Xi tea and NaiXue's tea have taken the initiative to reduce prices, and new tea drinks have encountered "growing pains"

Source: Beijing Evening News

"After Xicha, Nai Xue also reduced the price!" As a senior new-style tea lover, Xiaoying calculated an account with Xicha Zhizhi Luyan the other day: each cup dropped from 21 yuan to 15 yuan, which is 6 yuan cheaper, accumulating more than a year, and tea consumption can save a lot of money in a year. Now Nai Xue's tea has also joined the ranks of price reduction, making her happier.

Not long ago, the topic of tea price reduction of Xi Tea and Nai Xue has rushed to the Weibo hot search, attracting the attention of many tea lovers. Why are two tea head brands competing to reduce prices? What impact will the high-end tea that brings the price down to the 1-word head bring to the industry?

Nai Xue's Tea Wangfujing APM store has completed the overall price adjustment

■ Price reduction "consensus"

On March 17, Nai Xue's tea official announced a comprehensive price reduction plan, its classic products sharply reduced prices by 10 yuan, its products started at a minimum of 9 yuan, and launched a "easy" series of 9 yuan to 19 yuan, and also promised to launch a new low-priced product every month. Not long ago, Heytea also completed a comprehensive product price adjustment since January this year, no longer launched more than 29 yuan of drinks this year, and promised that existing products will never increase prices this year. The two tea head brands have rarely reached a "consensus" on price reduction.

The reporter randomly visited a number of Naixue's tea stores, taking the Wangfujing APM store as an example, the prominent position at the entrance of the store was erected with billboards of "Easy Series", "Super Value and Delicious" and "As Long as 9 Yuan". After entering the store, you can see from the main screen of the store that the price has been adjusted, and the products are divided into easy series, domineering fresh fruit tea, treasure fresh milk tea, cheese tea and sugar-free tea shop, with prices ranging from 9 yuan to 29 yuan, of which 1 model below 10 yuan, 10 yuan to 20 yuan 8 models, and 7 teas in the easy series are less than 20 yuan. However, according to the store manager, "the current sales of the easy series are not prominent, and the transaction volume of the easy gold peony of 9 yuan is not high." ”

Obviously, for Nesher's tea, the current product line has completed the comprehensive layout of the high-end and low-end price bands. However, after the price reduction, especially the layout of the price belt touching below 10 yuan, people can't help but wonder, how will the high-end tea drinks of the past be self-positioned after that?

■ Dimensionality Reduction Strike?

How did high-end tea brands suddenly reduce prices?

In this regard, Naixue's tea told the Beijing Evening News "Food and Beverage Weekly" that the price adjustment is based on the accumulation of brand, digitalization and supply chain, and does not affect product quality and materials. As of March, Nesher's tea has opened nearly 900 stores in more than 80 cities across the country, digital construction has begun to bear fruit, self-developed digital systems and equipment have been put into use, and the cost reduction and efficiency increase of operations have gradually emerged. In terms of supply chain, Nesher has built a stable and efficient supply chain system. At the same time as large-scale procurement, Naixue has compressed the upstream scale cost and provided space for product price adjustment through the joint construction of tea garden orchards, digital management and control, and strong brand bargaining power.

That is to say, after the large-scale development, the cost is diluted. However, is the reason for the price reduction really so simple?

The reporter noted that due to the general increase in the cost of raw materials in the past year, price increases have become the "main theme" of the food and beverage industry. The tea industry is no exception, on January 5 this year, Cha Yan Yue Xie announced on its WeChat public account that since January 7, 2022, most of the brand's milk tea products have risen by 1 to 2 yuan. Previously, a little bit, tea hundreds of dishes, CoCo can also be used to raise prices. In addition, due to the impact of the epidemic, most retail formats are facing different degrees of in-store customer flow reduction. In this context, the days of Xicha and Naixue's tea are naturally not so good.

Just last month, Nesher's Tea issued a financial alert with an adjusted net loss of $135 million to $165 million for the period. In fact, since its listing in June last year, in less than a year, Neixue's tea stock price has gradually declined, and its market value has fallen by 70% compared with the beginning of the listing. Similarly, not long ago, Xicha fell into a layoff storm, although the official debunked the rumors afterwards, but it still caused many people in the industry to worry about its performance.

At the same time that the tea of Xicha and Naixue has encountered "growth troubles", the growth rate of the entire new tea market is gradually slowing down, and the competition within the industry is becoming more and more cruel.

According to the "2021 New Tea Beverage Research Report", the growth rate of the new tea market in 2020 is 26.1%, and the growth rate in 2021-2022 has dropped to about 19%. At the same time, competition is becoming more and more intense, with the total number of mainland beverage stores at the end of 2019 being about 427,000, and the number of stores at the end of 2020 being about 596,000. Among them, new tea stores accounted for the highest proportion, reaching 65.5%, and the number of stores was about 378,000.

In the face of a variety of new tea brands, "products are almost drunk" is becoming a common feeling of many consumers. In this regard, food analyst Zhu Danpeng believes that last year,the domestic new tea industry has entered a highly homogenized Red Sea stage. At present, the degree of differentiation of milk tea products is not high, and the homogenization of promotion models, store operations and drainage has allowed the industry to enter a very serious cycle of internal volume.

It is not difficult to see that the tea of Heytea and Nesher brings products to the 1-word head or even single-digit price band, which also reflects the anxiety about intensifying competition and maintaining performance growth.

■ Competition intensified

"Price reduction is a kind of dimensionality reduction blow after high-end positioning for head enterprises such as Xicha and Naixue's tea, which will be beneficial to head enterprises." The price reduction will definitely have an impact on the profit of a single cup, but from the stage of branding and scale, this move should be of great help to the improvement of the entire market share, and the increase in market share, from a certain point of view, will drive the overall profit. Zhu Danpeng said.

However, when the industry's leading enterprises reduce prices, what impact will it have on the positioning of low-end tea brands?

In fact, the current low-end tea drinking track has been quite crowded. From the perspective of pricing dimension, with reference to the market positioning analysis of the brand of ready-made tea shops in 2020, within 10 yuan, Michelle Ice City has opened more than 20,000 stores, 10-25 yuan range, both ancient tea with more than 5,000 stores in the country, and CoCo with more than 3,000 stores. In addition, there are brands such as The New Upstart Tea Yanyue from Changsha, which also shows a competitiveness that cannot be underestimated.

In this regard, Zhu Danpeng said that the head enterprise through the price reduction, will further oppress the second-tier brand living space, development space, growth space, with the intensification of the entire involution, the head of the enterprise will form a greater sense of oppression for small and medium-sized enterprises, should harvest more consumption dividends. A development of the whole in the future is also the Matthew effect, "the strong are always stronger and the weak are weaker", and the concentration of the entire industry will be further improved.

For the key to the future competition of the enterprises, Zhu Danpeng believes that it lies in the following seven core points: the tone of the brand, the integrity of the supply chain, the innovation of the scene, the stability of the quality, the guarantee of food safety, the strengthening of customer stickiness and the improvement of the service system.