On February 24, Heytea announced that it had completed the price adjustment of this year's full range of products, ranging from 1-10 yuan. It is worth noting that the product price of the mainstream stores of Heytea has been fully below 30 yuan, and it is promised that there will be no further price increases this year, and there will be no new beverage products of more than 29 yuan.
For a long time in the past, the words that were closely associated with tea brands such as Hey Tea and Naisher's Tea were "expensive" and "price increase".
The unit price of 30 yuan once became a watershed in the milk tea industry.
Milk tea for a dollar and a cup in the snack area of the stationery store in the mobile stalls in front of the school disappeared with the end of the 1990s.
These low-cost, brightly colored and suspiciously colored trans fatty acid phytolipholic waters have been eliminated by the times, but people's love for milk tea has not.
From affordable milk tea that originated in Taiwan around the turn of the millennium to new tea drinks that sprung up around 2015, all kinds of shops large and small on the street have been iterating, but only milk tea shops are opening more and more.
In 2016, Xi tea, Neixue's tea, and Lele tea have become popular in China, and have also opened a new era in the milk tea market: a single cup of milk tea of more than 30 yuan has entered the field of vision of consumers.
Unlike the small street shops brewed with vegetable fat powder and tea powder, the new tea brands represented by Heytea have taken the boutique and high-end route at the beginning.
The first is that high-quality raw materials increase the cost of new tea brands. In terms of knowledge, the account named "Shanghai Zhaoyi Catering Jing'an Branch" lists the cost of ingredients for a cup of CoCo milk tea - tea, milk, light cream and other raw materials add up, a cup is 5.68 yuan, counting the cup is 6.48 yuan.
According to media reports, a cup of Heytea is sold for 25-30 yuan of drinks, and the cost of raw materials is close to 10 yuan. New tea brands choose healthier milk and fresh tea than vegetable concentrates, which use freshly squeezed juices and freshly made pulps over juice concentrates. In order to ensure the stable taste, during the vacancy period of domestic fruits, they will even go abroad to find ingredients.
Many new tea brands will also launch their own unique secret recipes: for example, the "Golden Phoenix Tea King" of Xicha is made by the R&D team with several tea leaves. Coupled with the tailor-made tea base, temperature, sugar content, and small ingredients for consumers, you spend 30 yuan to drink not only the cup of milk tea in front of you, but also the most innovative taste and the most innovative formula.
Of course, raw materials are obviously only part of the cost, and the reason why new tea brands dare to sell so expensive is because most of their stores are opened in the most prominent positions in the city's core business districts, and some even open directly next to luxury stores. In the case of a 100-square-meter store, the venue cost of Heytea accounts for nearly 30% of the monthly fixed cost.
Labor costs should not be underestimated, according to statistics, large stores in first-tier cities of Heytea, the monthly labor cost is about 270,000, accounting for nearly 30% of the total monthly fixed cost. To put it simply, considering these two major costs, if Heytea wants to maintain its operation, the pricing will never be low.
When you think that 30 yuan a cup of milk tea is expensive enough, Xicha tells you that the "price cap" of milk tea is far more than that.
In 2021, Heytea launched the world's first handmade shop in Shenzhen, selling handmade tea that is much higher than the price of other brands of milk tea on the market. The shop's signature feature is handmade: the staff processes the fruit by hand or juice.
As soon as it opened, the handmade store caused a queue in Shenzhen, and it usually took more than two hours to buy a drink. After a long wait in the sweltering sun or rain, customers found that most of the drinks in the store cost around 40 to 50 yuan.
But the price obviously did not resist everyone's enthusiasm for drinking milk tea, and the unit price was 75 yuan, double pounded mangosteen bale and slow-grinding mangosteen fairy dew, which became the most popular products in the store.
A cup of milk tea can sell for 30 yuan, and it is not a problem for hot stores to sell 3,000 to 4,000 cups a day. At first glance, milk tea shops are a low-threshold business that is easy to make money.
However, this is not the case.
