Text | Hedgehog Commune, author | Zhang Zhan, Editor | Shi Can
Coconut Tree, which has not cooperated with the outside world for 34 years, has finally "put down its body".
On April 11, luckin and coconut tree jointly named "Coconut Cloud Latte" was officially launched. This new product uses Luckin's "coconut cloud process", using coconut milk instead of regular milk caps, known as "light and dense" and "swallowing clouds in one bite". Luckin also followed the packaging style of coconut palm juice, designing custom cup sets and bags for this new product.
Coconut Cloud Latte Poster | Image source "luckincoffee Luckin Coffee" Weibo, Hedgehog Commune Mapping
In fact, as early as April 8, Luckin began to build momentum for this new product. Although the poster gave the co-brand a mosaic, netizens directly called "this mosaic is lonely". After being "exposed" by netizens, Ruixing Weibo published a poster calling for "Please let me finish the performance quietly, [Rose] will really thank you!" [Rose]".
Official poster of coconut cloud latte | Image source "luckincoffee Luckin Coffee" Weibo, Hedgehog Commune Mapping
This is a common joint marketing event in the consumer circle, but at this point in time, it is quite interesting.
On April 6, Luckin posted on Weibo that as of 19:48 on the same day, Luckin's 2021 explosive product raw coconut latte sales exceeded 100 million.
On March 24, Luckin announced its unaudited fourth quarter and full-year financial reports for 2021, which showed that Luckin's annual revenue in 2021 was 7.965 billion yuan, almost doubling its revenue in 2020. In terms of profit, although Luckin has not yet achieved profitability, the scale of loss has been greatly reduced - the operating loss of Luckin in 2021 was 540 million yuan, down 80% year-on-year compared with 2020.
In response to this financial performance, many industry insiders commented: Luckin has been "resurrected".
On the other hand, the performance of the coconut tree is equally eye-catching, and despite the packaging of "spicy eyes", people's taste buds are very honest. At the end of January 2022, coconut trees showed the growth of 2021: in 2021, coconut tree sales increased by 16.82% year-on-year in 2020, 7.71% over 2019, and an average growth of 12.26% in two years.
Hedgehog Commune (ID: ciweigongshe) has asked many local enterprises in Hainan about their impressions of coconut trees, and one of the words they mention most frequently is "closed" - as can be seen from the fact that coconut trees have not cooperated with brands for 34 years, and coconut trees are relatively traditional in the business ideas of enterprises.
But the story is about to be rewritten, and looking back a few years later, the listing of coconut cloud lattes may be a milestone event for coconut trees to "emancipate their minds". For Luckin, the coconut latte is more like champagne for celebration – after experiencing the pains of growing up, Luckin may really find the right path.
Luckin's "Celebration Banquet"
No one will deny that Luckin is a company with a rich story.
In 2017, the establishment of Luckin caused a lot of waves in the coffee market and even the entire consumer market, and the listing of Luckin 18 months after its establishment shocked the market - this once set a record for the world's fastest IPO, and Luckin's "blitzkrieg" became one of the most talked about topics at that time.
But no one expected that a short report pierced the bubble of false prosperity, and a series of events poured out to Luckin like dominoes, and finally overwhelmed Luckin:
In January 2020, muddy water, a well-known short-selling institution, claimed that it received an 89-page anonymous short-selling report that pointed out that Luckin data was fraudulent; in April, Luckin admitted to false trading of 2.2 billion yuan; in May, Luckin Coffee said it received a notice from the NASDAQ exchange requesting delisting from the NASDAQ; and in June, Luckin officially suspended trading and filed a delisting record. This in turn set a record for the fastest delisting of Nasdaq China companies.
Pain and pain. In May 2020, luckin's former CEO was removed from his position for financial fraud. After Guo Jinyi took over as CEO, Luckin's aggressive strategy was stopped, and "steady" became the key word for "new Luckin". Guo Jinyi formulated a new strategy for Luckin: to reduce diversified investment and strengthen the construction of stores, products and users of the three core departments.
His team focuses on refined product and marketing operations, for example, a significant change in the indicator is the marketing expense rate: in the second half of 2020, Luckin Coffee's marketing expense ratio fell below 5%, while in the past, this value has never been lower than 20%, and even as high as 60%.
Luckin's development thinking has changed, becoming more product-oriented and lighter marketing. Ge Xiantong, founder of Jingcai Capital, believes that products must be the foundation of the catering industry, and Luckin's product strategy is one of the important manifestations of its return to business common sense and focus on the essence of business.
He said that the market foundation of coconut is good, and the Chinese people have drunk coconut milk very early, which means that consumers have a high degree of awareness of coconut milk; in addition, most coffee consumers do not like the bitter taste of coffee in terms of taste preferences, and Luckin will adjust the bitter taste of coffee during research and development, conforming to this trend and promoting the popularity of raw coconut lattes. After the review, the Luckin team also speculated that the raw coconut latte stepped on the general trend of milk tea users gradually changing to milk coffee users.
