How did Sweet La La grow into Pinduoduo in the milk tea world?
Author|Mu Jiujiu
Editor|Huang Xiaojun
Source|Deep Krypton New Consumption [ID: xinshangye2016]
Cover image | pexels
The tea brand hit the Wandian track and squeezed into a "dark horse".
On September 12, Sweet La La said at the partner conference held that the total number of stores in 2024 plans to exceed 10,000. It is understood that at present, the scale of its national stores has reached 7,000 (including stores that have signed contracts and are in preparation).
In the lively tea market, there are not a few tea brands that have hit 10,000 stores, and it is not surprising that there are more than 7,000 stores, including Cha Bai Dao, Gu Ming, Hushang Aunt and other stores. But compared with the former, which has been active in the public eye for a long time, the existence of sweet lala is like a mysterious person.
Prior to this, there were few reports about the brand, and even investors who had been deeply engaged in the catering industry for many years had only heard of it.
Without financing, rooted in the sinking market for nine years, how did Sweet La La grow into a milk tea industry?
01
On Sweet Lala, it is inevitable to find the shadow of the tea giant Michelle Ice City by coincidence, and even the way of appearance is almost the same.
In 2019, with sales of 5 million cups and more than 7,000 stores, Michelle Ice City became a sweet potato and was reported by the mass media.
Four years later, Sweet Lala, which sells 400,000 cups a day and has 7,000 stores, has also attracted market attention because of its identity as an "invisible behemoth".
Behind the seemingly coincidence, it is Sweet La La's "ambition" to conspire to become the next Michelle Ice City.
Source/Sweet Lala
In 2014, Sweet La La was born, and its location was located in Bengbu, Anhui Province, not far from Henan, the base camp of Michelle Ice City. At that time, relying on 2 yuan ice cream, Michelle Ice City had already bought a large number of young people in small towns in Henan.
Seeing the development of Michelle Ice City in full swing, Tianlala, as a latecomer, simply "copied" its business model.
First of all, in the location of the store, Sweet La La also chose the sinking strategy.
According to Bright Company, Sweet La La currently has the largest number of stores in third-tier cities, reaching 2,441; followed by fourth-tier cities with 1,595 stores; There are also 719 stores in fifth-tier cities; There were 639 new first-tier and 665 second-tier companies, respectively. Among them, first-tier cities accounted for the smallest proportion, with only 97 stores.
It is worth mentioning that in the choice of sinking market, Sweet La La is even more sinking than Michelle Ice City. For example, in Anhui, where it is located, the largest number of stores is not in the provincial capital Hefei, but in Fuyang, which has 357 stores; In Henan, the places with more sweet la stores are also Nanyang, Pingdingshan and Zhoukou, not Zhengzhou.
Based on this, industry insiders call it "the county version of honey snow".
The choice of sinking market is destined to the unit price of its products cannot be too high. Therefore, in terms of product pricing, Tianlala chooses the same low-price strategy, and its price is generally between 2~13 yuan, emphasizing the quality-price ratio.
For example, compared with the price of 20~30 yuan for avocado products in other beverage stores, the sweet "super avocado" only costs 12 yuan a cup, which directly knocks down the price.
Source/Weibo @Sweet La La TLL
In addition, in terms of store expansion, Sweet La La has also adopted a franchise model like Michelle Ice City.
In the second year of its establishment, Sweet La La let go of its franchise and began to impact the external market. At this time, it was the first year of new tea drinks, new tea brands were established one after another, and Michelle Ice City, which was one step ahead, was also stepping up its expansion. Under such circumstances, Tianlala's external expansion will inevitably go head-to-head with Michelle Ice City at the same price.
Li Jiang, the founder of New Drive Catering, mentioned in an interview with the media that when Tian La La wanted to run out, she found that she could meet Michelle Ice City wherever she went.
However, the vastness of China's sinking market clearly accommodates Tianlala, allowing it to retain and survive in the competition with Michelle Ice City.
According to half-cooked financial reports, with the increase in the number of Michelle Ice City stores, its franchise threshold and review difficulty are also increasing, and some franchisees will retreat to choose the same type as Michelle Ice City and have a lower franchise threshold when they cannot pass the review of Michelle Ice City.
In this way, imitating giants promotes the advantage of sweet lala.
02
In the tea drinking circle, imitation giants has never been new: same-line brands imitate and copy each other, second-tier brands follow the first-line, and retail store "mixed imitation" abounds.
Even Sweet Lala's copying of the other party's model is not a special case, such as Cudi besieging Luckin with Luckin's playing style.
This is the following strategy mentioned by the American management scientist Levitt, that is, in the face of competitive pressure from market leaders, companies in a weak position can take a follow-up battle.
However, following strategy is not blindly following, it is divided into two types: long-term following strategy and following and leading strategy.
As the name implies, the former refers to defining itself as a long-term follower of the industry, while the latter refers to the fact that the company is not willing to be a long-term follower, and tries to be a challenger or even a leader in the industry after using the following strategy to develop and grow.
Of course, whether Sweet La La wants to surpass Michelle Ice City to become the dominant player we will ignore for the time being, but from the perspective of the brand growth path, it is not blindly obsessed with being a follower.
First of all, from the profit model.
As we all know, products below 10 yuan are not profitable, and their main income is the money of the supply chain. As early as 2019, with only 7,500 stores, Michelle Ice City recorded revenue of nearly 6.5 billion yuan based on the advantages of supply chain scale.
