The story of the counterattack on the Internet, Nai Xue did not tell it well

Text | Meal Alliance Research

Going to office buildings, shopping malls, and high-end residential areas is one of the biggest changes in Nai Xue's eyes after he went public.

The same positioning of high-end tea, also originated in Shenzhen, in product research and development and Nai Xue has been playing inextricably apart, Xi Tea, since last year began to slow down.

The two brands seem reluctant to have more intersection.

In the past year, Nexue has held high the banner of crypto pro stores, burning money to seize the remaining high-quality spots in the market; and Xicha, which has become Buddhist in opening stores, has focused its firepower on investment.

For Neixue and Xicha, the fiercest confrontation ended two years ago in the summer.

In June 2020, Nesher received a key financing of over $100 million, which was led by Shenzhen Venture Capital. And Tiantu Capital, which had been firmly standing behind Nai Xue, did not bless this time.

Before choosing Tiantu, the reason given by Peng Xin, the founder of Neixue, was that "there is no VAM agreement, no speed requirements for opening stores, and no interference in operation and management."

On the other hand, 3 months earlier than Naixue, Heytea completed the C round of financing, and the valuation soared from 9 billion yuan in the previous year to 16 billion yuan.

Along the way, Heytea's capital lineup has always been stronger than Naixue, with IDG Capital, Today Investment, Sequoia, and Hillhouse all among them.

Different from the Buddhist Ne xue, Xicha, who took the financing, immediately accelerated the pace of opening a store. Throughout 2020, Heytea added 202 main stores and 102 Heytea GO stores focusing on takeaway scenes.

However, by the time Nesher passed the HKEx hearing, the number of its stores was only 556, far below the total of 695 in 2020.

Nai Xue, who did not have an advantage in scale, finally chose a path that was diametrically opposed to Xicha: first overtaking and listing, and then completing the ticket later.

"Now Na xue, like the xicha in 2020, is bent on opening a store." An industry insider commented.

01 The store that owes it to the store must be paid back after it is listed

The store opened, but it didn't make money.

In the past year, Nesher has opened 287 pro stores and 39 Naisher's tea standard stores. At the same time, the proportion of pro stores reached 45% of the total number of stores.

Under the influence of economies of scale, Nesher's revenue set a record in the past three years, with a total revenue of 4.296 billion yuan, an increase of 40.5% from 3.057 billion yuan in 2020.

However, under the strategy of adhering to the encryption of pro stores, large-scale store openings have not exchanged huge profits for Nesher.

The same-store profit ratio of its first-class pro stores and second-class pro stores is only 9.8% and 6.2%, far lower than the 17.5% profit margin of its standard tea shop.

To be precise, in the first half of 2021, when Nesher was still only taking small steps to test, the effect of pro stores was stronger than in the second half of the year: the same-store profit of the first-class pro store was 21.7%, and the second-class pro store was 15.3%.

However, in the second half of the year, after Nexue laid out more pro stores in super-first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen, as well as second-tier cities such as Yinchuan, the two major expenditures of shop rent and manpower soared geometrically.

In the end, it led to a loss of 4.523 billion yuan in 2021, which is more than 20 times the loss of 203 million yuan in 2020.

In Neixue's vision, the same-store profit of the second type of pro store is better than that of the first type of pro store, and the same store profit of both will be higher than that of the standard store, which is counterproductive.

It is worth mentioning that there is no difference between the first-class pro store and the second-class pro store in providing products and decoration styles, the only difference is the location.

The former aims to occupy higher-level shopping malls, while the latter has a wider range, and Neisse has no limits on this.

In the view of a professional who has been responsible for the top-level design of multiple tea brands, the positioning of the Nesherpro store is not clear enough. Tea + coffee, but also want to provide buy-and-go services, such a large integration of the adjustment can not talk about innovation.

Compared with Nai xue, which has only two main store types, its competitor Xicha has a more delicate division. In addition to the main store that is similar to the Nesher standard store and the theme store represented by the black gold store, Heytea also has a GO store that focuses on take-away.

In 2019, Heytea launched a new store-type GO store, cutting off most of the tables and chairs in the main store and reducing the space to just enough to put down the console and display cabinet. This store type is based on its online order, the store can pick up the order of the small program "GO" and pick up the order.

An investor who has been exposed to Heytea told Food Alliance Research that the GO store is one of the reasons why the valuation of Heytea is several times higher than that of Nesher.

He believes that the practice of Xicha is more like Ruixing. GO stores support mobile endpoint ordering and delivery services, and divide the consumers who are not sensitive to space separately and divert them to offline stores, which can well solve the problem of how to improve user conversion rate.

