You can grasp everything big and small in the venture capital circle
Tencent Venture | ID：qqchuangye
"In time, I may still choose to invest in opening a store."
The source of this article is "Burning Dimension" (ID: chaintruth), which is reprinted by Tencent Venture with permission.
Author/Feng Xiaoting
Editor/Xie Zhongxiu
The "inner volume" of the milk tea industry is becoming more and more intense.
Recently, careful tea fans have found that the price of many tea drinks has been reduced, which is prominently reflected in the pure tea series, such as "Zhizhi Jinfeng Tea King" from the previous 22 yuan to 18 yuan, and the cheapest "pure green tea queen" has directly dropped to 9 yuan.
On the past January 7, the price of some milk tea products was raised. But whether it is a decline or an upward adjustment, it is a reflection of the current situation of the milk tea market competition and crazy "inner volume". Tea Yan Yue said that the price increase is mainly due to the rise in raw material prices. The industry speculated that the price reduction of Heytea had the intention of exploring the low-end market.
Whatever the reason, it can be seen that the milk tea industry is not as "glamorous" as it seems. At the end of 2021, Idle Fish released the list of "Top Ten Entrepreneurial Minefields of the Year", of which "Opening Milk Tea Shop" ranked first. Just knowing that opening a milk tea shop is a pit, there is still no shortage of people jumping into it.
"I plan to open a milk tea shop in October 2020." Dahua, who opened a milk tea shop in a third-tier city in Guangdong, told Burning Finance, "At that time, I retired from the army, got a one-time retirement payment of more than 100,000 yuan, returned to my hometown, and began to think about the next step of my life plan." ”
"I don't have much of a craft, so starting a business is the best option." In entrepreneurship, restaurants are the first choice for entrepreneurship, because the threshold is low and the gross profit is high. Milk tea shop belongs to the catering industry, low investment, low cost, and my girlfriend and friends around me like to drink, so I think this market is good. Dahua said.
So Dahua began to understand the market and planned to join a brand. "The famous milk tea shops in the market that have opened to join, I have basically submitted applications. Finally, we talked about a brand with a large number of stores in Guangdong. It took more than half a year to sign, renovate and train, and Dahua's milk tea shop finally opened.
"The initial investment is about 300,000 yuan, including equipment, decoration, brand use, training fees and so on." In the early stage of opening the store, Dahua also felt the hot atmosphere, "The first month of the store was so busy that it could not even take out the takeaway." But the hot scene was like a flash in the pan, and Dahua's milk tea shop soon snubbed down, "After a month of freshness, the flow of people decreased, and we launched a takeaway channel." ”
But takeaway also did not save Dahua's milk tea business, "the takeaway platform's 20% commission, as well as paid advertising and marketing activities on the platform, further compressed the profit space of milk tea shops." Only half a year after opening, in November 2021, Dahua transferred the store. In the end, the daily revenue during the opening period was almost only enough to barely maintain the operating costs of the store, and the 300,000 yuan invested in the early stage was "water drifted".
What made Dahua cry and laugh was that "the person who took over my façade will also use it to open a milk tea shop." Dahua said, "A little money wants to invest in business, nine out of ten first thought of opening a milk tea shop." "But the milk tea shop is not easy to do," I am in this commercial street, large and small, there are nearly ten milk tea shops, in half a year in addition to my milk tea shop also poured two or three." ”
Milk tea is a seemingly hot industry. According to the data of Tianyancha, there are more than 378,000 enterprises in China whose names or business scope include "tea beverages, milk tea, food and beverages", and the status is "in business, survival, relocation in, and out" of new-style tea-related enterprises. According to the statistics of the Prospective Industry Research Institute, the number of new tea stores in China has exceeded 500,000.
What is the concept of 500,000 stores? According to the 2020 annual data of the National Bureau of Statistics, there are 293 prefecture-level cities in China, and on average, there are more than 1,700 new-style tea stores in each prefecture-level city.