But "time and place" ultimately depends on some coincidences, and only "people" are things that a company can firmly grasp. As Zhou Weimin said: "We do research and development can not guarantee that a certain product will sell well, we can guarantee that the logic of this product is not wrong." ”
What is the underlying R&D logic of Luckin? We summarize it into three points:
Luckin officially said to the coconut cloud latte: "This new product, this year's OKR is the same as the raw coconut latte, 100 million cups. "From a business point of view, the coconut cloud latte helps to further consolidate the market awareness of the Luckin milk coffee category, and stimulate consumption and contribute to growth, but in the context of Luckin's development, we may wish to romanticize it as a "celebration ceremony" after the release of Luckin's financial report.
Driven by the three carriages of "stores, products and users", Luckin's latest financial report shows that at the end of 2021, the number of Luckin stores reached 6024, surpassing Starbucks China's 5557; its self-operated store operating profit reached 1.253 billion yuan, achieving an annual positive value for the first time, and a loss of 435 million yuan in the same period of 2020.
When you're done drinking this cup of coffee, it's time to go again.
The "milestone" of the coconut tree
Luckin is headquartered in Xiamen. Walk about 1,000 kilometers southwest along the coastline, and then cross the Qiongzhou Strait to reach Haikou, Hainan, where the headquarters of the Coconut Tree Group is located.
One thing that Coconut Tree Group is very proud of so far is that Coconut Tree has achieved a revenue scale of nearly 5 billion yuan today, which lost money for five consecutive years 36 years ago, changed four factory directors and could not be saved, and went bankrupt with only 20,000 yuan.
In September 1987, after 383 arduous tests, Coconut Tree finally developed Coconut Brand Coconut Juice. In 1988, natural coconut water without any preservatives was born. In that year, Haikou Canning Factory turned a loss into a profit for the first time, making a profit of 2.4 million yuan. In the years after the successful development of coconut juice products, natural coconut juice won the honors of "First Prize of National Spark Science and Technology", "China State Banquet Beverage" and "Gold Medal of the First China Food Expo". In 1994, Coconut Tree ranked first in sales among beverage companies in the country.
Nowadays, when coconut milk products are highly abundant, it is still difficult for us to find negative evaluations of the taste of coconut palm juice in the Internet world, and most of the criticism of coconut trees is concentrated on the marketing level - after all, in the beverages that young people love, it is difficult to find products that are uglier than coconut tree packaging.
According to the relevant reports of the Financial World Weekly, since 2005, the packaging design of coconut palm juice has been personally handled by Wang Guangxing, chairman of The Coconut Tree Group.
The entrepreneur, born in 1940, witnessed the various storms and waves since the founding of the People's Republic of China, and he had only two requirements for product packaging: the words should be large enough and the colors should be bright enough. He enlarged the word "coconut tree" on the packaging, changed its color to bright yellow, and hedged it with yellow with a black bottle, hoping to firmly grasp the attention of consumers.
Coconut product packaging with copywriting | Image source "Hainan Coconut Tree Group" Weibo
Since 2009, Wang Guangxing has not been satisfied with this design and began to add a female model image to the packaging. Therefore, the coconut tree has aroused the market's doubts about the vulgar and pornographic marketing of coconut trees, and in 2019 and 2021, the relevant market supervision departments in Hainan Province twice filed a case investigation into the relevant advertisements of coconut trees, and were fined 200,000 yuan and 400,000 yuan respectively.
Wang Guangxing's body condenses the characteristics of many older generation entrepreneurs: focusing on products, but still retaining traditional ideas in marketing. But times are changing, and the way companies market them are doing has to keep up with the times.
An article was published in the first issue of Coconut Tree People in 2022, an internal publication of the Coconut Tree Group, in which the author analyzed Coca-Cola's successful experience. In his view, Coca-Cola has achieved a transformation of the marketing planning concept in the process of development: from the early 3A (that is, Available can be bought, Acceptable can buy, Affordable can afford) to 3P (that is, Pervasive is everywhere, Preferred is preferred, Price Relative To Value is worth it).
New marketing ideas don't necessarily translate into packaging. When the design of the coconut tree "soil to slag" was applied to the customized cup set and bag, it even produced some wonderful chemical reactions, and many netizens said: "Don't I want the coconut brand coconut juice cup cover when I order the coconut cloud latte?" "So earthy, suitable for me."
Consumer reviews (representing the user's personal opinion only) | Image source Weibo @Mmmm-ing
Packaging is only "face", for the coconut tree, more important may be the user's thinking and brand thinking of the "lizi". The joint name with Luckin is a milestone step taken by Coconut Tree, but how to go in the future and how to achieve greater growth, Coconut Tree still has to think carefully.
Although coconut trees have established certain product barriers, there is no fortress in this world that cannot be broken - security has always been a luxury, and crisis is the norm.
Regardless of the up-and-coming stars such as the coconut juice industry special soldiers and happy homes, in March 2022, Chunguang Company, the "Hainan First Hand Letter Brand", which originally focused on coconut-flavored snack food, entered the coconut juice industry and became a major enemy of coconut trees.
