separately, and no one combined the two. Xiangpiaopiao seized the opportunity to combine them to produce a convenient cup milk tea to put on the market, and replaced the pearls in the original popular bubble tea on the market with coconut fruit to extend the shelf life of the product.
The innovation in cup milk tea has laid the market position of Xiangpiaopiao. Especially among young people, Xiangpiao piao became the top stream of campus drinks at that time. Especially in winter, the warm scene of "holding a cup of hot milk tea" opened by cup milk tea is simply irresistible. This also makes winter a clear peak sales season for Xiangpiaopiao.
By 2011, Xiangpiaopiao's promotional slogan had been changed to "Sell more than 1 billion cups a year, can circle the earth 3 times." From 2014 to 2016, Xiangpiaopiao's cumulative investment in advertising and marketing reached 1.046 billion yuan, and its advertising expenses accounted for more than 48% of sales expenses every year.
In 2017, Xiangpiaopiao landed on the Shanghai Stock Exchange and became the "first share of milk tea". From 2012 to 2020, Xiangpiaopiao has been at the top of the brewed milk tea market for 9 consecutive years, with a market share of more than 63%. Although there are also new milk tea brands such as Yoloma and Xiangyue competing with them, they cannot shake its market position.
But no matter how high the market share of Xiangpiaopiao, it cannot save the downward trend of the brewed milk tea market.
In 2012, nie Yunchen after the 90s founded a new tea brand "XiCha" in Jiangmen, Guangdong Province, using fresh milk and freshly brewed tea base to produce the first cup of cheese milk cover milk tea for new tea drinks. In 2016, Heytea received a Round A financing of 100 million yuan from IDG Capital and began to open offline direct stores across the country. At the end of 2016, another new tea brand, Naixue Tea, received a 100 million yuan Series A financing from Tiantu Capital and began to expand its territory in the domestic market.
The brewed milk tea market has also gradually touched the ceiling. Shenwan Hongyuan research data shows that as early as 2012 to 2015, the overall development of the brewed milk tea industry has entered a stable period. According to the data of Zhiyan Information, in 2018, the growth rate of the domestic brewed milk tea market has dropped from 17% in 2016 to only 5%.
In fact, after xiangpiaopiao's listing, in the first half of 2018, there was a cliff-like decline in net profit, with a huge loss of 54.58 million yuan in half a year, and the market value was cut. After that, from 2018 to 2020, its revenue and net profit growth rates have slowed down year by year.
In 2020, Xiangpiaopiao's annual revenue was 3.761 billion yuan, down 5.46% year-on-year; net profit was 358.4 million yuan; and non-net profit was 301 million yuan, down 1.75% year-on-year. The revenue of its brewing products is about 3.067 billion yuan, the operating income of ready-to-drink products is about 657 million yuan, and the gross profit margins of the two major businesses are 40.61% and 18.35% respectively. But even the gross profit margin of its brewing products, compared with The data of more than 60% of Naixue's tea, is still a big gap.
In 2020, the number of cups sold by Xiangpiaopiao's brewed milk tea sales has risen to 1.37 billion cups, but no one has the patience to count how many times it has circled the earth.
In 2021, Xiangpiaopiao still failed to reverse the decline in performance. The company's revenue in the first three quarters of last year was 1.974 billion yuan, an increase of 4.29% year-on-year; net profit was only 39.4 million yuan, down 11.45% year-on-year. In the first three quarters, the cost of milk tea products was 1.338 billion yuan, an increase of 12.75% year-on-year.
According to a research report by East Asia Qianhai Securities, on December 24, 2021, the retail price of milk was 12.84 yuan / kg, an increase of 3.63% year-on-year. In the case of the increase in raw material costs, Xiangpiaopiao's price increase for brewing products with lower pricing and higher revenue proportion seems to have become a "last resort" measure.
But can price increases "pull" Xiangpiaopiao's profits?
Xiangpiaopiao clearly stated in the announcement: "The price adjustment of some products may have a certain impact on the market share of the company's products, coupled with the rising cost factors, the price adjustment of the product does not necessarily increase the company's profits, and the impact of the price adjustment on the company's future performance is uncertain." ”
Wen Zhihong, a partner at Hejun Consulting and head of chain operations, also told Caijing Tianxia Weekly that under the background of the changes in the large industry market, "short-term price increases have no effect, although it has attracted more people's attention to it, but it cannot solve the fundamental problem."
