Contributed | Wu Xiao
Edit | Yang Wenjin
In the spring of 2022, for the new consumer enterprises that once penetrated half the sky, it is undoubtedly the "eventful spring" of the situation: first of all, the internet red milk tea in the new consumption field "carrying the handle" has spread the news of store closures, layoffs, and salary cuts, and brands such as Xicha, Tea Yan Yueshi, Lele Tea, and NaiXue have been "shot"; Wen Heyou, who once queued tens of thousands of seats and was calculated by the hour, also encountered water and soil dissatisfaction, and also hitched a ride on the shuttle of layoffs, adjustment of business formats, and stagnation of expansion...
New consumer companies that have already gone public are also having a hard time. Annual report losses, Internet celebrities with goods overturned, data fraud, excessive publicity, lack of transactions, etc. are often reported, experiencing the fate of "listing is the peak" and then the stock price continues to fall.
Behind the new consumer brands represented by internet celebrity brands and internet celebrity stores becoming less "fragrant", it is the retreat of crazy capital hot money in the past two years and the unsustainable consumption enthusiasm of consumers. These brands created by the Internet dividend, under the push of capital, continue to change, grow, encounter difficulties, decline, in the tide receding in the spring cold, they gradually slowed down, began to wake up, seek change, or eventually disappeared into the sea of people.
Tailor-made "new" consumption
When it comes to new consumption, Zhang Hong after 95 immediately popped up in her mind of "net red", "personality", "characteristics", "planting grass", "expensive"... These words. "It's the kind of thing it's exactly what you want!" Or think it seems like it's also good/a bit interesting and can try something. ”
Backed by the borderless market brought by mobile Internet, big data and other technologies, thanks to the rise of Chinese brands and the trend of domestic consumption, and then docking the new needs of Z generation consumer diversification, new consumer enterprises have become the darlings of capital in the past two or three years, and have entered a highlight moment.
Because of her work and e-commerce, Zhang Hong has participated in many consumer industry forums in recent years, and has heard experts and celebrities preach on stage such as "China has 1.4 billion people, huge consumption potential, can be divided into countless market segments", "consumption upgrades, all tracks are worth redoing" and other views, and also heard many experts share how to operate and copy Internet celebrity brands.
In Zhang Hong's view, the products of new consumer brands are products that are designed on demand after capturing and stacking young people's consumption preferences in the context of big data, "so you will like one of them, or be interested in a certain point." ”
Different from the traditional consumer enterprises to develop products first, and then find channels to sell to consumers of the business path, new consumer enterprises are going against the grain, starting from the "market" rather than "products", starting from user insights, aiming at user needs, and then developing products.
For example, Yuanqi Forest first set up a research and development center in 2015, and then set up a company a year later, first launched the tea product "burning tea" through Weibo "crowdfunding", and after a series of attempts, it officially launched sparkling water products for the market in the spring of 2018, becoming a new species of drink.
The founder and CEO of domestic beauty brand PMPM is Twinkle, and he once served as a brand director at Procter & Gamble. When starting a business on its own, the first thing that Flashing thinks of is not what product to do, but what kind of product to make, that is, to establish the "product personality" first.
"We do branding, the first knife cut is a personality portrait, not a category, nor is it efficacy. Now, even if two brands offer products with the same efficacy, they may attract completely different consumers. Today, when the solutions provided by the entire supply chain and products tend to be homogeneous, we believe that the final relationship between the brand and the consumer is the most important. If a brand in the early stage of birth, there is no personal soul, no personal expression and construction, it is difficult to truly connect and bind with consumers. "So PMPM first cuts the personality portrait, we call the explorer personality, explores the world externally, and explores itself internally." Next, we come to the second step, selecting the category. Under the category, the efficacy is chosen. Under the efficacy, the raw materials, recipes and technologies are selected. ”
In The blinking view, this layer by layer of stripping thinking is based on the innovation of consumer and brand relations in this era, and "product personality" is also the "new" place of new consumption.
