Wen | Dong Chailing
Editor| Qiao Qian
In recent years, new tea brands have been burning money like crazy, and the suppliers behind them have easily hitched a fast track to making money, and are now ready to go public.
Relying on the sale of raw juices to head tea brands such as Nai Xue, Tea Baidao, Shanghai Auntie, and A Little Point, Tianye Shares has soared in the past three years and will now sprint to A-share listing. According to the prospectus, in 2019, Tianye achieved revenue of 290 million yuan, compared with 266 million yuan in 2020. In 2021, the revenue of Tianye Co., Ltd. increased to 459 million yuan, an increase of 72.56% over the previous year, and the net profit was 0.65 billion yuan.
In the prospectus of Tianye Shares, As the first major customer, Nesher contributed nearly 120 million yuan in revenue to it in two years. Compared with The performance of Nesher in 2021, the annual revenue was 4.296 billion yuan, but it had not yet achieved a turnaround, with an adjusted net loss of 145 million yuan. It can be seen that in the bleak moment when the new tea is facing losses and closing stores, the suppliers behind them have become the biggest winners.
From innovating the tea base to using fresh fruit and real milk, a new cup of tea is getting more and more expensive, and it has become highly homogeneous, so it has to become more and more rolled in the recipe and taste, and begin to dig for niche fruits.
Nai Xue's "domineering jade oil orange" launched last year successfully brought the small fruit of oil citrus to the fire, and the upstream origin was also in short supply. The birth of this blockbuster is inseparable from the supplier Tianye shares behind it. In fact, a series of new and exotic flavors such as citrus juice, prickly pear juice, yellow peel juice, mulberry juice and so on are the result of close "collusion" between the new tea brand and the supplier.
Selling raw juices, quick-frozen fruits and vegetables and fresh fruits to downstream customers, Tianye shares easily earned more than 100 million yuan, and the gross profit margin gradually climbed. How did Tianye shares eat the dividends of the new tea industry? What are the concerns about its business?
Field Shares' business composition
Nesher is the biggest customer
In the process of opening up a new tea market by Tianye Shares, Nesher's is undoubtedly the most important customer.
Founded in 2007, Tianye Co., Ltd. initially mainly sold prepackaged fruit juice drinks to Nongfu Spring, Coca-Cola and Wahaha, and used the fruit and vegetable resources of Guangxi, Hainan, Guangdong and other places to produce and process tropical fruit and vegetable products. In 2012, Tianye co., Ltd. merged with another tropical fruit and vegetable juice manufacturing company, Hainan Dachuan, to expand its asset territory.
As the new tea industry enters the stage of focusing on raw materials and quality, the supply chain behind it has also ushered in an upgrade. One obvious change is that in recent years, the prepackaged juice beverage industry has grown weakly, and the demand for raw juice has grown slowly. On the other hand, Xicha, Naixue and others have opened up the high-end ready-made tea market, and the demand for raw juice is growing rapidly.
Tianye shares also began to transform. From 2019 onwards, Tianye Co., Ltd. has stepped onto the new tea track, adjusted the product structure, took tropical raw juice as the main product, and successively became a supplier of many new tea brands such as CoCo, Tea Baidao and Naixue.
For the production of raw juice, Tianye co., Ltd. adopts the mode of fixed production by sales and annual sales of seasonal production to reduce inventory pressure. The company masters more than 40 kinds of fruit and vegetable processing technology such as mango, passionflower and lychee, and produces concentrated fruit juice, NFC, blended fruit juice and other products, with a gross profit margin of nearly 30%.
All the way to build factories and expand production capacity, Tianye Co., Ltd. has 4 modern factories in Guangxi Beihai, Hainan Ding'an, Sichuan Panzhihua, Hubei Jingmen, and the production capacity layout covers the main tropical fruit and vegetable production areas. At present, the annual sales scale of raw juice has exceeded 400 million yuan, accounting for more than 90% of the revenue.
In the list of the top five customers of Tianye Shares, more and more new tea brands have appeared, replacing traditional food and beverage companies. The proportion of revenue contributed by new tea customers has increased rapidly from 4.2% in 2019 to more than 60%.
At present, Nesher has become the largest buyer of Tianye shares. In 2020, the purchase amount of Nesher was only 25.64 million yuan, and as the second largest customer, it contributed 9.63% of the total revenue to Tianye Shares. By 2021, the purchase amount of Nesher has increased sharply to 92.06 million yuan, jumping to the largest customer, accounting for 20.04%. In two years, Nesher has contributed about 120 million yuan in revenue to Tianye Shares.
Sales of the top five customers of Tianye Co., Ltd. from 2019 to 2021
The procurement scale is second only to Naixue's Chabaidao, positioning the mid-end market, the price is concentrated between 15 yuan and 20 yuan, and the rapid expansion of direct operation and franchise mode, the current store has exceeded 5,000. In 2021, the procurement scale of Chabaidao to Tianye shares doubled to 66.06 million yuan, becoming the second largest customer.
Also in 2021 to the field shares of large-scale procurement, there are Shanghai aunts and a little bit, because they all last year in line with the consumer trend to launch fresh fruit tea products.