But making money is indeed a major problem in the milk tea industry. In addition to Dahua, who was forced to close their stores due to profitability, Tea giants such as Naixue's tea and tea beauty were also mired in the whirlpool of losses. In December 2021, Lu Liang, the founder of Chayan Yueshi, revealed during a quarrel with employees in the work group, "During the epidemic period, the company lost more than 20 million yuan a month. ”
The secondary market also seems to be not paying for the milk tea business. Naisher's Tea (002150.HK) landed on the Hong Kong Stock Exchange with the "First Share of New Tea Drinking". HK), helplessly caught in the "listing is the peak" quagmire, the first day of listing was broken after the stock price fell all the way, the closing price on January 7, 2022 was 6.92 Hong Kong dollars / share, the stock price compared with the opening price of 18.86 Hong Kong dollars / share has fallen by more than half, the total market value is only 11.869 billion Hong Kong dollars.
Naixue's tea prospectus also shows that in 2018, 2019 and the first three quarters of 2020, the company's net losses were 69.7 million yuan, 39.7 million yuan and 27.5 million yuan, respectively.
In order to make a profit, Nai Xue's tea, tea face and happy tea are doing their best. Accelerating "Shangxin" has become a great weapon to attract consumers, And Neixue's Tea mentioned in the prospectus that it will launch a new product on average every week; and Heytea shows in its "2020 Annual Report" that Heytea will produce a new product in an average of 1.2 weeks in 2020.
The tentacles of the giants are also extending outwards, such as Heytea has invested in a series of "drinking" related brands such as the coffee brand Seesaw, the pre-mixed wine brand WAT, and the wild plant brand YePlant.
The fierce competition and "inner roll" of milk tea did not affect the outside world. Even if profitability becomes a problem, there are many other companies that are "cross-border" milk tea, such as "high-speed rail milk tea", as well as Wahaha, Wang Laoji, China Post and so on.
Dahua also said that although he has closed the store, he may choose to reinvest in the store in time, provided that it will be carefully considered, "There is still a huge potential for development in the third-tier cities, but there are many brands in the layout now, but consumers have not yet developed the milk tea consumption habits of consumers in first- and second-tier cities." ”
Under the support of the public and capital, under the fierce competition and "inner volume", where milk tea will go is still a difficult problem to be answered.
1
A milk tea business that doesn't make money
Milk tea was once associated with "profiteering".
An article on a catering network said that most stores will control the cost of a cup of milk tea between 1-2 yuan, but the price of a cup of milk tea will be more than 5 yuan, and the location and decoration of the milk tea shop can even be sold to the price of 10 yuan a cup. Now there may be some healthier drinks milk tea, will add fruit, milk and other ingredients, the cost is controlled between 2-4 yuan, but the price is higher, more than 10 yuan.
Based on the cost of 2 yuan and the selling price of 10 yuan, the profit margin is as high as 400%. However, it should be noted that only the raw materials and selling price of a cup of milk tea are listed here, and the cost of store rent, equipment, personnel and other expenses is not included. Most opinions still believe that the profit of the milk tea industry is about 60%-70%.
But milk tea making money seems to be just a "castle in the air".
Zhihu netizens "dreaming of dreams that can't be seen" sighed, "You said that he made money and he also made money, saying that he didn't make money and didn't make money." Milk tea shops are generally opened in downtown areas, and the rent is about 100,000 yuan a year, plus daily water, electricity, labor, plus others. Originally planned to open one, messy calculations, do not make any money, basically for the landlord to work, so temporarily dispelled the idea of opening a store. ”
In addition to high costs such as shop rents, the bigger problem stems from fierce market competition. "There are seven or eight milk tea shops in the whole commercial street, not counting myself, well-known and unknown brands, and there is no shortage of copycat brands that are easy to confuse the public." Dahua said, "Although the location of my store belongs to the business district, the flow of people is not as large as expected, and the competition is also fierce. Consumers will not say that they must designate a certain store for consumption, the categories of each store are highly similar, and it is a problem not to carry out promotions or even store operations. ”
"When there are no promotions on a daily basis, the flow is less than 500 yuan. Although the gross profit is indeed good, close to 70%, but regardless of the 300,000 yuan invested in the early stage, only the daily operating expenses are very reluctant. Dahua said bluntly.
