Image source @ Visual China
Text | Fat whale headlines
Heytea tried to tear off its "high-priced" label.
On February 24, Heytea announced the completion of product price adjustments carried out since January, and will not launch new beverage products of more than 29 yuan this year, and promised that existing products will never increase in price this year.
Xicha also revealed to the outside world that after the price adjustment, in addition to a few city-limited products, peripherals, as well as a small number of products in LAB stores and hand-made stores, the product prices of mainstream stores are all below 30 yuan, and the proportion of products priced at 15-25 yuan in all products reaches more than 60%.
"Everyone is drunk and I wake up alone"
The timing of the official announcement of the price reduction of Hi Tea is very special.
Just the day before (February 23), Lele Tea had closed all stores in Guangzhou after being exposed, and Lele Tea responded by "concentrating on the East China market". Earlier, Nesher's Tea (02150. HK) issued a 2021 performance profit warning announcement showing that losses are intensifying and the stock price continues to decline.
More peers are cautiously raising prices: on January 4, xiangpiaopiao, the leader of brewed milk tea, issued an announcement about the price increase of some products; the next day, Tea Yan Yue announced that most of the products will be raised by 1 yuan from January 7; on February 16, "Starbucks price increase" landed on the first place in the Weibo hot search list, and consumers found that the price of many products was 1-2 yuan higher than before; Luckin and Tims Coffee also recently raised the price of some products.
In this context, the price reduction of Xicha against the trend is very friendly.
The feeling of pure tea decline is very obvious, pure green tea from 13 yuan to 9 yuan, directly killed to 10 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; small material, cheese also dropped 1 yuan. In conjunction with this price reduction, the menu bar of Heytea has also been updated, and the "average recommendation" menu bar lists 15 products priced at 9-19 yuan.
In the consumer-facing price adjustment declaration, Heytea reviewed the growth process of the brand for ten years, and found that "expensive" has become a brand impression, but now hopes to find the original intention, use the advantages of the supply chain to support the price reduction, so that more people can drink Heytea.
In fact, the upward pressure of raw materials is widespread in the tea market, and the prices of fruits, fresh milk, coconut milk and syrup are constantly rising.
Cha Yan Yue said in the price increase notice: "Under the best circumstances, we still hope to improve the quality as much as possible but the price remains unchanged. However, the inflation of the general environment in recent years has been too strong, the raw materials and other costs in the market have risen year by year, and the dividends accumulated before cannot withstand a series of superimposed costs. ”
Starbucks CEO Kevin Johnson also mentioned inflationary pressures at the first quarter results meeting of fiscal 2022: "We plan to take further pricing actions for the rest of the fiscal year, which plays an important role in alleviating cost pressures, including inflation. ”
Compared with the price increase of 1 yuan and 2 yuan of peers, the decline of 3-7 yuan of Heytea is full of sincerity. Can such an obvious concession help Xicha expand the market?
Hi Tea started with the "Imperial Tea" in 2012. Heytea's explanation for the name change is that in order to distinguish it from the endless cottage brands, it has been fully upgraded to a registered brand "Heytea HEYTEA".
Ten years later, the style of copycats and plagiarism in the tea market is still prevalent, the phenomenon of product homogenization has not changed, and the high-end brand image management of Heytea for many years has finally bowed to the macro conditions.
The same echelon of Nesher and Lelecha have already responded to this. At present, There is a category of "super value and delicious" in the order page of The Tea Mini Program of Neixue, and the price is below 20 yuan. On March 3, Lele Tea released a price adjustment message through the WeChat public account, "Lele Tea resolutely does not discount (said to be the quality") article said that the price of some drinks has been controlled below 20 yuan, of which the lowest price of pure tea fresh extract jasmine green price of 8 yuan. The price war has begun.
"Imperial Tea" accepts "demotion"
If you look at the change in the popularity of the brand, the most concerned time point of Heytea is in Shanghai in 2017, and the highlight moment of tea is the opening of the first store in Wuhan in November 2020, and last year, the unique was Mixue Ice City.
