Text | Moment Business, author | Kuribuki, Editor | Zhou Ye
In 2022, the tea industry has entered the era of "inner volume", following the price reduction of Heytea and Naixue tea, recently, Lele Tea has also joined the ranks of price reduction.
Recently, Lele Tea WeChat public account announced that Lele Tea will launch products below 20 yuan, and the lowest price products are as low as 8 yuan.
Lele tea price reduction announcement, picture / Lele tea WeChat public account
Not long before that, Xi Tea and Nai Xue's tea, which have been at a high price, have also announced price cuts. On February 24, Heytea bid farewell to 30 yuan and announced that it had completed a comprehensive product price adjustment since January this year, saying that it would not launch new beverage products above 29 yuan this year. Nesher's Tea has also launched a new series of tea products, and the price of many drinks is below 10 yuan.
The price reduction of tea brands can be said to be against the trend. In fact, since the beginning of this year, the price of raw materials and equipment has risen, forcing many tea companies to follow the price increase.
For example, on January 4, Xiangpiaopiao announced the adjustment of the price of solid brewed milk tea (including classic series and good material series), and the price increase range of the main products ranged from 2% to 8%, and the official price adjustment began on February 1. On January 7, the price of most of the drinks rose by 1-2 yuan, which is also the first time in more than 5 years that the price increase has been increased.
At this time node when the raw materials of milk tea are rising and many players have increased prices, the head enterprises Xi Tea and Nai Xue's tea have bucked the trend and reduced prices in an attempt to seize the market.
After the price reduction, the price of some Xicha products has been comparable to that of the second echelon brands, and mid-range track players such as Chabaidao and Coco will usher in a positive impact. This is more fatal for Lele tea with similar products and similar positioning, and sure enough, Lele tea later reduced its price.
In fact, this is a stressful decision for Lele Tea. The survival situation of Lele Tea is not good, and it has attracted much attention because it wants to sell but is "disliked" by Xi Tea. A moment of business in the article "Breakthrough is difficult, research and development is weak, is the "abandoned" Lele tea still alive?" " has been interpreted. Having to follow up with the head brand to reduce prices, it can be said that it is "worse" for Lele Tea.
Nowadays, the industry reshuffle is accelerating, and the entire new tea industry will usher in more fierce competition.
01 Lele tea "forced" to reduce prices?
Following the price reduction of Xi Tea and Nai Xue's tea, the price of Lele Tea has also been reduced.
On March 3, Lele Tea announced that the price of some drinks has been controlled below 20 yuan, of which the lowest price of pure tea fresh extract jasmine green is priced at 8 yuan.
According to the content of the WeChat public account of Lele Tea, the price adjustment of Lele Tea is not a direct price reduction adjustment for existing products, but a price control on the newly launched new product line called "Large-mouth Fresh Fruit Tea" and "Fresh Famous Tea".
In order to respond to the refreshing needs of users, the product line has removed the cheese and ingredients on the basis of its original products, and reduced the price on the basis of raw materials, such as the price of the original strawberry peach cheese of Lele Tea is 31 yuan, and the price of large-mouth strawberry peaches after removing the cheese is 26 yuan.
Coincidentally, not long ago, the price of Hee Tea and Nai Xue's tea was also reduced.
Heytea was the first to take the first step. In January this year, Heytea first made price reduction adjustments for a number of hot-selling products, among which "Zhizhi Mangmang", "Zhizhi Berry" and "Zhizhi Succulent Green Ti" were adjusted from 32 yuan to 29 yuan, and the price of pure green Tea was reduced to 9 yuan after the price reduction.
Heytea price adjustment products, figure /Heytea GO mini program
On February 24, Heytea officially announced the completion of a comprehensive product price adjustment since January this year, saying that it will not launch new beverage products of more than 29 yuan this year, and then Heytea will continue to launch drinks that begin with 1 word, and promises that existing products will never increase in price this year.