However, Nai Xue's understanding of "buy and go" is obviously different from Xicha. It wasn't until the eve of the listing that Nayuki had the idea of making the store "light".

Previously, its founder Peng Xin had said many times that "Ne xue is the most like Starbucks in the spiritual core." For Nai Xue, he will not completely abandon the "third space" business, but he is not willing to do a café that sells tea.

Therefore, Nesher cut the "front factory and rear store" model and reshaped a pro store type with a smaller store area and fewer employees.

This initiative is on the one hand to meet the needs of consumers, on the other hand, to reduce the cost of opening a store.

Nesher's cost structure reflects, to some extent, that high-end tea drinks may not be as profitable as investors think. Because only its raw materials, manpower, rent three costs, combined to more than 70%.

According to its prospectus data, in 2018, 2019 and 2020, the cost of tea raw materials in Naixue was 35.3%, 36.6% and 37.9% respectively; labor costs were 31.3%, 30% and 30.1%, respectively; and the depreciation of the right of use assets was 11.1%, 10.5% and 11.5%, respectively.

Raw materials and rent are expenses that are difficult to cut in a short period of time, but there is still room for compression in terms of manpower.

Since the fourth quarter of last year, Nesher has successively used automatic tea making equipment in some newly opened stores.

A Naisher tea employee said that the employees assigned to the back kitchen were mainly responsible for boiling tea and making milk caps. The ratio of personnel in the three major sections of the pro store, namely the water bar, the back kitchen and the service area, is almost the same. In standard stores, because they take into account freshly baked products, the number of employees in single-room stores is at least 3 more.

This means that after the popularization of automatic tea making equipment, the labor cost of Nesher can be further reduced.

The ideal state is "open source throttling", but Neisher has only achieved the last two words so far.

02 Price increases and price cuts, who has the final say?

How long can the 30 yuan milk tea be sold?

When everyone paid attention to the price reduction actions of the two head players, a blind spot appeared: almost no one could recall when the new tea drink officially stepped into the 30 yuan era.

In April 2020, Heytea and Naixue announced a price increase of "2 yuan" for some products, and the new tea drink opened an era that began with "3".

Two years later, the two giants completely reversed course.

Heytea guarantees that there will be no new products with a price of more than "30 yuan" within one year, and the average price of existing products will be reduced by 2-3 yuan.

Nai Xue said that the price of all products will be within "29 yuan", and hit the iron while it was hot, and launched a relaxed series of teas located in the "9-19 yuan" price band.

Most analyses ultimately point to "strategic needs," which simply attribute price cuts to changes in market demand.

But this rise and fall is originally "counterintuitive". The market does not count, but nexue and Xicha themselves have to define.

The head players of the new tea drink take advantage of the epidemic to increase prices, essentially sharing a set of logic with luxury goods: when the economic situation is not ideal, they must raise their own value.

The price increase means that the head players, led by Nai Xue and Xi Cha, want to set the threshold higher.

This is also the expectation of capital, and raising the unit price of customers is equivalent to broadening profit margins. If it can still sell well in an environment full of uncertainty such as the epidemic, then the future situation will be optimistic.

In other words, Xicha, Nesher, and the capital behind them are all looking forward to a rebound after the epidemic, a wave of retaliatory consumption.

In the past two years, in addition to Xicha and Naixue, Capital has also seen players who show strong vitality such as Cha Yan Yue and Mi Xue Ice City.

In fact, the $15-$25 price band is more likely to outrun the winner. Tea Hundred Dishes, Books and Burning Immortal Herbs, as well as The Peach Peach, which was invested in Xicha last year, are all in this price band.

Investment and peach peach, once regarded as Xi tea's lack of confidence in the incubation sub-brand "Xi Xiao Tea", but is not willing to give up the choice of sinking market.

In 2020, in addition to experiencing that thrilling expansion, Heytea also made an important decision to launch a new brand "Xixiao Tea".

Hi small tea is intended to sink. The first store is located in Shenzhen Huaqiang North, and the location of the subsequent stores is also all staggered with the location of the core business district of Heytea. At the same time, the brand's products are all priced below 16 yuan, which is half cheaper than the main product of Heytea.

One year after its establishment, the performance of Xi Xiaocha was not bleak. In 2021, xixiaocha has 22 stores and sells 2.8 million drinks.

At present, Xixiao Tea is still lurking in the Pearl River Delta region, and there is no plan to quickly expand the national market.