In addition, the "new" of new consumption is also manifested in the new consumer groups represented by young people, the new lifestyle represented by green health, low sugar and low fat, and new traffic and channels such as Vibrato, Kuaishou, Xiaohongshu, and Station B. These elements are superimposed, and it is easy to make a blockbuster: Yuanqi Forest was established for 5 years, with an annual revenue of more than 7.5 billion; while Huaxizi has taken less than 3 years since its establishment to become a well-known new beauty brand, and in the fourth year of its establishment, its annual revenue has exceeded 3 billion. It can be said that the new consumer brand only took three or five years to complete the road of traditional brands for decades.
Source: "2022 China New Consumer Brand Development Trend Report" jointly produced by Weibo Yi &MMA & Magic Mirror Market Intelligence
The "Fragrant Feast" of Capital
The topicality of new consumption and the "beautiful" data allow capital to smell business opportunities.
Guangzhou Zhujiang New Town Huacheng Hui, as well as its underground connection to AutoNavi Land, IFC Center and the surrounding area, is one of the most active places for fashion brands in Guangzhou. There are popular Internet celebrity shops, specialty stores, and all kinds of large and small stores that can call brands and can't call brands, and the speed of change of these brands and stores is also staggering.
In the more than three years of working in Zhujiang New Town, Chen Hui used to buy European bags for breakfast at Lele Tea, eat Hefu noodles at noon, and incidentally order a cup of "Zhizhi Berry" with Xi tea on the mini program, and then drink milk tea and hang out with colleagues in Huachenghui. What impressed her most was that every time she came back from a business trip, she would find that some shops were missing, some shops had changed their positions, some shops were fenced up for decoration, and new shops were constantly popping up...
After returning from a business trip in August last year, Chen Hui planned to stop by Lele Tea to buy a cup of milk tea and dirty bags for supper when she left work, but found that Lele Tea, which was once as famous as XiCha and Nai Xue, had actually closed its shop! However, she turned around and found a new alternative: the Tiger Head Bureau Standard Chartered Cake Line.
There is never a shortage of new brands in the market, nor is there a shortage of capital with money in hand.
After the bull market in the secondary market in 2020, various investment institutions have raised more money, and institutions with "heavy gold" in their hands urgently need to find exports for funds. At this time, the topical and easier to understand new consumption has become a darling, and the trend has become the hottest investment outlet in 2021. "Financing, marketing, expansion; refinancing, remarketing, re-expansion; and finally listing or selling to cash out", this set of Internet play, placed on the topical new consumer brands, the same applies, so that capital believes that there must be "money scene" in it.
According to CBN Data data, in the first half of 2021, 333 new consumption projects were born, and 50 billion yuan of hot money entered, exceeding the amount of 2020. According to incomplete statistics, from January to December 2021, the domestic new consumer industry launched a total of 826 financing transactions (excluding IPOs and private placements), involving a total transaction volume of 83.1 billion yuan, far more than the 286 cases in 2020, and the transaction amount was almost twice that of the same period.
Hillhouse, Sequoia Capital, Meituan Dragon Ball, Tencent and other investment institutions have entered the game, and new tea, wine, pasta, coffee, baking, etc. have all received large amounts of financing.
Luckin Coffee also received a $250 million financing in April 2021 and achieved sales of more than 10 million cups a month with a cup of "raw coconut latte". Manner Coffee, M Stand, Tim Hortons China, Seesaw Coffee and others all received large rounds of funding during the year.
The above-mentioned cutting-edge baking brand Hutou Bureau Standard Chartered Cake Line, as well as the similar Mo mo dim sum bureau, have also won the favor of major VCs such as Sequoia China, IDG Capital, and Today Capital, and have received hundreds of millions of yuan of investment from institutions. Investors are grabbing new consumption projects everywhere, and the Mo mo dim sum bureau, which was born in June 2020, ran five rounds of financing in one year, and it is rumored that its single store valuation has reached 100 million, which shows the degree of madness.
