Text | New Entropy, author | Li Lili, Lemon, editor | Moonmi
In the price increase of new tea brands such as Tea Yan Yue, Xi Tea has quietly reduced its price.
On January 10, some netizens found that some products of Heytea had a price reduction. Among them, the price of pure tea is reduced by 3-5 yuan, the price of 5 fruits is reduced by 2-3 yuan, and the price of cheese is reduced by 1 yuan. The signature milk tea of 32 yuan, Zhizhi Mangmang, was reduced to 29 yuan, and the price of succulent green was reduced by 4 yuan. The largest price reduction is pure milk tea, from 22 yuan to 15 yuan, and pure green tea has dropped to a unit price of 9 yuan, becoming the only single-digit cup drink in the store. However, compared with other mid-price milk tea brands with an average price of about 15 yuan, xi tea after the price reduction is still not out of the range of high-price unit price.
For this round of price reduction, Heytea responded to the "new entropy" that the mainstream product price band is still maintained between 19-29 yuan, not high-end tea, this round of price reduction thanks to the brand potential, scale advantage and continuous accumulation in the supply chain and deep ploughing in the upstream, Heytea has the ability to adjust the price of some products under the premise that the product formula, materials and quality do not change.
However, some insiders told "New Entropy" that this round of price cuts put aside the advantages of supply chain maturity, and the reason for the price reduction of Xi tea may be on the one hand to counter the disguised price reduction of Naixue's tea since December, on the other hand, it is also to crack down on those waist tea drinkers who are in the depths of the water. From the perspective of the new tea industry, the overall sales volume of high-priced tea drinks has been weak since last year, and since then, Naixue's tea has taken the lead in reducing prices through the sixth anniversary activities, and its performance in the fourth quarter has improved significantly.
This also reflects from the side that consumers are sensitive to the price of high-consumption commodities such as new tea drinks, and even consumers are willing to directly exchange the price with taste. Reflected in the data, in 2021, among the different echelon players in the different echelons of China's new tea industry, low-end brands accounted for 85.3% of the share.
The once scarce tea taste has now become increasingly popular, and behind the price reduction of Heytea is the quiet change in the competitive environment of new tea drinks. At the moment when the product difference is gradually becoming smaller, the window period for consumers to pay a high premium is closing, and Heytea has already felt it.
01 "Please don't call me a high-end tea drink"
From the perspective of price alone, the self-positioning of Heytea is obviously not "good quality and low price".
The more common coCo, a little point, tea baidao and other mid-end milk tea brands on the market, most of the product unit price is around 15 yuan, while the products of low-end tea brands such as Yihetang and Mixue Ice City are only about 10 yuan, and the price of pure tea products is hovering between three or five yuan.
The overall pricing of Heytea products is high, most of them are around 30 yuan, which is a rare milk tea brand on the market with a unit price of more than 30 yuan, and even Naixue, which is known as a "high-end new tea drink", also rarely has a unit price of more than 30 yuan.
In order to support a cup of milk tea of 30 yuan, it can be seen from the city where Heytea chooses to open a store that its target group positioning is highly similar to high-end drinks such as Starbucks and Naixue, mainly in the layout of new stores in first-tier cities, and at the same time, in order to "screen" out high-net-worth groups, almost 90% of the stores are located in shopping malls, with the main purpose of covering the core business circle.
According to the data of the narrow door dining eye, as of October 2021, Heytea only has 878 stores, mainly distributed in Guangdong Province and Jiangsu, Zhejiang and Shanghai and other economically more developed southern cities, the number of stores in first-tier cities accounts for 43%, and the number of stores in new first-tier cities accounts for 31%, which means that the cost of opening stores in Heytea is more expensive than other milk tea brands.
Low-end milk tea brands that are not stuck in first-tier cities or core business districts are obviously less stressed in terms of store costs, and can seize the market with a large number of stores. The mid-range tea brand Shuyi Xiancao has opened more than 7,000 stores nationwide, the ancient tea with a unit price of 15 yuan also has more than 5,500 stores, the number of stores of a large number of mid-range tea brands such as CoCo, Tea Hundred Ways, Little Point, and Shanghai Auntie has also exceeded 1,000, and the low-end tea brand Michelle Ice City has opened more than 20,000 stores.