The pit that Chen Jiong stepped on was deeper. "The leeks were cut, the taste of the drink and the time to go to the company to investigate are very different, after joining the forced purchase of materials from the company is also a big pit, Taobao has the same model, but the price difference is more than ten times." The brand has no popularity, the taste is not good, there are few repeat customers, dry a day to lose a day, simply transfer, but also stop the loss. Chen Jiong, who joined a "quick recruitment brand" but hung up the "Wangpu sublease" less than two months after opening the store, lost 200,000 yuan.
Entrepreneurs are still like this, and the life of the head brand in the industry is not good. First of all, the repeated exposure of food hygiene and safety issues has attracted wide attention, and the rectification of stores has also damaged the trust of consumers time and again.
At the same time, Cha Yan Yue also experienced "internal and external troubles" in one year. Cha Yan Yue first announced the temporary closure of nearly 20% of its stores in November 2021, and it is the third time in 2021 that it will be temporarily closed. The epidemic has not yet passed, at the end of 2021, Cha Yan Yueshi has detonated major social platforms due to a "war of words" between nearly 10,000 high-level leaders and grass-roots employees. During the period, founder Lu Liang also revealed that the company lost more than 20 million yuan per month during the epidemic.
Lele Tea, which was once named "the three giants of high-end new tea drinking" by consumers and Heytea and Naixue' tea, has also fallen behind significantly in recent years. In July 2021, the day after Heytea responded to the suspension of the acquisition of Lele Tea, LatePost posted that it learned that Lele Tea was looking for the next round of financing. But in the past few months, Lelecha's most recent financing was still in July 2020.
Naixue's tea, which landed on the Hong Kong Stock Exchange in 2021 and made a lot of money, mentioned in the "Operation and Profit Warning for the Third Quarter of 2021" and the supplementary announcement that the year-on-year revenue growth rate in 2021 will be lower than expected.
The ratings of Naisher's teas by a number of brokers have also changed over time. Despite the opening break on the first day of listing in June 2021, many securities companies such as Guotai Junan and CITIC Construction Investment still gave NaiXue's tea "overweight" rating. In July 2021, Guosen Securities Research Report estimated that the potential reasonable valuation of Nesher's tea in the mid-line of 2023 was 19.5-36.2 Hong Kong dollars, which also gave an "overweight" rating. However, in October 2021, CICC published a research report that gave Nai Xue's tea a "neutral" rating for the first time, with a target price of HK$12.48.
2
Get together to play the idea of "milk tea"
In the past few years, "low threshold, high gross profit, fast return", new tea with these characteristics, has become the darling of cross-border enterprises in all walks of life.
Found on the menu of the restaurant "milk tea", is no longer a new thing, milk tea has been quietly integrated into people's lives, in addition to occupying a place on the menu, catering brands are also scrambling to try the "meal + drink" model, the launch of their own new tea brand.
Among a group of food and beverage brands, the hot pot brand is particularly important. Sipping and feeding "tea rice tea", Xiaolongkan's "Dragon Tea", Du Niang's hot pot "Du Niang's tea", a brother in the hot pot industry Haidilao also opened a "Haidilao Milk Tea Shop" after the launch of "9.9 Self-service DIY Milk Tea" in individual stores.
In addition to the hot pot shop selling milk tea in the catering industry, the Chinese fast food brand Rural Ki also opened its first new tea shop "Village Base Hand Cranked Tea" in early 2021. A few years earlier, Kung Fu Group, the parent company of True Kung Fu, hatched its own new tea brand "Cat Bear Boiled Tea" in 2015.
It is not only catering companies that have joined the milk tea army.
In November 2021, a message that "high-speed rail milk tea has been launched" landed on the first place in the Weibo hot search list. This "that girl" high-speed rail milk tea launched by Guangzhou EMU Catering Co., Ltd. caused a hot discussion. According to the data of Tianyancha, Guangzhou EMU Catering Co., Ltd. is 50% owned by Guangzhou Railway Station Car Service Co., Ltd. and Yishi Zongheng Co., Ltd., and the parent company behind Yiyi Zongheng Co., Ltd. is Caissa Tourism, an A-share listed company.