According to Xicha told interface news, under the premise that the materials and quality of the products have not changed, after the price adjustment, in addition to a few city-limited products, peripherals, as well as LAB stores, handmade stores, the product price of heytea mainstream stores has been comprehensively less than 30 yuan, and the current price of 15-25 yuan products has occupied more than 60% of all products of Heytea.
Subsequently, Xicha bid farewell to 30 yuan, Xicha promised not to increase prices this year, and Naixue's tea also quickly followed.
In January this year, Nesher's Tea launched a new series of tea products, and the price of many drinks was below 10 yuan. According to the Red Star Capital Bureau, several teas with reduced prices belong to the "limited time easy to buy" series. For example, the easy American coffee (350 ml) and easy golden peony (500 ml) in the limited time easy purchase category are only 9 yuan. However, compared to the 650ml capacity of regular fruit teas, its new "Easy" series has been reduced to 550ml and eliminates the need for cheese and cream.
Nesher Easy Series Products, Picture/Nesher Order Mini Program
In response to the price reduction measures of Lele Tea, Caijing asked Lele Tea whether this move was a low-price strategy for benchmarking the other two brands, but Lele Tea denied this statement, saying that the price of dakou series products was due to the sharp reduction in raw material costs due to the non-use of cheese. "Because there will be some price cuts and price adjustments on the market recently, what we hope to pass on to consumers is the addition of this product line rather than price adjustment."
It can be found that although the three companies also carry out price reductions, the price reduction strategies are not the same. If Heytea is a one-shot direct price reduction, then Neisher's tea and Lele tea are biased towards a roundabout way to reduce prices by reducing costs.
Coincidentally, the lowest-priced products in the three are pure tea products. After the price reduction of Xi tea, the lowest price of a pure tea price of 9 yuan, Nai Xue launched a new series of tea drinks in a 500ml tea price of the same 9 yuan, and the lowest price of lele tea after the price reduction of 8 yuan, to consumers more concessions.
Tea companies have reduced prices, releasing a signal that the competition in the offline tea market is becoming more and more incentivized, and user grabbing has entered a white-hot stage.
Xi tea, Neixue's tea and Lele tea are not only similar in positioning, products, there is also a certain degree of overlap in the target customer group, the three also take young people in first- and second-tier cities as the main customer group, but after several years of user expansion and mining, potential users have become less and less, in order to ensure market advantages and achieve business growth, these high-end tea brands are also facing unprecedented pressure. Therefore, robbing users by reducing prices and lowering the consumption threshold has become the most effective and urgent solution.
02 After the price reduction, lele tea is more difficult?
After being "forced" to reduce the price of Lele Tea, the pressure to survive is even greater.
Among the many milk tea brands, Xi Tea, Nai Xue's Tea, and Lele Tea are divided into the echelon of "expensive milk tea" by consumers because of the product price of 30 yuan. Although it is the same high-end tea drinking team, there is still a certain gap between Lele Tea and the other two.
According to the "Analysis of the Market Size and Competitive Pattern of China's Ready-made Tea Industry in 2021" released by the Prospective Industry Research Institute, in the high-end tea market, Xicha ranked first with a market share of 27.7%, Naixue ranked second with a market share of 17.7%, and Lele Tea only accounted for 3.8%, far behind.
Market share of China's high-end ready-made tea industry in 2020, Figure/Prospective Industry Research Institute
In terms of the number of stores, Lele Tea has also been thrown out of a large margin. According to the content of the public account of Lele Tea, in January 2022, the total number of Lele Tea stores has exceeded 100. According to the official website of Xicha, as of March 11, 2022, it has laid out 888 stores nationwide, of which 373 are in the north, Shanghai, Guangzhou, and Shenzhen; Nesher's Tea announced at the sixth anniversary of its brand that as of November last year, it had opened more than 700 stores in more than 80 cities across the country.
At the same time, the financing prospects of Lele Tea are not optimistic. According to the investigation, there are four rounds of financing disclosed by Lelecha, and the most recent financing stayed in July 2020.
