Text | Radar Finance, author | Kaijing Zhang, Editor | Deep
The milk tea business, which was unusually hot last year, is now in a state of flux.
On February 8, the performance forecast disclosed by "milk tea first share" Nai Xue's tea showed that the company expected a net loss of 135 million yuan to 165 million yuan in 2021; followed by the news of internal layoffs, although Heytea responded that this move was a normal personnel adjustment and optimization, but the discussion about infighting, quality control failure, excessive overtime and other discussions on social platforms had fermented years ago. And similar topics, not long ago, also in the tea face of the large-scale closure of the store, the founder of the end and the employees of the fierce debate.
The head milk tea company is in a dilemma, and the new players who are pouring into the track are also complaining. "All the malls, pedestrian streets and communities, there should be some, tea brands are difficult to choose, new brands are difficult to have a head start." Mei Sheng, the founder of Xiaoxian Rabbit, once sighed.
According to the "2021 New Tea Beverage Research Report" released by the China Chain Store & Franchise Association, from 2018 to 2020, the growth rate of the revenue scale of the new tea market in mainland China was 26.5%, 23.4% and 26.1%, respectively, but in the next 2-3 years, the growth rate of new tea drinks may slow down in stages, adjusted to 10% to 15%.
The market is slowing down, internal management is repeatedly mired in controversy, and Xicha is facing unprecedented challenges.
Behind the rumored layoffs, the effect of Xicha Ping declined
On February 9, Sina Finance reported that Heytea was implementing layoffs internally, involving 30% of employees overall. Among them, the information security department is all laid off, the store development department is laid off by 50%, and the laid-off employees will be compensated by normal N+1, and they can also choose to transfer internally to other departments, such as technical posts to business posts.
The report pointed out that in the eyes of employees, the poor performance of Xicha in the past year is the main reason for layoffs, although the company is still making money, but the net profit has seen negative growth.
Radar Finance noted that in response to the xicha layoff storm, employees and the company gave diametrically opposed responses.
Xicha said that the relevant rumors are false information, the company does not have the so-called large layoffs, a small number of personnel adjusted to normal personnel adjustment and optimization based on year-end assessment. At the same time, the year-end bonuses of employees have also been issued to employees normally before the Spring Festival according to their performance.
However, the complaints of internal employees have long been unfolded in a large area on platforms such as Pulse and Little Red Book.
In response to the layoffs themselves, a junior drinker who claimed to be a Xicha store in the northwest region said that some employees had not implemented "N+1". "The partners in the front-line operation are not superficially layoffs, and most of them are optimizing the store structure to force the partners to leave their jobs."
It also revealed that since October last year, he has not received all his salary, no year-end bonus and new year subsidy, and the company mandates that he cannot leave his job during the New Year, because he is afraid that the store will not be manned enough.
Another employee said that in the live broadcast of the annual meeting, the largest red envelope on the day was only 188 yuan, and there was no 2-3 months year-end bonus promised by HR at the time of entry.
On this basis, many netizens have "attacked" the corporate culture of Xicha.
For example, users who are certified as Employees of Heytea on the pulse said that the commitment of Heytea when it entered the company was far from the actual situation, and the poor performance had to be throttled by a large number of layoffs. "What comrade-in-arms culture, employees give you the back, but you directly stab", "In fact, Xicha has been very turbulent in recent years, and the interior is very chaotic." Management is messy, nepotism is obvious; layoffs are a frequent thing that comes once a year; there are many people who want to be laid off, and getting n+1 is several times more than the year-end bonus. ”
In contrast, there are also voices pointing out that Xicha's layoffs at this time are preparing for the IPO. However, one of the capitalists behind Heytea, Zhu Yonghua, founder of Meituan Dragon Ball, said that Heytea would not consider listing within two years.
It is worth noting that the employees' statement that "the performance of Heytea has declined" is indeed confirmed by data.
According to the data of Jiuqian Consulting Middle Office, from July 2021, the average revenue of Heytea and stores nationwide began to decline. Taking the Data of October 2021 as an example, the average revenue and sales efficiency of stores fell by 19% and 18% compared with July; compared with the same period in 2020 last year, it fell by 35% and 32%.
From the perspective of store opening data, Heytea has a total of 695 stores by the end of 2020, of which 220 and 304 were newly opened in 2019 and 2020, respectively, but in 2021, until the third quarter, the number of company stores exceeded 800, and the expansion rate decreased significantly.
Troubles are not only like tea
Nai Xue's tea, which is called the "duopoly" of the industry with Xi Tea, has a bad life.
