In the high-growth new tea beverage track, how to expand the scale while maintaining consumer stickiness for a long time is the key to the next step out of the industry's "breakthrough race".
Text/Daily Financial Report Lv Mingxia
In recent years, with the tide of people's increasingly rich life and consumption upgrades, new tea brands such as Heytea, Naixue Tea, Michelle Ice City, and Hushang Auntie have risen rapidly with the help of capital. Following Naixue's opening to join and Gu Ming's rumored IPO, the tea drinking industry has recently welcomed the explosive news - Aunt Shanghai is going to Hong Kong for an IPO.
In fact, Aunt Hushang just received a new round of strategic financing on July 28, but the amount of financing was not disclosed, which was jointly invested by Zhuhai Hengqin Zhiyi Qianrui Investment Partnership (Limited Partnership), Jiayu Fund, Jinyi Capital, Yimei Investment, and Shanghai Yiyu Investment Consulting Co., Ltd.
According to relevant news, Aunt Hushang plans to IPO in Hong Kong and is expected to submit a prospectus by the end of this year, and CITIC Securities and Haitong International jointly help arrange for it to advance. For the listing rumors, Aunt Hushang has not yet officially responded, but in the eyes of industry experts, its IPO has reached a mature stage.
You know, the new tea brand that is currently preparing to go public is not only a Shanghai aunt, so what are its unique advantages and confinement? If the listing is successful, can it get out of the opposite good performance of Nai Xue's tea?
The listing track is too crowded
In addition to Shanghai Auntie, there are currently at least 6 companies in the new tea beverage industry ready to queue up for IPO, including Michelle Ice City, Chabaidao, Gu Ming, Bawang Chaji, Xinshi Brewed Milk Tea, etc.
Among them, Bawang Chaji is working with Bank of America and Citi. In terms of background, in 2017, Zhang Junjie and his companions founded Bawang Chaji, proposed to use the "original leaves" of tea to make milk tea, to create a new Chinese style tea drink, the first store was unveiled in Wuyi Road, Kunming City, Yunnan Province, and now there are more than 2,000 stores.
In addition, Chabaido and Xinshi Brew are considering IPOs in Hong Kong. In June this year, it was reported that Chabaidao is simultaneously preparing to list in Hong Kong, and unlike other brands that focus on milk tea, Xinshi Brew stands out through the differentiated play of milk tea and fried chicken, and launches products such as overlord barrel, small man's waist, milk tea with fried chicken, etc., positioned in the range of 7-20 yuan.
In contrast, the scale of Bawang Chaji may be smaller, but its growth has been rapid, expanding the number of stores of less than 500 nearly fourfold in just one year. At present, Bawang Chaji has opened more than 70 stores in Malaysia, Singapore, Thailand and other places.
In general, in addition to Michelle Ice City, the above several new tea brands have several commonalities. First of all, the unit price of customers is about 10-20 yuan, and the target consumers are second- and third-tier young groups; Secondly, most of the profits are around 1 billion yuan; Third, the store expansion model is mainly based on franchise, and the number of stores opened is at least more than 1,000.
From the perspective of financing, the above several brands have also received financing, and the amount is not small. Cha Bai Dao received a financing amount of 1 billion yuan in June 2023, led by Orchid Asia, whose brand valuation is close to 18 billion yuan; Bawang Chaji also conducted 2 rounds of financing, and the amount of Series B financing in 2021 exceeded 300 million yuan; Gu Ming also received two rounds of financing, the Series A financing investors are Sequoia China and Meituan Dragon Ball, the amount of both rounds of financing was not disclosed; Michelle Ice City completed the first round of financing of 2 billion yuan in 2021, with a brand valuation of nearly 20 billion yuan.
It can be seen that these sprint IPO brands not only accelerate their expansion in scale, but are also very favored by capital. Therefore, under such fierce competition, it remains to be seen whether Aunt Shanghai can highlight the success of the IPO.
