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"Can you 'encircle' Nai Xue and 'suppress' Cha Bai Dao?"
The source of this article is "Kai pineapple finance" (ID: kaiboluocaijing), which is reprinted by Tencent Venture with permission.
Author/Jin
Editor/Wei Jia
At the beginning of 2022, the price of Xicha has quietly decreased and entered the 10 yuan era.
Open Pineapple Finance to view the Hi Tea GO Mini Program, field visits to a number of stores found that its price list and menu have been updated synchronously, the price reduction categories include pure tea, milk tea, fruit tea, a drop of 3 yuan -7 yuan.
Cartography / Open Pineapple Finance
Pure tea products are the cheapest after the price reduction, such as pure green tea after the drop from 13 yuan to 9 yuan, pure buds from 16 yuan to 11 yuan, Zhizhi green tea from 19 yuan to 14 yuan; milk tea category price reduction is the largest, such as pure cow milk tea from 22 yuan to 15 yuan, straight down 7 yuan; pure berry in fruit tea also dropped by 7 yuan, the current price of 25 yuan, in addition, succulent grapes without cheese version from 29 yuan to 25 yuan, Zhizhi berry / Mangmang from 32 yuan to 29 yuan; small materials, cheese also dropped by 1 yuan.
All the milk tea rose and fell alone, and the workers who were addicted to milk tea finally smiled, but naixue should panic.
Nesher's tea (hereinafter referred to as Nesher) went to the cheese version of the domineering cheese strawberry 32 yuan, the domineering grape 28 yuan, higher than the price reduction after the hi tea; there are surveys show that the second echelon of ancient tea, the highest selling 2 single cheese succulent grapes and cheese berry, is to imitate the cheap alternative launched by heytea. After the price reduction of Heytea, the market of "flat substitution" may be impacted.
It is worth exploring that Xi Tea, the originator of the 30 yuan cup of Internet celebrities, the Jianghu people call the milk tea industry "Hermes", now silently reducing prices, what is the calculation?
According to the analysis of many industry insiders, the expansion speed of the main brand of Xicha has slowed down in 2021, and the single-store ping effect has not improved; the sinking KPI was originally handed over to the "pro-son" Xixiao Tea, but only 3 new stores were opened in half a year, and the effect was lower than expected; the stock price of Naixue, which was listed first, fell by 60% in half a year, and the "second share of new tea drinks" Michelle Ice City is on the way - Heytea wants to seek a higher valuation, reduce prices to grab users, and invest in expanding territory, which may be something that has to be done.
1
Hi tea price reduction,
Involuntarily or voluntarily profitable?
From the end of 2021 to the beginning of 2022, the tea industry players "made an appointment" and collectively increased prices. The "first share of milk tea" Xiangpiaopiao raised the price by 2%-8%, and the price increase of the tea color of the tea color that has been in turmoil for the first time in 5 and a half years has increased. Lin Yazhou, an entrepreneur of a regional tea brand, said to Open Pineapple Finance that the recent environment of the tea industry is the continuous rise in equipment and raw material prices.
Only the Xicha family "dares" to reduce the price, where does the confidence come from?
Heytea responded to the media's statement, "Our mainstream product price band has been maintained between 19-29 yuan for a long time, not the so-called high-priced tea, and this price adjustment is also the normal adjustment action of Heytea in its own mainstream price band." ”
Xicha said that he was not a high-priced tea drink, which immediately attracted the sneering ridicule of netizens, after all, the unit price was sold to more than 30 yuan, and Xicha was the first of the new tea drinks. Take The 2020 sales champion "succulent grapes" of Xicha, according to the data of Zhongtai Securities Research Institute, the price of a cup of cold 650ml / hot 500ml "succulent grapes" is 29 yuan, and the cost of raw materials is about 8 yuan-10 yuan.
The relevant person in charge of Xicha told Kamen, "Xicha has indeed lowered the price of some products this time. This is due to the brand potential, scale advantage, as well as the continuous accumulation in the supply chain and the deep cultivation in the upstream, so that Heytea has the ability to adjust the selling price of some products under the premise that the product formula, materials and quality do not change. ”
In Lin Yazhou's view, a new tea drink for the head of a single cup to the ceiling of 30 yuan suddenly broke into the 10 yuan era, and things may not be so simple. He believes that in general, the number of directly operated stores exceeds 800 (according to Heytea's "2021 Inspiration Tea Report"), and the reasons for the price reduction are no more than two.
One is that as Xicha said, it has gained a certain supply chain advantage in the upstream, so it can give the price to consumers accordingly, but this possibility is very low, and more bluntly, if the sales volume is normal, the probability will not be reduced.