They represent high, medium and low-grade chain tea brands with an average price of more than 20 yuan, more than 10 yuan and less than 10 yuan respectively.
This change in heat also reflects the "downgrading" of tea consumption habits from the side. Although the overall market size is growing, the increment may shift in the direction of the low-mid-range.
According to the disclosure of Heytea in the "2021 Inspiration Tea Drinking Report", the number of its global stores is 800+, of which 200+ go stores have been added. Combined with the total number of 390 stores in 2019 and 695 stores in 2020, it means that the net increase in Heytea stores in 2021 is less than 200, and considering that the scale of new GO stores is more than 200+, it can be reasonably speculated that the main stores of Heytea in 2021 will grow at 0 or even negative growth, which is obviously restraining its own ambitions.
According to Guosheng Securities Research Report, in 2021, Naixue opened 342 new stores throughout the year, basically completing the annual exhibition store target, closing 16 stores, adding 326 stores, and as of 2021, Naixue operated a total of 817 stores. This scale is already comparable to Xicha, on March 3, Fat Whale inquired from the official website of Xicha, and the total number of Heytea stores is currently 889, and the number of GO stores is 196.
On the other hand, the offensive of low-end brands is much fiercer, especially the crazyst franchise brands.
From 2018 to 2020, the number of stores jumped from more than 1,300 to 5,000, and there are currently 7,000 stores.000+. In September 2020, the number of stores just exceeded 2,100 Shanghai aunts, and by December 2021, the number of stores has exceeded 4,000. The number of stores is more than 4,000, as well as Gu Ming, CoCo Duke, Cha Bai Dao, YiheTang, and Mi Xue Ice City has reached 20,000+.
According to iResearch consulting data, in 2021, the market share of high-end brands in mainland new tea drinks (that is, unit prices higher than 20 yuan) is only 14.7%, more than 85% of the market share, and it is controlled by low-end brands with a unit price of less than 20 yuan. The emergence of "9 yuan of hi tea" also confirms that hey tea has to accept the "downgrade" of tea consumption.
In fact, under the influence of various macro factors, "downgrading" has become a quagmire that the entire catering retail cannot break free. The voices of chain brands closing stores and laying off employees have come and gone, and the higher the position, the deeper the sinking.
Haidilao, a former star company, announced on November 5, 2021, that it had decided to gradually close about 300 stores during the year. According to the number of 1597 stores shown in the 2021 interim report, the proportion of closed stores is nearly 20%.
If the loss of stores can also be attributed in part to price increases, then the "downgrade market" is frustrated, and it is difficult to spare the reality of sluggish store consumption. Among the 8 sub-brand restaurants opened by Haidilao in the past two years, 4 brands have closed their doors, including potato flour "Jojo's powder" with an average price of 8.9 yuan per bowl, "Bai Bran Private Room Noodles" with an average price of 7 yuan, as well as "Fishing Pie Noodles" with a minimum price of 7.99 yuan, and "Damutian" as a japanese food store sub-brand.
The other side of the shrinking store consumption is the growth of online consumption. According to the "China Sharing Economy Development Report (2022)" released by the State Information Center, online takeaway revenue will account for about 21.4% of the national catering industry revenue in 2021, an increase of 4.5 percentage points year-on-year. The rescue effect of macro-control is also shifting to the line. In the "Several Policies on Promoting the Recovery and Development of Difficult Industries in the Service Industry" jointly issued by 14 departments on February 18, the requirements for "guiding Internet platform enterprises such as takeaway to further reduce the service fee standards of merchants in the catering industry and reduce the operating costs of relevant catering enterprises" were clarified.
The growth rate of new tea takeaway is much higher than the overall growth rate of catering takeaway. According to the "2021 New Tea Beverage Research Report" released by the China Chain Store & Franchise Association, the annual takeaway order volume of new tea drinks increases at a rate of 50%, and the GMV of new tea drinks on the takeaway platform is about 16 billion yuan in 2019, about 24 billion yuan in 2020, and it is expected to reach 32 billion yuan in 2021, and some brand first-tier cities account for 70% of orders on the takeaway platform.