In addition, North China Pharmaceutical, which is also an A-share listed company, also launched the tea brand "Zhen Drink" in 2021, and the first flagship store was also unveiled in Shijiazhuang, Hebei Province in August 2021, and at the end of 2021, it was reported that investment materials were being produced and investment promotion activities were about to start. At the same time, there are milk tea shops on the market, as well as Wahaha, Wang Laoji, China Post and other entities.
Enterprises in all walks of life pay close attention to milk tea, whether it is the nature of the enterprise or the industry span, it is quite large. Behind the entry, naturally, is because it is profitable.
According to the "China Catering Category and Brand Development Report 2021" jointly published by the World Catering Federation and Red Food Network, the market size of ready-made tea drinks in 2020 is 113.6 billion yuan, and it is expected to reach 340 billion yuan by 2025, with a compound annual growth rate of 24.5%. Judging from the expectation of such a market size, China's tea market is still in the middle of development, in the rising channel, and far from touching the ceiling.
The world is bustling for profit, the 100 billion market is bound to be indispensable to the participants who come forward and follow, although the competition of the new tea drinking track is very fierce, but it is undeniable that this is also an imaginative track. While the brand wants to get a piece of the pie, it also tries to use the influence of its main brand to earn franchisees.
"There are currently two business models in the new tea industry, namely direct operation and franchise model. Brands that make tea across borders basically choose the franchise model, mainly using their brand influence to attract franchisees and earn franchise fees and management fees. "Xiao Huang, a staff member who used to be engaged in milk tea franchise agents, told Burning Finance that although the tea brands incubated by enterprises will be linked to large companies when attracting investment, the actual situation is that most of the tea brands are authorized to cooperate in operation." What's more, it hopes to become the next Mixue Ice City, through self-built large-scale production bases and raw material factories, to further reduce product costs and increase their own profit margins. ”
"The nature is not much different from the celebrity endorsement hot pot restaurant, which uses the popularity and reputation accumulated by the brand in the public's mind for many years." Xiao Huang also said that the cross-border opening of milk tea shops by enterprises is also due to the consideration of the company's development.
Although the Wahaha Milk Tea project is not directly operated by Wahaha, Wahaha holds 25% of the company's shares. In 2020, when the first direct-operated store of Wahaha Milk Tea opened in Guangzhou, Zong Qinghou also stood for it. With the reputation of Wahaha, there are many franchisees who come to the door at the beginning, but in the past year, basically no one cares, after all, tea brands continue to emerge, and franchisees also hope to cooperate with Internet celebrity brands with their own traffic. ”
Xiao Huang also said bluntly that although there are many milk tea brands, from the perspective of the development of franchisees he has cooperated with, eight or nine out of ten have not yet achieved profitability, and he himself left the company in October 2021. "Summer was supposed to be the peak season for our sales, but the volume of trading in the summer of 2021 is much worse than in 2020. The life of the franchisee is also not good, and the fastest one for the customers I have received is to close the store in less than 3 months. ”
3
Bloody inner roll bet on the future
The background of cross-border selling milk tea into a trend is all out of the desire to seize market share. The "China Catering Category and Brand Development Report 2021" also shows that the total number of tea brand stores below 100 in 2020 accounts for 81.9%, which shows that the industry has not yet formed a monopoly trend, and there are still potential opportunities.
In 2021, the development of new tea drinks has taken a big step ahead. In this year, the "first share of new-style tea drinking" Nai Xue's tea successfully sprinted to the Hong Kong Stock Exchange; because the magic song successfully out of the circle of the "five rings outside the player" Michelle Ice City is also a year of good news, September 30, 2021, the official website of the Henan Securities Regulatory Bureau disclosed that the Honey Snow Ice City counseling filing publicity, which means that The Honey Snow Ice City will be listed on A shares.