Another reason is to stimulate consumption and increase turnover to roll cash flow. "The epidemic has been repeated, the offline performance of tea drinking has been quite affected, the pressure on labor and rent costs is very large, and Heytea is a direct store."
In fact, like tea is good or bad, look at the ping effect to know. This indicator is the key to determining the profitability of new tea drinks.
"Judging from the strategy and playing style of Heytea, it is foreseeable that the rapid opening of stores has led to the decline in sales today. However, it still depends on the final result, because the decrease in sales does not mean that the cost will become higher, or the net profit will become lower. A consulting expert said.
According to the data of a research agency, since 2020, Heytea has been experiencing a decline in single-store ping effect, in addition to being affected by the epidemic, the main reason is the diversion of stores brought about by the rapid opening of stores; in 2021, as of the third quarter, with the increase in the number of stores nationwide, the single-store ping effect of Heytea has declined significantly year-on-year.
The decline in the efficiency of single-store ping can be said to be the inevitable result of the road to expansion. Starbucks has also suffered from a more than 20% drop in sales per store. The solution is to improve the upstream supply chain and the refined operation of stores to improve profitability, which is also the direction of Xicha's efforts.
As a practitioner, Lin Yazhou is also worried that the price adjustment of more than 800 stores will not undermine the stability of the supply chain and operating system of Heytea.
Shen Jiuqiao, an investor in the catering field, believes that the direct operation mode of Xicha, price reduction will not face many resistance to the franchise model, in theory, the price reduction will bring about a reduction in the gross profit of a single cup and an increase in the daily cup volume of a single store, which may have little impact on the profit of the store, plus, the supply chain system or self-control or investment of Heytea, the impact of cup volume growth on the supply chain system may be controllable.
The earliest high-end new tea drinking track was opened up because Heytea added fresh fruits to the tea, so that a cup of tea has a higher sense of value. Xicha has also established a refined brand image by selecting mainstream business district store sites + upgrading store decoration, and pushing the price of products from 10 yuan to 20 yuan / cup of traditional tea to 20 yuan - 30 yuan / cup.
Nowadays, the price of some products of Xicha has been reduced, and the interpretation of Zhuang Shuai, the founder of Bailian Consulting, is that it has entered the stage of stock competition. To strive for existing users, it is necessary for the brand to cover more price bands and product lines, and the proportion of the number of heytea price reduction commodities does not exceed the range of 20%-30%, so it will not damage the brand image of high-end tea drinks.
This is similar to the "dimensionality reduction attack" of Mercedes-Benz, BMW, and Tesla, which was originally a high-end brand, and suddenly launched several low-end models to obtain more consumer groups and differentiate against competitors, killing two birds with one stone.
2
Can you "encircle" Nai Xue and "suppress" Cha Bai Dao?
Xi tea reduced prices, opponents "suffered", Nai Xue bore the brunt of it.
Succulent grapes, succulents and berries have a lot of prestige on the battlefield of new tea drinking, the earliest, Heytea is to seize the mind of grapes and strawberries, the first time, in the late stage, Nesher star fresh fruit tea, there are just domineering grapes and domineering cheese strawberries.
Naisher's domineering grapes are 28 yuan, domineering cheese strawberries are 32 yuan (including cheese, the same price without cheese), and now, the pure succulent grapes of Heytea (excluding cheese) have dropped from 29 yuan to 25 yuan, and pure berries have dropped from 32 yuan to 25 yuan. The original price was widened.
When: May 2021
Before the price reduction of Xicha, the data of Jiuqian Middle Platform showed that it was in the same echelon as the price of Naixue, and the unit price of the guest was 50 yuan and 43 yuan respectively. More than 400 consumer samples previously surveyed by Jiuqian Zhongtai showed that the customer groups of the two companies overlapped very highly. For most consumers, which one is not an irreplaceable choice, if the tea queue, may go to buy Nesher.
"If Nesher still adheres to the current pricing, it will definitely be more passive in the same business district and location." Sky, a former tea brand entrepreneur, analyzed.
Open Pineapple Finance visited a business district in Beijing where Xicha and Naixue both set up stores, and a number of takeaway workers noticed that perhaps because of the price reduction, xicha's orders for afternoon tea time in recent days have indeed become more, and the order volume of Naixue in the same business district does not seem to have changed significantly. More than one consumer who went to the Xicha store to pick up a meal said that he came specifically to buy reduced-price drinks.