There is also a story in the venture capital circle that sounds like a paragraph: a donkey meat burning shop in Hebei that has been open for more than 20 years has been targeted by capital. Four or five capitals found the boss at the same time, hoping to help him "become bigger and stronger". This makes the boss feel frightened, can't understand and can't understand what these swarming capitals want to do?
"Naked swimming" after enthusiastic retreat
The turning point occurred in July and August last year.
In July, the state issued a "double reduction" policy, which caused a devastating blow to the online education and training industry, and also gave crazy capital a blow, so that they could restrain and start to wait and see. Next, the poor market performance of some new consumer brands and sales figures that fell far short of expectations poured cold water on capital and sobered them up.
According to EneNiu data, in July 2021, there were more than 100 financing incidents in the new consumer industry, and the amount of financing reached 13.48 billion yuan, but since August, the number of monthly financing projects has been less than 100, and the monthly financing amount has not exceeded 10 billion yuan. The stock prices of new consumer brands such as Perfect Diary, Bubble Mart, and Nesher have been folded after listing, and capitals have also realized that new consumption may not be so simple.
The financial reports of the newly consumed listed companies are shocking: the financial report of Perfect Diary's parent company, Yixian E-commerce, shows that in Q4 2021, the revenue of Yixian e-commerce fell by 22.1% year-on-year to 1.528 billion yuan; the net loss was 475 million yuan. Yixian E-commerce expects revenue to fall by 35%-40% to 867 million yuan to 939 million yuan in the first quarter of 2022.
Crazy smashing advertising, buying traffic, but in exchange for continuous losses. In 2021, Yixian E-commerce achieved operating income of 5.840 billion yuan, but sales and marketing expenses spent 4.006 billion yuan, and the net loss reached 1.547 billion yuan.
Other new consumer brands are similar. In order to maintain the degree of discussion on social media, in addition to pushing new products, it is to continuously put hard, soft text and implants on the platforms of Xiaohongshu, Weibo, Dianping, Douyin, etc., spending a lot of marketing expenses in exchange for topics and popularity, but the efficiency of direct conversion is not optimistic.
Who's going to headlong into a loss-making business with no end in sight?
Therefore, at the end of the year, the more capital investment in new consumption becomes more and more "stingy", and hard technology has also replaced new consumption as an outlet.
According to the incomplete statistics of IT Orange, in January 2022, there were 65 financing incidents for new consumer brands in China, down 27% from 89 cases in December 2021. In February, there were 61 financing transactions in the new domestic consumer industry, four fewer than the previous month.
Inner roll squeeze foam
Capital gradually "cut off supply", the impact and stamina on the new wave of consumption represented by milk tea is also gradually emerging, layoffs, salary cuts, closures emerge in an endless stream, and the drama of survival with broken arms is constantly staged.
In mid-February, while Starbucks, Luckin, etc. announced price increases, high-end tea drinks began to reduce prices.
On February 26, Xicha began to reduce the price of "farewell to the 3-character head", and promised not to launch new beverage products above 29 yuan this year, and existing products will never increase in price this year. After the price adjustment, in addition to individual city limited products, peripheral products, as well as a small number of products from LAB stores and handmade stores, the product price of the mainstream stores of Heytea has been comprehensively lower than 30 yuan, and the products priced at 15-25 yuan account for more than 60% of all products. Among them, the price of "pure green tea queen" and "American coffee" after adjustment is only 9 yuan.
Lele Tea and Naixue's Tea are also following suit.
On March 3, Lele Tea announced the launch of a large-mouth fresh fruit tea series with de-cheese and a series of freshly extracted teas with no ingredients, and the price was controlled below 20 yuan.
On March 17, #Naixue slashed its price by 10 yuan #on Weibo's hot search, and netizens expressed "welcome" and hoped that milk tea brands could "roll up more strongly". After the price cut, Nai Xue also bid farewell to the "3-character head", its products started at a minimum of 9 yuan, and launched a "easy" series of 9-19 yuan, promising a new low-priced product every month.