In his view, although Xiangpiaopiao has almost become synonymous with "solid brewed milk tea" before, it is currently facing the crisis of being replaced by a new brand. What's more, at a time when everyone is paying more and more attention to the concept of food health and safety, Xiangpiaopiao's solid brewed milk tea still uses raw materials such as creamer and vegetable fat powder, which is inevitably unable to adapt to the market's demand for "healthy tea".
According to the report released by Industrial Securities, the end of plant fat is the "just need" of low-end milk tea, if you take 10 yuan / cup of 500ml milk tea as an example to do cost splitting, the cost of the plant fat powder, pearls, black tea, cups used is only 0.47, 0.59, 0.3 and 0.38 yuan, respectively, which can greatly solve the cost problem.
But the performance is still mainly dependent on the fragrant fluttering of cup-made milk tea, and it is not easy to tear off the label of "unhealthy".
(Source: Visual China)
Wanting to "become younger", Xiang Piao's strength is not enough
Under the general trend of consumption upgrading, Xiangpiaopiao has already felt the impact of cup milk tea.
In the new-style tea drinking jianghu, unicorns such as Xicha, Naixue's tea, and Honey Snow Ice City have risen one after another. The size of the ready-made tea market has also grown from 42.2 billion yuan to 113.6 billion yuan in 2020 in just five years.
According to the forecast of China Insight Consulting, from 2020 to 2025, new tea drinks will grow to 340 billion yuan with a compound growth rate of 24.5%, accounting for 42% of the overall tea market size, surpassing tea, tea bags and tea powder, and becoming the largest category in the domestic tea industry.
The new tea conveys the concepts of health and low sugar, as well as the social attributes and convenience of catering to contemporary young consumer groups, all of which threaten the status of Xiangpiaopiao brewed milk tea.
Xiang Piaopiao obviously can no longer stick to one side. In fact, it has also made a lot of efforts in product innovation.
As early as 2017, Xiangpiaopiao launched the ready-to-drink milk tea brand Lanfang garden and entered the field of liquid milk tea. In 2018, Xiangpiaopiao's "MECO" juice tea came out, of which the main products include juice tea, lactic acid bacteria, etc., and also played the slogan of "0 fat, 0 added pigments".
In recent years, Xiangpiaopiao has also launched new products such as "sugar-controlled milk tea" with the main "0 sucrose added" and milk tea self-heating pot. In terms of taste innovation, peach oolong, sea salt cheese, peach grapefruit, Thai lime, kumquat lemon, the current popular instant milk tea flavor on the market, Xiangpiaopiao has not fallen.
Xiangpiaopiao's marketing, which has always been good at, has also intensified with the continuous launch of new products, and strives to catch up with the "trend" to attract young users.
Xiangpiaopiao has successively launched cooperative products with well-known IP such as Tomb Robber Notes and Red Adzuki Beans, and has joined hands with brands such as Luzhou Laojiao, Qingdao Beer, and Baicao Flavor to launch cross-border products.
In terms of communication channels, during the "618" period in 2020, Xiangpiaopiao and star Deng Lun entered the live broadcast room of the head anchor Li Jiaqi, and also specially sponsored the Tmall "Double Eleven" carnival night that year, and cooperated with the head anchor to broadcast more than 30 times throughout the year. In addition, Xiangpiaopiao also invited wang Junkai, Wang Yibo and other traffic stars as product spokespersons.
Xiangpiaopiao's advertising expenses have also risen. From 2018 to 2020, Xiangpiaopiao's advertising expenditure was 299 million yuan, 357 million yuan and 169 million yuan, respectively.
However, in contrast, Xiangpiaopiao's product research and development expenses were only 0.09 billion yuan in 2018; in 2020, it only rose to 0.23 billion yuan.
The result of "heavy marketing, light research and development" is that the fragrance of solid milk tea products is accustomed to fluttering, and it is constantly criticized by consumers for "containing a strong flavor of creamer" and "too sweet" in new liquid milk tea products.