Lin Yazhou explained the logic of price reduction on the opening of pineapple finance: Xicha must have done research before the price reduction, know where Nai Xue's fruit is purchased from, how much the cost price is, and when judging that if the opponent follows the price reduction, there is no cost advantage, and the loss of interests will be lost, and he will still be able to afford to lose or still have a small profit. For example, in theory, if your own cost is 20% lower than the other party, you can reduce the price by 10%.
The price reduction of xi tea may also affect the tea hundreds of the second echelon.
Lin Yazhou said that the tea chain is divided into several price bands of less than 10 yuan, 10 yuan - 15 yuan, 15 yuan - 20 yuan, 20 yuan - 25 yuan, and more than 25 yuan according to a grade of 5 yuan. Now, the cheapest "pure green Tea Queen" of Xi Tea sells for 9 yuan, reducing the price bottom line to less than 10 yuan, and one family occupies the full price band.
However, Sky and he both believe that Xicha is actually coveting the price band of 15 yuan-25 yuan. After this round of price adjustment, the price of 11 products of Heytea is 25 yuan and below, and the price of 6 products is 15 yuan and below.
In this price band, the new tea drink user base is the most concentrated, the competition is the most fierce, and most of the thousand store chain brands are grabbing food inside.
"The price range of Heytea's price-reducing products is very close to the mid-range head brand, namely Tea Hundred Dao, Ancient Tea, Book and Burnt Immortal Grass." Sky said that 15 yuan is the dividing line between mid-to-high-end ready-made tea and low-end tea. According to Jiuqian Zhongtai data, the average price of a single cup in a store in Chengdu is 15 yuan; in 2019, the ancient tea of Heytea's affordable alternative to drinks was launched, and the unit price of customers in 2020 was 13.9 yuan.
From the perspective of scale, there are 7,000 stores of books and immortal herbs, and the number of shops of ancient tea and tea hundreds of ways has exceeded 5,000. Sky judged that the number of stores of these three mid-range brands is very likely to exceed 10,000 in the next step.
The price of freshly made tea drinks is brand loyalty
Source / Guosheng Securities Research Institute
However, the lower the price band, the lower the brand loyalty.
Sky said to Open Pineapple Finance that Xicha is in the range of 15 yuan-25 yuan, and it is almost difficult to play the above brands, which can quickly encroach on the market in the same location. "It is not an exaggeration to say that it will have an impact on the entire tea market, and consumers will definitely choose products with a more brand sense of the same price segment."
In Shen Jiuqiao's view, stretching the timeline, pulling down the price of some products of Xicha, adapting to a wider range of people and site selection, combined with a more aggressive expansion strategy, will cause some impact on players in the medium price band. However, the expansion rate of Xicha under the direct operation model may not be ideal.
In fact, the KPI of the "dimensionality reduction strike", XiCha was previously handed over to the "pro-son" Xi Xiaocha.
Xi Xiao Tea is a sub-brand launched in 2020, the unit price of customers is 13 yuan-16 yuan, mainly against the price of a little bit and coco. In May 2021, Xixiaocha released data saying that it would open 22 stores in 6 major cities in Guangdong (Shenzhen, Guangzhou, Dongguan, Zhongshan, Foshan and Huizhou) in one year.
Note: Tai Gai is a sub-brand established by Neisse in 2017
However, in the latest "2021 Inspiration Tea Drinking Report", Heytea disclosed that the total number of stores was 800+, and the GO stores with high hopes opened 200+ new, without mentioning Xixiao Tea.
Open pineapple financial inquiry Xi Xiao Tea WeChat Mini Program found that in the 6 months after "showing muscle", Xi Xiao Tea only opened 3 new stores, expanded a city in Jiangmen, and always lived in Guangdong.
"Time has passed so long, Xixiao Tea, as a sub-brand, has not quickly occupied the market, indicating that there are problems in the strategy." Sky analyzed that the "pro-son" was unfavorable, and Xicha now had its own meaning.
3
Nai Xue was beheaded, Mi Xue wants to go public, Xi Cha is in a hurry?
Since the second half of 2019, the competition of the head new tea brand has entered the stage of store expansion and refined operation from product innovation. Xicha and Naixue are crazy to seize the shopping mall points in first- and second-tier cities. By the end of 2021, Xicha 800+ stores and 817 Naixue stores (According to Naixue's fourth quarter 2021 operating report).
The eldest and second are anxious to expand, but the first- and second-tier cities are almost saturated.