In July last year, according to Guanchao New Consumption, yuanqi forest and xicha both wanted to acquire the new tea brand "Lele Tea", and both sides attached great importance to the channel value of Lele Tea and gave a valuation of 4 billion yuan. But soon, Nie Yunchen, the founder of Xicha, said in the circle of friends late at night, "The news is untrue, and there has been contact through the introduction of the intermediary before, but after in-depth understanding of the internal situation, business data and situation, it has been completely, completely and resolutely abandoned." ”
Subsequently, in response to questions about the new round of financing, LeleCha said that the new round of financing has not yet begun, and many investors have already found it, and the previous valuation of 4 billion yuan is not reasonable.
In contrast, Nesher's tea has been listed in Hong Kong in June 2021, and Heytea completed a $500 million Series D financing in July 2021, after which the post-investment valuation of Heytea soared from 16 billion yuan in 2020 Series C financing to 60 billion yuan.
There is no advantage in price, low market share, and small number of stores, it is conceivable that if you do not join the tide of price cuts, Lele Tea will face the risk of user loss.
After being forced to reduce the price of Lele Tea, it needs to pay a higher cost.
Today's entire milk tea industry is facing cost pressures brought about by rising prices of raw materials such as cream and sugar.
On January 4, Shanghai Hairong Food Technology Co., Ltd., the "first share of cream", issued an announcement that in view of the continuous rise in the cost of major raw materials and accessories, the ex-factory price of some products ranged from 5%-8%. Panda Dairy Group Co., Ltd. also announced that it will raise the ex-factory price of the company's main condensed milk related products by 3%-10%.
At the same time, the "plastic restriction order", which officially took effect from January 1, 2021, has also increased the operating costs of the milk tea industry. Nesher's tea has mentioned in the prospectus that its average daily order volume of a single store in the third quarter of 2018-2020 is about 608 singles, if calculated according to the conservative data of using 1 straw per single, while considering the loss rate of 10%, then the monthly cost of replacing PLA straws will rise by about 3,000 yuan, the paper straw will only increase by about 1,000 yuan, and the replacement cost difference of 340,000 tea shops nationwide is about 8.16 billion yuan / year.
Under the pressure of rising prices of upstream raw materials, if many tea companies want to stabilize the steady growth of performance, price increases are a way.
In January this year, Xiangpiaopiao issued an announcement that in view of the continuous rise in the costs of major raw materials, labor, transportation, energy and so on, after research and decision, the price of Xiangpiaopiao's solid brewed milk tea (including classic series and good material series) products was adjusted, and the price increase of the main products ranged from 2% to 8%, and the new price was implemented according to the price adjustment notice of each product from February 1, 2022.
Soon after, Tea Yan Yueshi announced a price increase on its WeChat public platform, and the price increase was mainly concentrated on milk tea products, most of which were generally adjusted to 1 yuan, and the price of "Gardenia" increased by 2 yuan. In response to the reasons behind the price increase, Tea Face Yuese said that after the scale became larger, Tea Face Yue Color converted the cost advantage of centralized procurement into the use of better raw materials, but in recent years, the environment inflation has been too severe, raw materials and other costs on the market have risen year by year, and the dividends accumulated before cannot bear the cost of superposition.
The price of raw materials has risen, but Lele Tea has reduced the price of products at this time, and how to dilute costs and increase revenue has become a real problem in front of us.
Coincidentally, when "Xi Tea Price Reduction" landed on Weibo's hot search, Lele Tea in Guangzhou Link Shopping Plaza officially closed its store, which is the last store of Lele Tea in South China, and it is also another city after Lele Tea closed all stores in Xi'an in 2021.
Lele Tea Guangzhou closed, photo / Lele Tea WeChat public account
On February 23, Lele Tea officially responded that the temporary closure of stores in other regions was to focus on the East China market and consolidate its own foundation. At present, the brand is in a relatively primary stage of development, from the perspective of efficiency and strategic layout, it will focus on the first- and second-tier markets in East China in the past year.