In addition, many people have the impression that the products of the Coconut Tree Group are only coconut brand coconut water, but this is not the case: in addition to coconut water, coconut tree product matrix also includes mineral water, fruit juice, tea drinks and fibrous fruit. Coconut trees are the absolute hegemony in the coconut juice market, but in other categories, coconut trees are unknown, and in order to make some noise, coconut trees need to use new ideas to open up the market.
Since the establishment of the Haikou Canning Factory in 1956, the company has experienced almost all stages of China's economic take-off in New China. Although there is inertia in the development of enterprises, when the 21st century is in the third decade, when Chinese consumption has entered the "new consumption era", it is time for the "old man" to look up and take a closer look at this rich and ever-changing new world.
A metaphor for a joint name
At this point, we can't help but sigh: Luckin is too new, new to study Luckin articles and books emerge in an endless stream, but the new consumer brands always have some "newborn calves are not afraid of tigers", easy to rush to make quick profits; but the coconut tree is too old, old enough to stop the water, easy to follow the old, in place.
But the wonderful thing is that they are all leaning in the middle: Luckin has moved from heavy marketing to heavy products and heavy users, replacing radicalization with a steady development style; Coconut Tree has gradually begun to realize the power of brand building and communication, recognized the value of marketing, and knows that only excellent products are not enough. -- New consumption and old consumption have the same destination.
Weng Yinuo, founding partner of Hongzhang Capital, has 20 years of experience in consumer investment, and has invested in brands such as Blue Moon, Aunt Qian, and Ziyan Baiwei Chicken. He said that in the discourse system of Hongzhang Capital, there is no concept of "new consumption".
"We don't talk about the concept of new consumption, because when it comes to new consumption, it has to correspond to the old things, but the old things are also the latest in its time, so it is only the time dimension that is extended." We do not make such a distinction, innovation is the basic state of existence, but it has been iterative process. Weng Yinuo said.
If we use this passage to explain the joint name of Luckin and Coconut Tree, we can regard this joint name as an encounter between Luckin and Coconut Tree in the process of self-iteration, and this intersection can be understood as a consensus - recognition of adhering to the essence of business, and respect for business common sense.
According to China Entrepreneur magazine, Guo Jinyi now always says that he wants to create a legend of business history. But what is legend? The fastest IPO is, creating value is, rebirth is, but making bubbles is definitely not. Although in the context of the current fierce competition in the coffee track, it is still too early to say that Luckin has been "reborn", but after nearly two years of adjustment and exploration, Luckin has indeed preliminarily verified the feasibility of the "new Luckin model".
Wang Guangxing has set a target of 10 billion yuan in output value during the "13th Five-Year Plan" period (2016-2020). Although this goal has not been achieved, and there is even a huge gap, considering the market size of coconut milk of more than 15 billion yuan, and the huge opportunities in the market of other categories, on the basis of adjusting the way of thinking, this goal will not be achieved in the future.
In addition to symbolizing self-iteration, in this winter of consumer capital, the story of Luckin and coconut tree is like a fable about long-termism.
Hedgehog Commune has asked more than a dozen new consumer founders the same question: In the face of the capital winter, what should brands do? They gave a highly consistent answer: a firm long-term approach.
Yin Linyi is the vice president and investment director of the consumer group of Binfu Capital, which has invested in well-known consumer brands such as Guanzhan, Fat Tiger, and New West Mystery. She said that at the current time node, consumer brands should understand the road of "flowing water does not compete".
"Affected by the epidemic, people may have to live a hard life in the next few years, but anxiety and hope always coexist." In this anxious environment, brands should be based on a more long-term perspective and constantly think. The market always has a chance, and only by polishing the internal strength can we seize the opportunity. Yin Linyi said.
Weng Yinuo, who has experienced many rounds of consumption cycle, believes that consumption is not such a "fast" industry, but it is slowly rising to see consumption for a long time span, and it can go far.
Coconut tree has proved this with performance, coconut palm juice that has existed in the market for more than 30 years is still a strong beverage product in the consumer market; Luckin has also proved this in stages with its own strategic adjustment, and the steady pace of development has brought Luckin a good industry reputation and a historic breakthrough in turning losses into profits.
Slower, faster, but never stop, perhaps it is the biggest inspiration that the two brands behind this joint brand have brought to the consumer world.
Resources:
[1] Hongzhang Capital Weng Yinuo: Pulling a long time to see consumption, re-understanding this round of "hot and cold" cycle, wave new consumption, 2022.3
[2] Luckin Coffee Zhou Weiming: How was the explosive product with a monthly sales of more than 10 million cups born |? Entrepreneurship says, Dapu Capital, 2022.2
[3] Luckin Thunderstorm 700 Days: "Traitor", "Gangster" and Secondary Listing, China Entrepreneur Magazine, 2022.
[4] Coconut palm juice performance has stagnated for 5 years, the 6 billion target has been empty, and the 79-year-old leader is unable to return to heaven, Finance and Economics Weekly, 2019.2