As a FMCG, the cost performance is undoubtedly a more powerful competitive strategy, but when the tea powder, plant fat powder and creamer become the tacit tacit understanding of the milk tea industry, Heytea uses freshly brewed tea and fresh milk, uses imported New Zealand well-known brands to make cheese milk caps, selects S-grade fresh fruits, and peels fresh flesh by hand... These are costs that can rise and cannot fall. In order to ensure the quality of raw materials, Heytea also built its own organic tea gardens, and has been involved in the production of various raw materials such as taro and raw coconut.
High-quality raw materials may be the source of Heytea's high pricing, and it is also the embarrassing reason why Heytea can't really cut prices and cut into the middle end. The tea market that is constantly rolling in needs more "inspiration", but in the era of consumption downgrading, high-priced tea drinks seem to be out of time, and Nai Xue, which is positioned as a high-end tea drink, has been defeated in the secondary market, and Heytea may also have begun to hesitate, and this price reduction is probably also a test of Heytea's entry into the mid-market.
Among the products that adjust the price of Heytea, at least 5 original prices are more than 30 yuan, and they are all non-seasonal products, but after the price adjustment, there are still many fresh fruit products in the product list of Heytea with a unit price of more than 30 yuan, after this round of small price reduction, how to grasp the mind of price-sensitive users is still a test.
02 Hi Tea Down
The "2019 New Tea Consumption Report" has already mentioned that "the tea market in first-tier cities tends to be saturated, and the head tea brand is unstoppable to sink the market." "High-end brands have long smelled the industry trend.
In April 2020, Heytea launched the sub-brand Xixiao Tea, which was regarded by the outside world as a move by Heytea to test the sinking market. At the time of the launch of Xixiao Tea, the number of Xicha stores was more than 600, concentrated in the first-tier and new first-tier cities with stronger consumption power, and the objective conditions such as the scale effect and brand potential of Xicha at that time were doomed to the significance of the birth of Xixiaocha: as a supplement to Xicha in the high-priced unit price market.
Regarding the difference between Heytea and Xixiaocha, the official introduction is: "In Heytea, we want to make the best tea with the highest standards; but in Heyxiaocha, we are committed to providing suitable and just right teas, and making them as affordable as possible on qualified standards." ”
Observing the product layout of Xicha and Xixiaocha, it can also be found that compared with the tea of inspiration and the xicha that advocates individuality, in order to be "just right and suitable", the raw material selection of Xixiaocha is slightly mediocre.
In 2020, Heytea released an annual report, Heytea TOP5 products, there are four are fresh fruit tea, grapes, strawberries, peaches, mangoes and other materials selection, transportation, storage, processing, etc. are very test cost control; at the same time, the top three xixiao tea released at the same time: young fairy grass grand slam, original bean flower milk tea, original cake milk tea, are based on milk tea, supplemented by different small materials of conventional tea, these materials even if in line with the xixiao tea "fresh milk fresh tea" proposition, in the cost of raw materials is significantly lower than the main brand of fresh fruit materials.
To the basic combination of "tea, milk, desserts" as the mainstay, the tea base is ordinary, the dairy products are simple, and the fruits are rarely selected from high-end complex greens, grapes, cherries, etc. If the small tea does not use the high-end fame of the tea, it is pure fighting in the mid-end market, and there are not too many advantages to speak of.
The secondary effect of the strong correlation between the main and sub-brands has also gradually emerged, and compared with the sub-brands such as Taigai and Lishan launched by Naixue's tea, the feeling of Xixiao tea attaching to Xicha is more obvious. This brand effect trades over the original high-end image of Heytea and exchanges competitive space for sub-brands, and the two are not complementary to each other, but a relationship between one and the other.
Heytea itself also understands the emotional value of a high-end cup of tea as a social currency, but yielding is inevitable. In the face of the rise in raw materials and the increasingly coiled tea market, whether it is a price increase in tea or a price reduction in tea, in essence, they are seeking a dynamic balance of production capacity and profits, and Heytea has only made a long-overdue action at the critical point.