The "2020-2021 Chinese New Tea Industry Development Report" mentioned that 57% of the adjusted consumers can accept 10-15 yuan of milk tea, 26.9% of consumers can accept 15-20 yuan of milk tea, while only 6.4% of consumers who can accept 20-30 yuan and more than 30 yuan of milk tea, in addition to 9.4% of consumers can accept milk tea below 10 yuan.
The low-end new tea drinks represented by Xi Tea, Lele Tea and NaiXue's Tea have lowered their prices, which is obviously aimed at a wider consumer group.
In the case of high-end milk tea price reduction, Chen Hui found that the situation of tea shops does not seem to be so bad. There are many new milk tea shops on the streets of Guangzhou, and there are four "tea rescue planets" around Beijing Road alone, and almost every few steps you can see a "hand-beaten lemon tea".
On the one hand, the "leading big brother" lowered the price, and on the other hand, the tea shops that sprung up like mushrooms appeared one after another. Small investment, not a high threshold, considerable profit margins, so that many people still look to tea when starting a business. The foam of the milk tea track seems to have a lot of room to squeeze out.
How to build a "moat"?
"Opening a shop to make milk tea does not necessarily make money, but if you have a milk tea brand, develop a franchise chain, collect franchise fees and service fees, it is a steady profit!" Shange from Pingnan County, Guangxi, the "first county of milk tea", said that his Pingnan hometown milk tea shops are all over the country, and even go abroad to Southeast Asia, "it is not surprising that he earns tens, millions or even tens of millions of franchise fees and management fees a year..."
In fact, the production process and raw materials of tea drinks are similar, and there is no real sense of "moat", each brand, each store may have one or two signature products, but it is easy to copy the appearance and taste of products that are similar. "No matter how much milk tea is, it is nothing more than a little better use of raw materials, a little novelty, replacing the milk tea powder with tea leaves, replacing the juice with fresh fruit, using animal cream with a high price, and there is no room for it." Brother Shan said.
Therefore, in addition to continuing to develop new products, develop new business lines, and create more blockbusters, new consumer brands are also improving their business layout through investment and mergers and acquisitions. Xicha, Tea Delight, Honey Snow Ice City at the same time as opening a store, began to invest in other tea brands, especially Xicha, the scope of investment also involved pre-mixed wine, plant milk and hot Seesaw coffee; and the same as the typical representative of the new consumer brand Perfect Diary, Bubble Mart is also constantly throwing money outwards, around their own main business ecological investment in the surrounding areas; and Yuanqi Forest has also shifted from "light" assets to "heavy" assets, began to invest in factories...
They all hope to find new growth points, alleviate the anxiety of brands in stock prices and growth, and have more confidence and stronger vitality in the rapidly changing market.
Yao Zhen, the managing partner of Dao Fund, who has invested in Projects such as Zhong Xuegao, Da xidi, ding ding fresh food, panda does not take the cake, believes that the entry of a large number of institutions and financing cases make the consumption track look particularly lively at the same time, but also bring a lot of illusions to enterprises, and want to spend the money raised as soon as possible to melt the next round. A large number of funds have flowed to the most convenient flow of spending money, neglecting to build their core competitiveness, "in the past, spending 1 yuan can do 5 yuan of sales, but today it takes 4 yuan to do it, can this not lose money?" ”
In the end, the high-rise buildings built by traffic soon reached the top, and the brand could easily be "cool" because it failed to build a core barrier.
However, for new consumer brands, the shutdown of capital is not a bad thing, and the advantages of squeezing the bubble of the industry outweigh the disadvantages. In the long run, the entire industry is no longer driven by traffic and capital, but will promote the overall growth of consumers, products, brands and supply chains, and then form a spiral of iterative rise of the entire industry.
Fortunately, more and more new consumer brands have realized that relying on mining traffic and Internet marketing cannot solve everything. How to build their own moat and how to compete with traditional consumer giants are the biggest challenges they are facing at present.
END