According to the results forecast, as of December 31, 2021, the Company recorded revenue of approximately $4.28 billion to $4.32 billion and adjusted net loss (not measured under IFRS) of approximately $135 million to $165 million.
In fact, losses are nothing new to Nesher's tea. According to iFind data, from 2018 to 2020, the company's cumulative net loss attributable to the mother exceeded 300 million yuan.
At the same time, the company's expansion has not met expectations. Huatai Securities Research Report pointed out that Naixue's tea will open 326 new stores in 2021, the number of which is slightly lower than the 350 previously planned. In 2018-2020, the company closed a total of 9 stores, but in the second half of 2021 alone, the company closed 10 stores.
More notably, the loss of Nesher's tea is based on the high unit price of customers. According to the prospectus, the unit price of Nesher's tea customers was 42.9 yuan, 43.1 yuan and 43.3 yuan in the first three quarters of 2018, 2019 and 2020, respectively, which was higher than the average of 35 yuan in the whole milk tea industry. This means that the company's revenue cannot cover a series of expenses such as high rent, material and labor costs for the time being.
Affected by this, The stock price of Nesher's tea broke on the market, and as of February 10, it fell by more than 60% from the issue price, and the market value evaporated by more than HK$20 billion.
Earlier, with product differentiation, low pricing, and quality service, it has become an industry sample, and The Internet red milk tea brand Tea Yan Yuese, which is the business card of Changsha, has also experienced large-scale store closures. It is understood that in 2021, there will be three centralized temporary closures of the store, and founder Lu Liang revealed that the company's average monthly loss during the epidemic period reached 20 million.
Under the huge pressure, there was even a scene where Lu Liang personally went down to tear up with employees in the work group, and after the contradiction intensified, many employees stood up and said that they did not get enough labor remuneration for their pleasant payment.
If the problems in operation affect only the company itself, then several food safety incidents in the past six months have really hit consumers' trust in internet red milk tea shops.
In August 2021, Xinhua News Agency reported that a series of food safety problems such as the dirty and hygienic environment of food processing, the deterioration of food raw materials, and the tampering of labels in many stores such as Naixue's Tea Beijing Xidan Joy City Store and Chang'an Shopping Mall Store have aroused social concern.
Subsequently, the Guangzhou Municipal Supervision Bureau conducted a surprise inspection of a number of net red beverage stores, and found that brands such as Heytea and Naixue's tea had improper preservation of prepackaged foods after opening, and the logos of pools, refrigerators, and ice pellet machines were not standardized enough.
A month later, Xicha was once again pushed to the cusp of food safety issues due to the accidental delivery of drink display props to customers by an employee of a store in Shanghai, resulting in the hospitalization of stomach wash after drinking.
In November, Shanghai Neixue's tea-related stores were again fined consecutively for failing to produce and operate food and food additives that marked false production dates, shelf life, or expired shelf life, as well as the total number of bacteria sampled for Golden Mountain Treasure Tea.
Why does the new tea drink "fall off the altar"?
The new tea track that was once favored by capital, why is the scenery no longer beautiful?
The 2021 New Tea Drinking Research Report divides the milk tea industry into three periods: the 1.0 "tea + milk" era before 1990, the 2.0 "tea + milk + fruit" era in 2012-2019, and the 3.0 "tea + milk + fruit + culture" era after 2020 to the present.
In the 2.0 era, what is particularly special is the birth of Heytea and Naisher tea in 2015. The two brands not only integrate homemade fresh fruit tea and cheese milk cover tea, but also successfully go out of the circle in the integrated marketing communication of the mobile Internet, and establish an Internet celebrity with its own traffic.
Different from the traditional franchise chain method, the two brands chose to directly cut into the high-end market, and hoped to lock in the consumption habits of young people with designed store decoration and creative specialty teas. At the beginning, The area of Nesher's tea store reached more than 200 square meters, which was no longer just a simple milk tea shop, but also a leisure and social life scene for urban women.
Capital is all too familiar with the way to quickly build unicorns, and since 2016, new tea drinks that have received financing have begun to expand wildly. In the case of Xicha, the total number of stores in early 2017 was about 50, which increased to 180 two years later, and has expanded to 835 by the end of the third quarter of 2021.
It's worth noting that this expansion is not simply copy-and-paste of stores. On the basis of standard stores, Xicha has opened black gold, PINK, DP and other theme stores; Naixue's tea pursues a multi-brand strategy, street chain store cover, 27FRUITS focusing on fruit cutting, more neutral Lishan, and bar Blabla Bar, all of which were once projects of NaiXue's parent company.