Nesher also has plans to enter the sinking market, and it is far earlier than Xicha.

However, compared with the strong binding of Xi Xiao Tea and Xi Tea, Xi Xiao Tea can open the market faster by borrowing the popularity of Xi Tea, and the tai lid has almost no borrowing Nai Xue. It was not until Nai Xue submitted the prospectus that Tai Gai entered the public eye.

Nesher's explanation for this is that Taigai's target audience is a younger customer base, a brand derived from its preference for milk caps.

Last year, the cover began to accelerate its expansion. Today, in addition to the Guangdong base camp centered on Shenzhen, Taigai is also trying to use Wuhan to radiate the entire Hubei region.

To put it simply, Xicha plays with a high belt and a low, but Nai Xue abandons this practice and chooses to go from 0 to 1.

It is not difficult to explain why Nesher has always insisted on the core of Starbucks to do the third space. Once the business model of Taigai runs through and the two brands complement each other, Neixue will no longer be a single tea brand, and can continue to extend outward as a tea group in the future.

But the sinking market that everyone wants to enter is not as easy to conquer as imagined. The absolute sinking of the Honey Snow Ice City took nearly 20 years to refine.

Xicha and Naixue are still in a difficult stage of reclamation, and the road ahead is uncertain.

03 Compete back to selling fruit tea

Investors in the secondary market, it is difficult to see a glimmer of hope.

From the break of the listing to the fall of the stock price, The market value of Nesher is now only a quarter of the original.

Fortunately, consumers are still enthusiastic about Nesher.

Creating explosive products with niche flavors is the best idea for Nesher to crack sales growth last year. With two products, the domineering jade oil orange and the duck fragrant treasure tea, Nai Xue used the screen to prove that its net red aura has not faded.

This year, Nesher still follows this line of thinking. The "sour and spicy fruit tea" domineering and crisp manbale, which has been online for more than a week, can be called another hunting product in the tea drinking industry.

Because the eating method of sprinkling paprika on the fruit is only popular in the Liangguang area. With the blessing of duck feces fragrant tea base and oil citrus, the taste of this product is considered by Nai Xue's fans to be the "master of the domineering series", and it has three layers of sour, sweet and spicy.

It is worth mentioning that the inspiration of these explosive products all happens to point to the same region - Chaoshan in Guangdong.

At present, Chaoshan is to the tea industry as Silicon Valley is to the technology circle. So far, Chaoshan has contributed at least two new categories to the tea industry: licorice tea and fruit ice.

The molecular juice brand "Wild CuiShan", which was acquired by Xi Tea last year, was formerly a tea brand that made fruit ice.

Not only to provide inspiration, Chaoshan has also become a replica of Yiwu in the tea industry, sending a steady stream of fruits that were popular in the last season to major brands.

Last year, Nesher also burned the tea war to the orchards upstream.

Although traced back to the source, it was not Naixue who first started making citrus juice, but a local tea brand in Shenzhen. But the slogan of "a cup of domineering jade oil citrus, use up 66 oil oranges" was started by Nai Xue first, and then other brands followed suit to change the standard for making oil citrus juice.

After the launch of the oil citrus juice by Neixue and Xicha, in just one month, the wholesale price of this previously unsalable niche fruit quadrupled.

This year, before the official launch of the new product, Nai Xue had already started to play bale in Chaoshan and its surrounding areas. Although other brands do not use licorice tea as an incision, they have invariably chosen this pink and girly fruit - Bale in the season limit.

Upstream growers who rely on consumers to eat are now eyeing several major tea giants. For both sides, cooperation is undoubtedly the best way out.

Why does Nesher's muse have to be Chaoshan?

Enlarging this area, what Nesher has been doing since its inception is to expand the scope of radiation from Shenzhen to Guangdong, to the entire South China region, and finally to all parts of the country, and even to the sea.

The story of Nesher began in Shenzhen, and South China is now the largest market for Nesher and its best testing ground. Pro shop, Nai Xue Dream Factory, Nai Xue bar, every time a store type is launched, Shenzhen has rushed to the first line.

When the competition returns to selling fruit tea, if Nesher wants to be invincible, she must conquer consumers with taste. Then, whether it is out of innovation or out of pleasing consumers, it is not surprising that Neixue takes South China as the first.

Combined with Nai Xue's new actions, its future main product is a relaxed series of fruit teas of 9-19 yuan, and Nai Xue has found its own direction from yaw.

Because no matter how many stories you want to tell, it must first be a company that sells fruit tea in the public's impression.