It is worth noting that in addition to the new tea, Tianye shares also has an important customer - beverage giant Nongfu Shanquan. It has a number of juice brands such as "Water Soluble C100", "Farmer Orchard", "Nongfu Spring NFC Juice" and so on. From 2019 to 2021, although the procurement scale of Nongfu Spring continues to rise, the growth rate is far less than that of the new tea and beverage brand, so by 2021, its proportion of the total revenue of Tianye shares has even been lower than that in 2019.
The consumer trends behind this are not difficult to guess. According to the data, the retail sales of domestic juice drinks are expected to grow from 143.5 billion yuan in 2019 to 160.3 billion yuan in 2024, with a compound annual growth rate of only 2.2%. The market for prepackaged fruit juice drinks is being occupied by the emergence of new tea drink players, who occupy the minds of consumers with quality upgrades and rapid iterations.
Sales revenue obtained by Tianye Shares from customers in different industries
Dealing with new tea customers, Tianye shares see more business opportunities. The difference is that the core appeal of food and beverage customers is to control costs, provide standardized and stable quality products, and focus on large packages of concentrated juice. New tea customers are mainly small packages of NFC, customized products, not only require easy preservation, distribution and ready-made operations, but also have higher requirements for product innovation.
In addition, new teas usually require full cold chain transportation, and the cost and price are higher than those of customers in the food and beverage industry. In terms of the unit price of raw juice, the purchase price of new tea customers is almost twice that of the food and beverage industry.
Backed by many beverage giants and new tea brands, Tianye Shares' revenue has maintained growth. In 2019, the revenue of Tianye Co., Ltd. was 290 million yuan, and in 2020, it fell slightly to 266 million yuan due to the impact of the epidemic. In 2021, the revenue of Tianye Shares increased to 459 million yuan, an increase of 72.56% over the previous year. The net profit in the past three years was about 24 million yuan, 0.21 billion yuan and 0.65 billion yuan respectively.
The hidden worries of bundling new tea drinks
For these beverage processing plants such as Tianye, their own research and development investment is low, and the advantages are more reflected in large-scale procurement to achieve the ultimate compression of upstream costs. At present, the new tea industry is ushering in an industry reshuffle, and Xicha and Naixue have also reduced prices, starting from the compression of supply chain costs, which undoubtedly poses a challenge to the business of the field.
This is also reflected in Tianye's prospectus – in 2021, the average price of products sold by Tianye to the new tea industry fell from 17,300 yuan in 2020 to 16,700 yuan – in the context of the upstream price increases in the food and beverage industry since 2021, this situation is really not good.
Sales price of raw juice products of Tianye Shares
Field's challenges also include quickly adapting to market changes. After luckin launched the raw coconut latte last year, coffee and milk tea brands on the market have taken action to rush to new coconut-flavored drinks. Tianye Shares has also launched normal temperature coconut milk, frozen raw coconut milk, coconut fiber fruit, coconut water and other products, supplied to Coca-Cola, Nongfu Spring, Nai Xue and so on.
For the financing listing, Tianye shares said in the prospectus that it plans to raise about 476 million yuan for investment project construction. The aim is to increase the production capacity of 8,000 tons of coconut products, 12,000 tons of flavored syrup and 23,400 tons of fruit and vegetable products, catering to the rapidly growing demand for sugar and coconut in the new tea industry.
Others have more far-reaching changes. In order to form a differentiated competition, new tea drinks are more eager than ever to build barriers from the supply chain. In essence, the industry has a low entry threshold, and the product must fight for both taste and new speed. The products on the market have been similar, and consumers prefer novel flavors, so some powerful new tea brands have begun to try to build their own supply chains.
Heytea built its own tea garden in 2017, and Nai Xue went to the strawberry production area in the country for base direct harvesting. Tianye shares also said that large-scale enterprises, with the advantage of scale procurement, their own research and development and operation capabilities are strong, willing to purchase raw materials and products according to their own research and development formulas, direct procurement of origin or customized methods.
It is not easy for brand companies to build their own supply chains, but what is even more difficult is the transformation of supply chain enterprises from the B-end to the C-end. Tianye Co., Ltd. had developed the beverage business, launched its own brands "Fruit Fruit Language" and "Green Island Coconut Grove", as well as dried fruit products, but these attempts were quickly buried.
In addition to a field stake, the new tea drink is feeding more suppliers. Nesher once disclosed in the prospectus that in 2020, Nesher established partnerships with more than 250 well-known raw material suppliers, of which the cooperation relationship with the top ten suppliers averaged more than 2 years.
It is foreseeable that the new tea market will drive the upstream supply chain reform, with the purpose of expanding production capacity, and more supply chain enterprises may land on the capital market in the future. Considering that the new tea brand itself faces the problem of profitability, and at the same time seeks to reduce the cost, it will be more difficult for these raw material suppliers to make money from the new tea drink in the future.
As the raw material juice of the field head product, it accounts for more than 90% of the company's revenue. Suppliers who have eaten the first wave of dividends in the new tea industry are well thinking about how to get rid of the dependence on a single product line and large customers and explore more diversified growth paths.