Taking Naixue's tea as an example, in 2018, Naixue's net loss was 56.58 million yuan, and in 2019, it lost another 11.74 million yuan. It was not until the eve of the listing, after adjustment, that Nesher achieved profitability in 2020 in the financial report. By 2021, Nesher's tea is still expected to lose 135-165 million yuan.
On the other side, the days of Xi Tea and Le le Tea are also not good. Since the beginning of the year, Lele Tea has closed its last store in Guangzhou and completely withdrawn from the South China market; Xicha has been exposed to large-scale layoffs, and even some employees said that the company could not even issue year-end bonuses.
Although Heytea's response to layoffs is just a normal personnel adjustment, in the rapidly expanding new tea industry, layoffs are likely to be one of the intuitive manifestations of business problems.
The uncontrollable cost is an important reason for the difficulty of making a profit for milk tea shops. Most of them are located in the downtown business district, and the appearance of the store needs to match the style of the entire mall, and it will cost a lot of money to decorate.
In order to always maintain a degree of discussion on social media, in addition to the regular launch of new products every quarter, most of the new tea brands need to invest a lot of money in publicity and marketing. Little Red Book, Weibo, Dianping, no matter which platform, brands are not willing to let go.
Many tea brands also don't seem to bother to control costs. Su Ge, who owns more than 200 milk tea shops, once said in an interview with Southern Weekend that he had sent his staff to Nai Xue to work, and found that like tea drinks, Nai Xue's soft European bags also emphasized fresh production, and standard Nai Xue stores were usually equipped with bakeries. This results in a large number of employees in the store, almost half of whom do baking, but they are often idle.
"If the baked product is not sold out, it cannot continue to be done, but the employees of different lines cannot be transferred between employees, and the tea side is busy to death but no one helps."
The lack of clarity in brand positioning has put the new tea brands led by Nai Xue's tea into an even more embarrassing situation. Nesher's tea once claimed to focus on the social scene, imitating Starbucks to create a "third space". In layman's terms, it is to expand the store area and provide leisure interactive scenes, and users buy not only tea and bread, but also space and experience.
Unfortunately, in China, milk tea is mostly just an expensive alternative to bottled drinks, and it is difficult to become a social place like a café. Expanding the area of a single store did not bring more customers to Nesher's tea, but only increased the cost.
It should be known that the number of milk teas that Heytea and Naixue can sell every day in stores in first-tier cities is almost the same, but the area of Naixue's tea single shop is 2 times that of Xicha, and the cost is so high that it can be imagined.
The average price of a cup of milk tea made by Grandma, which has just opened in Shanghai, is still around 30 yuan, and consumers need to click to the Mini Program to place orders, and the hand speed can only come back tomorrow morning if the hand speed is slightly slower.
Hi tea used to be a grand queue
Although there are constantly emerging brands trying to challenge this price point, consumers' willingness to pay has been much lower than before.
According to the "2021 H1 China New Tea Industry Development Status and Consumption Trend Survey and Analysis Report" released by Ai Media Consulting, among the major new tea brands in China, the average price of industry products is 18.22 yuan, and only the highest unit price of xi tea, Naixue's tea, Lele tea and Shanghai auntie is more than 30 yuan.
The tea brand with the highest unit price is Naixue's tea, with the highest price of 38 yuan, and the price of most products is between 25-30 yuan.
That is to say, in the milk tea shops that can open all over the country, only the three shops of Xi Tea, Lele Tea and Naixue Tea before the price reduction dare to set the maximum price of a cup of milk tea at more than 30 yuan.
Consumers are also very sensitive to the price of 30 yuan, according to the report of Ai Media Consulting, 36.1% of the surveyed users of the new tea can accept the highest unit price concentrated in 15-20 yuan, 20-30 yuan of acceptance of 30.4%, only 5.8% of users are willing to accept a cup of milk tea above 30 yuan.