Only after the scale of the crowd that consumes Heytea rises, it is possible for Heytea to open more stores in a broader market in exchange for greater brand potential.
Looking back at the chain reaction of the price reduction of Xi tea, it is not without cattiness. In the regular sales category, more products are to remove the small material, add the word "pure", turned into a "new product", as for the real new product price reduction, some catering industry insiders to the "new entropy" said: "The new product pricing originally had an attempt to adjust the period, in the catering called the adjustment menu, enrich the price band." Heytea announced a price cut in the tide of peer price increases, which is more like a marketing that goes against the grain. After the price increase of tea, it still falls in the middle zone of 10-20 yuan, and the price reduction of some products of Xicha has not left the first echelon, the essence is a compromise made by the supply side to the demand side, and consumers need real products, rather than the price of self-congratulation. ”
03 A 60 billion valuation defense war that must be defended
Stores, investment, new retail, the troika of Heytea layout seems to be running out of more and more anxiety under the valuation of 60 billion.
Relying on the offline stores and convenience store channels to launch the Xicha bottled beverage, under the siege of new and old brands, it is more like an insignificant decoration of the fiery new consumption track. Also choose the sparkling water field, the same main zero sugar zero fat zero card health concept, to create a hi tea brand "Yuan Qi Forest" is not so easy. Taking the sparkling water promoted by Xicha as an example, in 2020, the unit price of 5.5-6.5 yuan of Heytea sold 1.9 million bottles, while the sales volume of 5-6 yuan yuan of Yuanqi Forest was calculated in hundreds of millions.
In addition to catching up with the sparkling water, through investment, Heytea and Yuanqi Forest also meet on the narrow road on the coffee track. In October 2020, Challenger Capital quietly invested in Never Coffee, a bottled ready-to-drink coffee brand, and two months later, Luckin Coffee executives joined Yuanqi Forest. In early 2021, the largest shareholder of the Never Coffee brand has become a genki forest.
The first investment after turning VC, Heytea also chose the specialty coffee track. In July 2021, Heytea led seesaw coffee's over 100 million yuan Series A financing, and soon launched a joint gift box during the Mid-Autumn Festival, striving to "collaborate and share with the coffee brand at multiple levels." ”
With the first investment attempt, Heytea began to blossom more, in August the acquisition of Wang Lemon Tea, accounting for 70% of the shares, in September invested in the oat milk brand "Wild Plant YePlant", in October, into the tea brand and peach peach, participated in the A round of financing of the pre-mixed wine brand WAT. In November, it became the largest shareholder of the "Molecular Juice" brand Yecuishan.
A new tea brand, on the road to VC, the biggest reason is probably the crazy inner volume of the new tea drinking track. From milk tea to cheese tea, in order to be "creative", new tea drinks even promote niche fruits into the public, in March 2020, Nai Xue launched a domineering jade oil citrus product, in a short period of time its popularity is close to the previous sales list of domineering cheese strawberries, in just two months, Heytea also launched a series of oil citrus products, driving a number of tea and coffee brands to notice this niche fruit.
For example, the niche fruit yellow peel was sought after by many brands for a time, Yihetang opened a sale of sea salt honey yellow peel, Xicha launched a succulent yellow skin fairy dew, Lele tea on the shelf to pound the succulent yellow skin, this series of new actions squeezed within a week. When a new tea brand "digs" out a new way of playing a niche fruit, other brands will quickly launch similar products, after all, the complexity of tea products is not high, and the difficulty of replication is not large.
But the "blockbuster" is not enough to become a brand moat, at least in the tea circuit is difficult to achieve. Nai Xue is gone on the road of "third space", Heytea opens the "VC" copy, seemingly different behind the road, the new tea drink has been rolled up.
Under this historical trend, the product depth is strong, the iteration speed is fast, the consumption frequency is high, there are too many ready-made tea shops that can flex and stretch, the track has begun to be crowded, and the tea is like sailing against the current, and if it does not advance, it will retreat.
In the face of dissenting consumers, rising shop rents, and salaries that can rise but not fall, tea brands can only have a future if they continue to iterate forward and run wild.