In the primary market, Xicha completed a $500 million Series D financing in July 2021, after which Heytea was valued at a whopping 60 billion yuan. According to the statistics of the Red Food Brand Research Institute, as of November 25, 2021, there were 32 financings in the new tea industry in 2021, with a total amount of more than 14 billion yuan, and the number of financing events and the amount disclosed have been higher than in the whole of 2020, reaching the peak of nearly 10 years.
After several years of barbaric development, the new tea has also entered the era of broken blades, and tens of thousands of milk tea shops have gradually presented three levels of brands at the high, middle and low end. In order to conquer the market and break the shackles of homogenization, major tea brands continue to open stores while developing new products, and their speed is getting faster and faster.
According to the data of Jiuqian Middle Platform, from 2018 to 2020, Lele Tea launched 600 new products (including peripheral products) in three years, and Xicha and Naixue have launched 300 new models and 200 models respectively in the past three years. Nesher's tea mentioned in the prospectus that it will launch a new product on average every week; and Heytea shows in its 2020 Annual Report that Heytea will produce a new product in an average of 1.2 weeks in 2020. As Nai Xue's Tea said in a recent announcement: "The Group has increased its research and development and promotion of hot drinks in winter with a view to improving the Group's sales performance in winter. ”
Innovation can stand out from many brands with serious homogenization, and more stores means more coverage. The person in charge of Wahaha Group said shortly after the opening of Wahaha Milk Tea that it will open 10,000 Wahaha Milk Tea Shops in the next 10 years.
The laggard Lele Tea clearly wants to make a comeback as well. At the beginning of December 2021, the public account of Lele Tea posted that "the fifth anniversary is reversed", saying that it is "committed to the number of stores nationwide in 2022 to exceed 300". Founded in 1997, after more than 20 years of development, the number of stores nationwide only exceeded 10,000 in June 2020, but in just over a year, the number of Michelle Ice City stores broke through from 10,000 to 20,000.
On the other hand, although the revenue growth rate of Naixue's tea in 2021 is not as good as in the past, the store opening plan can not be delayed at all, and even the number of new stores opened in 2021 exceeds the previous plan, and it is expected that the number of new tea and tea shops in Naixue will increase by about 50 throughout the year, and about 350 new tea shops will be opened throughout the year.
According to naixue's tea past public data, as of December 31, 2020, Naixue's tea has 489 tea shops in Chinese mainland, which means that the number of new stores opened in 2021 is 70% of the total number of stores in the past five years.
The number of Heytea stores has also added hundreds of stores in the past year, and the number of stores has exceeded 800. Compared with other brands, Heytea is going farther and farther down the road of doing VC in the next game.
In The investment project library of Heytea, there are a series of brands related to "drinking" such as coffee brand Seesaw, pre-mixed wine brand WAT, and wild plant brand YePlant. Among them, in November 2021, Ye cui shan, which caused a hot discussion because a cup of olive branches sold for 1,000 yuan, also received investment from Heytea. According to Tianyancha data, Heytea invested in the company on November 11, 2021, and became the largest shareholder of Yecuishan with a 60% shareholding ratio.
For the investment, the relevant person in charge of Xicha said: "The investment is only to promote the perfect integration of Xicha with other brands, accelerate the pace of research and development, and provide consumers with more new drinks." ”
It's true, for tea brands. The significance of cooperation in investment should be at the forefront. Like Naixue's tea and Shanghai Auntie's shares in the field shares, the main business is tropical fruit and vegetable processing, according to the data released by Tianye shares, Naixue's tea, tea Baidao and Shanghai auntie these three milk tea brands are its top three customers in the first half of 2021. It is not excluded that in the future, Nai Xue's tea and Shanghai aunt will strengthen cooperation with Tianye Shares to reduce costs.
Open stores, develop new products, make investments... This year's milk tea players are constantly breaking through their own boundaries and trying to open up outside the comfort zone, but their own development has yet to be tested in time.
Resources:
How much does a cup of milk tea cost? Milk Tea Cost and Profit Analysis Report", Source: 33 Catering Network.
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