In recent years on social media, "milk tea is getting more and more expensive" has also become a topic that can often cause netizens to complain. A vote on Weibo with nearly 2 million people participating showed that if the unit price of a cup of milk tea exceeded 30 yuan, 62% of netizens said they would be dissuaded, more than 30% said they would drink less, and only 5.4% of consumers were still willing to pay for it.
In the comment area, the reasons of most netizens are also similar: it is not worth this price, the technical content of milk tea is not high enough to be irreplaceable, and there are many mid-range milk tea brands on the market to choose from.
In order to make the tea in the store look "worthy of the price of 30 yuan", there has been a wave of inward wind among the new tea brands. Some chase unpopular fruits, from bale, oil peel to oil citrus, what kind of niche fruits seem to be able to find their place in the milk tea shop.
Some of them have unique flavors, snail powder milk tea, coriander milk tea, hot pot milk tea, and the name alone has dissuaded a large wave of consumers. Some work small ingredients, and half a cup of milk tea is filled with small ingredients, which is more full than a bowl of porridge.
Unlike today's successive price cuts, in previous years, the new tea brands led by Xicha will increase the price of each product by 2-3 yuan almost every year. Interestingly, this has not caused much of a stir among consumers, and this is obviously related to the fact that these three brands have always focused on the boutique route.
A paper published in November 2018 crawled through 110,000 comments on Xicha on public reviews, which proved that its consumers are most concerned about product quality, and consumer psychology such as "from it" and "punching card" also occupies a large proportion, but product price is not the focus of everyone's attention.
In short, the main customer group of Heytea and Naixue's tea is not only a cup of ordinary milk tea for 30 yuan, but also a young and fashionable lifestyle and guaranteed product quality.
This is also very consistent with the product positioning mentioned by Peng Xin, the founder of Neixue's tea, in an interview: "First, let everyone feel that the positioning is fashionable and in line with his life taste; second, the product quality should meet the requirements of the 20-year-old to 30-year-old fashion white-collar group, rather than just for children to drink." ”
After the outbreak of the epidemic, the living conditions of The Teas have quietly changed. According to the report of Ai Media Consulting, during the epidemic, more than 40% of users said that the purchase volume of new tea drinks declined, the main reason for the decline was for health considerations, and health has also become an important criterion for many consumers to choose milk tea.
However, Xicha and Naixue's tea have been exposed to food safety problems in the past two years, dirty and messy back kitchens, expired raw materials, and production times that have been arbitrarily changed, which have made consumers who once thought that "you get what you pay for" gradually lose trust in high-end tea brands.
In today's endless internet celebrity stores, it is obviously not a fashionable behavior to punch in the tea, and consumers are obviously no longer willing to pay for their added value. More importantly, even if young people in first-tier cities are still willing to pay for a cup of 30 yuan of milk tea, the positioning of Heytea and Naixue's tea is obviously unable to attract a wider range of price-sensitive consumers, and it is imperative to reduce prices.
Life at the milk tea shop is not good either. According to the data of Tianyancha, as of November 30, 2020, the total number of tea drinking enterprises in China exceeded 300,000; among them, more than 130,000 enterprises were suspended, liquidated, revoked and cancelled, accounting for 43%. The speed of reshuffling in the new tea industry has also put tremendous pressure on head brands such as Heytea.
In addition to price cuts, many head tea brands have also begun to launch sub-brands, hoping to enter the low-end market. In 2017, Nesher's tea launched a sub-brand taigai, the price is relatively close to the people; Heytea launched Xixiao tea in 2020, but the market share of these two brands has been relatively low so far.
On the one hand, the scale of the expanding industry, on the other hand, consumers who are already tired of milk tea, the rapidly developing milk tea industry has indeed come to a halt to cool down.
References:
Ai Media Consulting: Survey report on the development of the new tea industry in the first half of 2021
CNBData: 2020 New Tea White Paper
Southern Weekend: Nai Xue's tea: The valuation of the "first share of tea drinking" exceeds 10 billion, but it does not make money
Written by: Echo & Potted Plants
Edit: Echo
Image from Visual China
Ownership is owned by the original author