It shows that the competition of tea consumption is shifting to the line, which is not good for high-end tea drinks that are heavy brand, heavy experience and heavy research and development. Because online ordering is a consumption scene with extremely compressed space, the brand and product are only a small square in front of the screen, a few lines of code that are not much different, the space design of the store, the environmental atmosphere, the aesthetic experience, the formula materials, these visible and tangible feelings, can not be transmitted with digital technology, and the price has become the most obvious feature.
The price reduction is equivalent to Xicha showing the bottom card in the online competition.
Tea drinking without "Starbucks"
Heytea completed a US$500 million Series D round in July last year with investors including Black Ant Capital, Tencent, Sequoia China, Hillhouse, Temasek, L Catterton, Sunrise Oriental and others. After this round of financing, the valuation of Heytea reached 60 billion yuan, refreshing the financing valuation record of the new tea market.
No one will doubt the leading position of Heytea in the new tea drinking industry, whether it is brand influence or market share, it is still the most eye-catching one. However, the price reduction of Heytea and the slowdown in store growth behind the price reduction and the decline in ping efficiency (Jiuqian Consulting Middle Office data shows that from July 2021, heytea's average revenue of Pingqiao and stores nationwide began to decline. In October 2021, its average store revenue and sales efficiency fell by 19% and 18% compared with July, and compared with the same period last year, it fell by 35% and 32%), all of which indicate the brand development crisis of new tea drinks.
The "2021 New Tea Beverage Research Report" mentioned that from the classification of the tea market, the tea retail market is in a state of "strong region and weak brand", the head brand structure of the prepackaged tea market has tended to be stable, and the new tea drink produced on the spot is a track with great potential in the entire tea market.
But this track is already overcrowded, and a price war has been fought in the case of low brand concentration, which is obviously deviating from the development path of "tea against coffee".
The stories of the earlier two years are very different. The founder of Neixue set the future dream as "Starbucks in the tea industry", and Nie Yunchen (founder of Xicha) bypassed Starbucks and learned the "product experience" of Apple and Facebook, but in fact, consumers can see that the location and pricing of these two cups of tea are close to Starbucks.
The "Tea and City: Heytea City Consumption Report" released by Heytea and CBN mentions:
As of November 2021, more than half of the Bubble Mart stores in 19 cities are located around Heytea. At the same time, you can find one or more new energy vehicle experience stores around nearly 40% of Xicha stores. Like Heytea, these brands and formats are also favored by young urban consumers, and together they constitute a new consumption ecosystem covering core consumption areas such as casual catering, sports, entertainment, culture and travel. Here, we define them as the "symbiotic format" of heytea.
It still wants to emphasize the influence of Heytea among urban youth, and Heytea can become an imprint of urban life. But the truth is that there are fewer people in the tea shop, and the number of tea brands that have become social currencies is increasing.
"21st Century New Domestic Goods and Tide Brands - 2021 New Tea Drink List" believes that tea brands are more regional, and there are few brands throughout the country
Choosing to reduce prices and focus on the construction of "take and go" Xicha GO stores are more like Luckin's playing style. However, whether it is Xicha or Naixue, the speed of opening a store is far from catching up with Luckin.
Luckin has recently "escaped from death" from the storm of financial fraud and delisting, and has become Starbucks' biggest enemy in the Chinese market. As of January 2022, Starbucks has a total of 5,557 stores in China, while Luckin has completed the opening of 6,031 stores. Luckin never hides that he "touched" Starbucks, and it really verified that it can be exchanged for scale at a low price.
Even so, the list of coffee markets that want to challenge Starbucks is still growing. However, it is regrettable that the new tea brands that carry the expectations of the "revival of tea culture" have retreated in this direction. According to some institutional statistics, the number of financing events in the new tea industry in 2021 and the amount of financing disclosed have reached the peak of nearly 10 years, and Heytea has put down "nobility", which may imply the next trend of the financing scale curve - the prosperity will decline, and the lipstick economy has arrived.
Is "Starbucks in the Tea Drinking World" a false proposition? We are optimistic that there will be a war between the "Tea Party" and the "Coffee Party". However, the mystery is far from being revealed.