The second strand of new tea is difficult to sit firmly
Since Nai Xue's tea successfully landed on the Hong Kong stock market in June 2021, speculation about the world's second stock of new tea drink has been prevalent in the industry. Even after putting aside a group of strong competitors, for Shanghai Auntie, the road to listing is not easy.
Since the establishment of the brand in 2013, it has launched the original "freshly brewed grain tea", and the price of the drink is concentrated at 10-20 yuan, which has been very popular with consumers. However, in 2021, Auntie Hushang transformed from "grain tea" to "fresh fruit tea", bringing new development opportunities with innovative products, and accelerating the pace of market development.
The new tea market, which has long been in the Red Sea stage, does not tell too many new stories. In terms of model, either like Heycha Naixue at the beginning, offline expansion adopts direct stores, and brand unified management; Or like Michelle Ice City, which currently has the largest number of stores in China, it is directly open to earn money from franchisees and supply chains.
The layout strategy of the Shanghai aunt clearly chose the latter. Since its establishment in 2013, as early as early 2014, it has begun to announce its open franchise. But in fact, the biggest risk of this model is that investors cannot give a reasonable estimate of performance.
Because in terms of procedures, franchised stores order goods directly from the headquarters, pay the purchase price according to the contract price, and finally incorporate the purchase price into the company's revenue. Therefore, once the company requires franchisees to purchase a large number of goods in order to ensure high growth in performance, it is easy to form false prosperity in performance. Therefore, for Shanghai Auntie, how to explain in the prospectus that this model has high performance authenticity and sustainable growth will be a major attraction.
On the other hand, even if the company is successfully listed, whether it can solve the problems at the operational level needs to be another matter. After all, going public means that the profit pressure of enterprises is greater, because the compliance requirements of listed companies are higher, and China's current catering enterprises are still under the small profits of three highs and one low (high rent, high labor, high cost, low profit), it is likely that after the company deducts the cost of compliance, all profits will be lost.
Under this logic, Nai Xue's tea can also be counted as a lesson from the past, since its listing in 2021, the two report cards handed over by it are losses, and the company's market value has evaporated by 20 billion.
The new tea drink "enclosure war" is intense
At the end of the day, for many new tea brands, going public is just another beginning, and it doesn't mean that the company's development will rest easy.
In February 2023, the "2022 New Tea Beverage Research Report" released by the New Tea Beverage Committee of the China Chain Store and Franchise Association showed that the size of the mainland new tea beverage market increased from 42.2 billion yuan in 2017 to 104 billion yuan in 2022, and the total number of new tea stores was about 486,000. In 2023, the market size of this track is expected to reach 145 billion yuan.
Although the market size continues to grow, the competition is actually very fierce. In addition to the 6 new tea brands that are about to be listed, there are more than 4,000 stores similar to Shuyi, Tianlala, COCO, Yihetang and other brands. And brands such as jasmine yogurt and lemon tea that focus on market segments have also become a force to be reckoned with.
Today, Heytea, Naixue and Lele Tea have all opened up to join, and it can be seen that the new tea drinking track in 2023 and the future will only be rolled up, and there will be a battle for mid-waist tea.
At the store level, Aunt Hushang is not currently far behind her main competitors, who are also waist players. According to the data of the narrow door restaurant APP, the number of Michelle Ice City stores is the first with 24,536, and the number of Guming stores is 7,678, ranking second; There are 6,874, 6,753 and 6,831 stores in Shuyiyao Fresh Grass, Cha Bai Dao, and Hushang Auntie Fresh Fruit Tea Stores, respectively, with a small difference.
At this stage, halfway through 2023, in the high-growth new tea beverage track, how brands can expand their scale while maintaining consumer stickiness for a long time is the key to the next "breakthrough race" in the industry.
Some insiders believe that the future competition is all-round, which will test the brand's ability in supply chain integration, cost control, product innovation, overseas market expansion, marketing and other aspects. It may not be easy for Aunt Hushang to come out on top in the battle.