On the other hand, under the same scale, its annual income is about 2.5 billion yuan, which is far from the same.
As Interface News said, Sweet Lala's source of income is not in the supply chain, but more on products, and makes small profits through volume sales. In this regard, there is a qualitative difference between Sweet La La and Michelle Ice City.
Source/Dianping
Secondly, from the perspective of product structure, sweet la la and honey snow are also slightly different. Sweet La La focuses on fresh fruit tea drinks, while Michelle Ice City is fruit tea.
In other words, the main competitors of Sweet La La products are actually brands that focus on fresh fruit tea such as Naixue, or mid-range tea brands that have a layout for fresh fruit tea. For example, in the menu structure of Sweet Lala, there are 7 points of sweet explosive poplar nectar, and there are also the popular Zhizhi grapes of Heytea, and even Luckin's popular raw coconut latte can be found here, which can be described as the "method" of honey snow and the strength of everyone.
It is worth mentioning that in terms of products, Sweet La La does not always maintain a "latecomer" attitude.
Take a barrel of fruit tea launched in 2021 as an example, before that, this product did not exist in the entire tea industry. Due to its high quality and low price, the product sold out of stock as soon as it was launched, selling 400,000 barrels that day and later imitating tea brands.
From this point of view, sweet la la is not limited to imitation.
However, fresh fruit tea is easy to sell, but fresh fruit tea is not easy to make. Since fresh fruit tea production requires the use of raw materials such as fresh fruit, this means that the brand must not only ensure the supply of upstream raw materials, but also connect the transportation from upstream to midstream, and even the processing of fresh fruits in stores. In addition, because of the "fresh" involved, enterprises also need to consider the cost control of fresh fruit transportation.
This is not easy for tea brands like Tianlala that focus on low prices.
Although as early as the first year of its establishment, Tianla began to set up a special food company to build a supply chain system, and now it also has its own orchards, tea bases, and industrial parks in China, which can realize direct procurement of its own orchards, coupled with the support of the cold chain logistics system, the adequacy and freshness of fresh fruit tea raw materials are guaranteed, but peers are not standing still.
Taking Aunt Hushang, who also focuses on fresh fruit tea, as an example, she has established a global raw material supply chain, has a number of warehousing and logistics bases in China, and the national cold chain coverage rate is close to 100%, which can deliver cold chain ingredients to stores within 1~2 days.
Looking through the official websites of various tea brands, you will find that there are not a few enterprises that have built the entire industry chain today, and technological changes have made cold chain transportation possible and common. On this basis, the competition between enterprises is no longer the freshness of fruit, but how low your cost is, how high your repurchase rate is, and even how powerful your digital ability is on the basis of freshness.
As the saying goes, people have me, people have me, this is the future competitive advantage.
Obviously, in the easiest price to buy consumers, sweet la has occupied a competitive advantage, and one of the ways to achieve profit at low prices is to expand scale and reduce costs.
From this point of view, it is not surprising that Sweet La La is on par with Michelle and impacts the scale of 10,000 stores.
03
On June 22, 2020, Michelle Ice City announced that it has exceeded 10,000 stores worldwide. Today, the number of Michelle Ice City stores has reached 25,000.
However, as the only brand in the tea beverage industry that has broken through 10,000 stores, Michelle Ice City is not small after breaking through the scale of 10,000 stores.
Source/Weibo @Michelle Ice City
On the one hand, although the Chinese market is vast, due to the long-term dominance of the sinking market, it is not easy for Michelle Ice City to win the next line of consumers; On the other hand, consumers' diversified demand for tea flavors is also slowing down the opening of stores in Michelle Ice City.
In September last year, the prospectus released by Michelle Ice City showed that the number of stores decreased by 176 stores in January ~ March 2022, accounting for about 10% of the current increase, accounting for much higher than in 2020~2021, and the growth rate of stores slowed down significantly. In August this year, the number of stores opened in Michelle Ice City was only 531, which is far less than before.
To this end, Michelle Ice City, which is a great horse in the tea drinking industry, even eyed the business of the fried skewer shop next door.
Recently, there have been many news reports that Michelle Ice City is applying for a commercial label related to the fried skewer brand "Kazika". In this way, fried skewer trading is a must-do business for the Snow King.
Imagine that when Sweet La La achieves the scale of 10,000 stores, it is bound to face the same problem.
As the interface commented, "Tianlala's business model is effective in the sinking market due to factors such as poor information, lack of reach of other brand stores, and the importance of cost-effectiveness by target consumers, but it also hinders the penetration of Tianlala into the market with higher consumption levels." Therefore, when its stores reach 10,000 stores, it may encounter a growth bottleneck. ”
For this reason, Tian La La set her sights overseas early.
At the partner conference, Wang Wei, founder and chairman of Tianlala, revealed that the brand plans to open 60 stores in Indonesia by the end of this year and fully enter overseas markets in 2024.
The story of the Snow King may eventually repeat itself in the "Bear King" one day.
*The above pictures have indicated the source, if there is any infringement, please contact to delete
Resources:
Interface News "In the county town and township, the next Michelle Ice City has appeared"
Bright Company "How to open 6,000 sweet la-la on the market: fresh fruit tea version of Michelle Ice City|Several stores 11"
Half-cooked Finance "The Invisible Behemoth of the Sinking Market: There Are More Stores Than McDonald's, but Few People Know"