Xiangpiaopiao's product innovation also appears to be "inadequate". In 2020, the revenue of its ready-to-drink products was 657 million yuan, a year-on-year decrease of 34.62%. In the first three quarters of 2021, the revenue of Xiangpiaopiao brewing products was 1.412 billion yuan, an increase of 9.05% year-on-year; the revenue of ready-to-drink products was only 531 million yuan, a year-on-year decrease of 7.56%. The contribution of innovative products to the company's performance remains limited.
(Source: Xiangpiaopiao's financial report)
At the same time, the traditional channel system of Xiangpiaopiao is also being reduced. In 2020, about 300 franchisees have withdrawn from Xiangpiaopiao, and in the first half of 2021, nearly 100 dealers have also withdrawn.
In addition, in the first half of 2021, 4 of the 13 companies controlled by Xiangpiaopiao were in a state of loss. According to Choice data, at the end of 2017, 78 institutions held Xiangpiaopiao shares, and by the end of September 2021, only 4 institutions were left.
In Wen Zhihong's view, Xiangpiaopiao's innovation cannot keep up, largely because Xiangpiaopiao has been "too successful" in the past. Industrial Securities also pointed out in the report that after the market of Xiangpiaopiao is stable, the sales personnel and dealers in some areas of the company may have a "small wealth is safe" mentality, do not take the initiative to pursue breakthroughs, and lack of hard work and momentum.
Chinese food industry analyst Zhu Danpeng believes that Xiangpiaopiao's main business has hit the ceiling, although the company has done a lot of innovation, but the overall effect is not obvious; at the same time, because the company's main core business is concentrated in third- and fourth-tier cities, it has also caused some of the current innovations to "basically have no big effect".
Fight the sinking market
Where are the main consumer markets of Xiangpiaopiao?
Many consumers in first- and second-tier cities may have forgotten Xiangpiaopiao, but in the sinking market, Xiangpiaopiao still has a large market foundation.
"Post-90s" Xiao Zhang's father engaged in freight work, in her memory, from childhood to adulthood, she and her father went out of the car at high speed, solid brewing milk tea, various convenience foods, etc., is the necessary food on their road. During the snow disaster in the south in 2008, the scene of drivers and masters blocked on the highway hoarding a large number of milk tea and instant noodles at the service station was deeply imprinted in her mind and was indelible.
"In the service station, brand products such as Xiangpiaopiao and Master Kong are selling very well and are the favorite of long-distance driver masters." Xiao Zhang said.
In the sinking market, whether it is a school, a traditional supermarket or a roadside couple convenience store, you can find fragrant products in the drink area.
Xiangpiaopiao itself also said that its brewed milk tea products mainly focus on sinking markets such as counties and townships. According to the financial report data, in the first half of 2021, more than half of Xiangpiaopiao's revenue came from the sinking market.
In terms of development strategy, Xiangpiaopiao also avoids big cities and strengthens the deep ploughing of the sinking market. Around its plan of "thousands of counties and ten thousand towns", Xiangpiaopiao has screened out 147 core cities across the country and built its channel advantages by increasing the channel terminal outlets of districts, counties and townships.
In 2020, in more than 200 counties and county-level cities across the country, Xiangpiaopiao opened more than 50,000 stalls and recruited tens of thousands of temporary promoters to do activities.
The school is also the focus of Xiangpiaopiao's layout. In March 2019, Xiangpiaopiao focused on promoting its newly launched MECO juice tea brand in high school campuses in Wuhan, Harbin, Shanghai and other regions, and selected campus KOLs to promote online. In 2020, Xiangpiaopiao basically had two promotional activities on campus every day.
But even so, Xiang Piaopiao still could not avoid the sniping of the opponents of the new tea drink. In low-tier cities, a cup of Honey Snow Ice City with a price of less than 5 yuan has blossomed everywhere; the price of Heytea incubation has dropped to 10 yuan a cup of Xi Xiao Tea, and it has also begun to connect with Honey Snow Ice City.
But for Xiangpiaopiao, once it is "lost" in the sinking market, where can it retreat?
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