At the same time, the two stores also have to update their products frequently to retain the freshness and anticipation of consumers. According to reports, in 2021, Nesher's tea will launch a new product in an average of 5 days, and a total of 79 new products will be launched throughout the year, including 36 teas, 37 roasts and 6 coffees.
However, multi-brand multi-business lines also mean more complex supply chains and greater operational difficulties. In the view of observers, Nie Yunchen, the founder of Xicha, has just turned 30 years old in 2021, and Peng Xin, the founder of Neixue, is only 34 years old, and the social accumulation is relatively small, and the rapid expansion of the enterprise has brought great management difficulties.
Not only that, the characteristics of low product technical barriers, low industry access thresholds, low consumer brand loyalty, and inconspicuous mid-to-high-end segments are also destined to be a highly competitive track for new tea drinks.
According to the report released by iResearch, according to incomplete statistics, there are currently 163 new tea brands in China, of which chain brands occupy a market share of about 90.8% in the entire industry. The market share of low-end chain tea brands represented by Mixue Ice City is close to 50%, which is much higher than about 7.7% of high-end tea brands such as Hey tea, Naixue tea, and Lele tea.
In 2021, the scale of new tea stores has reached 378,000, accounting for 65.5% of the total size of ready-made beverage stores. The number of industry financing events and the amount of financing disclosed have reached the peak of nearly 10 years.
But among them, according to the first financial survey, the number of milk tea shops that have survived for more than 1 year in 2021 will account for only 18.8%, and nearly 80% of the new brand tea shops will close.
Xiao Yao, a Partner at Rees Strategic Positioning Consulting China, once said: "Nesher's tea, Xicha, Lele tea brands have not yet established a real differentiated advantage, although each one believes that there are more preferences for consumers, but the actual brand between the fungibility is very strong." ”
Even if they survive successfully, brands will face the problem of attenuation of traffic effects. At the beginning of 2022, when explaining the reasons for the price increase, Tea Yan Yue mentioned that the accumulated brand dividend and the procurement dividend brought by relying on the expansion of scale were no longer enough to support the superposition of raw materials and other costs year by year. The implication is that the traffic dividend of the brand is gradually dissipating.
Will diversification be the way to break the game?
As a person in the bureau, XiCha and Nai Xue's tea is not unaware of these drawbacks. In order to break the game, they are also groping for solutions.
At the beginning of 2022, Heytea has reduced the price of 14 single products to varying degrees, including a price reduction of 3-5 yuan for pure tea, 2-3 yuan for 5 fruits, and 1 yuan for cheese. The price of the cheapest pure tea product has dropped below 10 yuan.
A week later, Nesher's tea also lowered the price of the product in disguise. In its newly launched "Limited Time Easy Buy" series, some products reduce the capacity or eliminate cheese cream at the same time, compared with the previous price reduction of 5-7 yuan. This move is also called "allocation reduction and price reduction" by some industry insiders. At the same time, Nesher also launched a relaxed golden peony priced at 9 yuan.
As a result, some of the product prices of the two high-end tea leading brands have been comparable to those of the second echelon brands. In the industry's view, this is the means taken by the brand to stimulate consumption, increase turnover and efficiency.
In terms of sinking, Xicha is also offering "Xixiao Tea" priced between 6-16 yuan in 2020, and Peng Xin, who has said that "we have no plans to open a small shop", is also narrowing the storefront through pro stores and streamlining manpower. In contrast, Michelle Ice City launched the "M+" to explore the high-end market, and several major brands are vertically testing their unfamiliar price bands.
Horizontally, in addition to homemade tea drinks, Heytea is also adding ice cream, tea bags, water cups, bottled drinks and other businesses, and has invested in a number of start-up companies including pre-mixed wine, coffee and other fields. Among them, the coffee track has been crowded with many players such as Nai Xue's Tea, CoCo Duke, Little Point, And Honey Snow Ice City.
In January this year, Nai Xue launched more than 20 new Chinese dim sum and continued to cultivate intensively in the baking field.
Also gaining in the field of investment are the tea beauty that bets on Changsha's local tea brand "Guo Ya Ya", and the Mi Xue Ice City that invests in the Guangdong tea brand "Hui Tea".
Zhu Danpeng, an analyst in the Chinese food industry, told Radar Finance that on the whole, the new tea companies need to be continuously strengthened in terms of the integrity of the supply chain, brand tone, scene innovation, service system, customer stickiness, etc.
"This track is actually a very good track, the overall consumption power of China's new generation is still very strong, and enterprises have different emphases at different stages, but the recurrence of the epidemic has brought stage challenges to the track."
But there are also views that perhaps only by becoming the next "Wahaha" and "Nongfu Mountain Spring" can the new tea drink really find its own barrier.