While competitors are frantically opening stores, Lele Tea is closing stores, which is not good news for Lele Tea, which does not have an advantage in market share, but from another point of view, this may also be a way to survive with its broken arms, reducing manpower, rent, operation and other costs by closing the store.
The rise in raw material prices and the industry's internal roll is already an indisputable fact, in the face of such a situation, Heytea and Naixue's tea can rely on the scale effect, financing strength and brand influence formed by accumulation to escort the adjustment of their strategies, while Lele Tea, which has fallen behind, may have greater pressure after price reduction, and the road forward is more difficult.
03 Under the inner volume, the tea industry intensified the elimination?
In the long run, the head players Xi Tea, Nai Xue's tea, and Lele Tea have "inner roll" price reductions, which is not a good news for the entire tea industry.
On the one hand, the rise in raw material prices will undoubtedly lead to an increase in cost prices, and the price reduction at this time will undoubtedly only further compress profits and weaken the profitability of enterprises, not to mention that the current profit problems of tea and beverage enterprises have not yet been solved.
Taking Naixue's tea as an example, on February 8, Naixue's tea issued a profit warning, and it is expected that as of December 31, 2021, the group will achieve revenue of about 4.28 billion yuan to 4.32 billion yuan, and adjusted net loss of about 135 million yuan to 165 million yuan. The head brand is still like this, once the tea company joins the price reduction team, the pressure can be imagined.
On the other hand, the loyalty of consumers in the tea field is actually not high. Previously, the "2019 New Tea Consumption White Paper" released by 36Kr Research Institute and Naixue Tea pointed out that only 6% of the respondents of new tea drinks have very strong brand loyalty, that is, consumption is concentrated on one tea brand; 20% of respondents have almost no brand loyalty; and the vast majority of consumers will concentrate their consumption on a small number of brands.
Consumer Brand Loyalty, Photo/2019 New Tea Consumption White Paper
The choice of Xi tea, Naixue's tea, and Lele tea to reduce prices at this time also shows that the industry's grab for the mid-range market has reached a white-hot point.
In the context of the industry's general internal volume, the head tea brand wants to maintain profit growth and seek more market share, but can only continue to sink, to provide users with lower consumption threshold, higher cost performance products, therefore, the mid-end market has become a new target.
According to the "2020-2021 Chinese New Tea Industry Development Report" released by NCBD, in the acceptable price range of single cup milk tea, the consumer group corresponding to 10-15 yuan accounts for 57%, and the consumer group corresponding to 15-20 yuan accounts for 27%. It can be seen that the mid-end price range is still the mainstream consumer market for new tea drinks, and it is also an inevitable battlefield for many players.
According to Lianshang Network, according to the different unit prices of customers, tea chain brands can be divided into three price bands: the low-end market with a price of no more than 10 yuan, the mid-end market with a price of 10-20 yuan, and a high-end market with a price of more than 20 yuan. At present, the mid-end market is dominated by many track players such as ancient tea, tea beauty, tea hundred ways, Coco can be, a little bit and so on.
When the price reduction of high-end tea provides a lower consumption threshold, the price of mid-end tea drinks continues to rise to seek living space, the boundaries between the two are broken, and the echelon differentiation is no longer obvious, which also means that many players in the middle and high-end tea drinks will grab the same batch of users, and the price war will break out.
With the deepening of the sinking of high-end tea brands and the advent of dimensionality reduction, mid-range track players such as Tea Baidao and Coco will usher in a positive impact, directly facing the risk of user loss and revenue decline.
If these mid-range tea drinkers want to avoid head-on competition with high-end players, they may only be able to take the way of reducing prices to grab more low-end users.
However, the chaotic competition situation formed in this way will only make the tea industry fall into an increasingly difficult situation, the cost continues to rise, the price drops again and again, and once there is no more financial support, it will only accelerate the reshuffle of the industry.
Under this wave of price cuts in the tea industry, the knockout round will also be more intense. In 2022, survival may become a common goal for tea drinking players.