According to the "2021 China New Tea Industry Analysis Report" by Ai Media Consulting, 49.8% of new tea consumers are distributed in first-tier cities, and 22.7% are distributed in second-tier cities. However, in first- and second-tier cities where 72.5% of consumers gather, the number of consumers of new-style tea drinks, the density of shops and the size of the market are almost at the top, and it is difficult to have a breakthrough growth.
Xicha opened 220 new stores in 2019 and 304 new stores in 2020 (a total of 690); Jiuqian Middle Office data shows that 198 new stores will be opened in 2021 (the latest total of 888). Taking East China, where tea drinking competition is most fierce, as an example, due to the late entry of Heytea into the market, good points have been occupied by brands such as Starbucks, and in Shanghai, it is even more difficult for Heytea to get good points in the city center.
But the situation is not waiting for anyone.
In the first half of 2021, milk tea is still the most sought-after one in all offline consumption tracks, in the second half of the year, "the first share of new tea drinks" Nai Xue was bearish all the way, the market value fell by 60% in half a year, and the Honey Snow Ice City that impacted the "second stock of new tea drinks" has entered the listing counseling period, and the burden on Xi Tea is getting heavier and heavier, if you want to support a high enough valuation before the IPO lands, you can't just sing the old tune of tea drinking.
After getting a new round of $500 million financing, Heytea began to make frequent moves on the road of CVC (corporate venture capital).
Since July 2021, Heytea has intensively launched 6 brands, including specialty coffee Seesaw, lemon tea brand Wang Lemon, fruit tea brand and peach peach, juice brand Ye Cui Shan, oat milk brand wild plant YePlant, and pre-mixed wine brand WAT. The investment shareholding ratio is from 5% to 60%, which shows the ambition of Xicha in the business of "drinking".
Source / unsplash
Zhuang Shuai summarized the projects invested by Xicha into three types, the first type is to rely on investment to expand the categories that they do not do well enough, the most typical is Seesaw coffee; the second type is to lay out FMCG brands through investment, mainly canned products, such as Wild Cuishan and WAT, which can improve the increment of other channels; the third type is to build a back-end supply chain, and its investment in wild plant YePlant is the second largest supplier of B oat milk in the country, in addition, It also smashed the upstream supply chain to build a self-built tea garden in Fanjingshan, Guizhou, and a jointly built betel nut taro planting base in Guilin, Guangxi.
Nie Yunchen, the founder of Xicha, revealed the future planning of Xicha as early as 2019: "Our consumer industry has only two barriers, or eventually become a wheel that has been turning, constantly affecting the upstream and downstream, so as to further expand its own scale, and finally realize the super platform of the strong Hengqiang, such as Meituan, Tmall, JD.com, amazon; or become a super brand with the brand itself as a barrier, like Coca-Cola, Starbucks, McDonald's, or those luxury brands." ”
Zhu Yue, a partner at CIC Insight Consulting, told Kai Pineapple Finance that Heytea's downward investment in the brand is an attempt to expand products and potential consumer groups, and the essence is still seeking a second growth curve of the business. In Shen Jiuqiao's view, Xicha controls the upstream by way of equity, which can obtain more gross profit space and ensure the stability and competitive advantage of the supply chain.
In general, Lin Yazhou analyzed that the price reduction of Xicha belongs to the "inner volume" on the main business track, grabbing users and grabbing the market; doing CVC investment is intended to buy other people's stories and expand their own territory.
Li Yingtao, senior analyst of the new consumer industry at Analysys Analysis, said that after several years of outbreak of new tea brands, some brands have obtained a certain scale foundation, industry competition has shown a white-hot trend, the industry integration in the second half will accelerate, and the number of users, the number of stores and the scale of final revenue will be a weapon to integrate others, and the living space of competitors can be further compressed by reducing prices.
"The most typical example is the catering brand Jiumaojiu that has been listed, because of its low gross profit, many categories, and it is not easy to standardize, if it is not because of the incubation of high-profit margins of Taier sauerkraut fish, the listing would be hopeless." Shen Jiuqiao said to Open Pineapple Finance that now, the listed bubble mart, the unlisted Yuanqi Forest, KKV, are all telling the story of the investment territory. From the perspective of doing high valuation, it is understandable to tell the story of CVC. ”
Lin Yazhou sighed, "Xicha broke into the 10 yuan era, it depends on how Nai Xue reacts." "A butterfly flapping its wings may trigger a storm, and the butterfly effect of the price reduction of hi tea may be imminent."
*Title image source Visual China. At the request of the interviewees, Lin Yazhou, Sky, and Shen Jiuqiao were pseudonyms in the text. Third Bridge Consulting also contributed to this article.
END
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