In 2018, Michelle Ice City entered the Vietnamese market, and in just 5 years, the number of stores exceeded 1,300.
In terms of quantity and influence, it far surpasses other tea brands in Vietnam and has become the No.1 of Vietnam's current new tea drinks.
However, just when Michelle was preparing to go public and overseas expansion was a great success, some franchised stores in Vietnam began to protest Michelle Ice City and expressed their dissatisfaction by pulling banners.
What's going on here?
Source: Netizens broke the news
Michelle franchisee's protest, the reason is funny - too rolled.
Because of the fire in Michelle Ice City, many businessmen in Vietnam choose to join, but Vietnam itself is not a big place, seeing more and more franchised stores, the profits of merchants will naturally face being eaten.
In addition, in order to expand the market, Michelle Ice City set off a new round of price reductions of more than 20% on October 2, and the prices of many products have approached the price of drinks in roadside shops, making local beverage merchants under pressure.
For example, the ice cream cone in Michelle Ice City in Vietnam sells for 10,000 VND (about 3 yuan) a piece, and the price of the main product milk tea and fruit juice drink is between 20,000-30,000 VND / cup (about 6-9 yuan / cup).
Milk tea in the local market in Vietnam generally sells more than 50,000 VND / cup (about 17 yuan / cup).
It can be said that in the face of the absolute price war, Vietnam's local tea enterprises have no advantage at all.
Most Vietnamese people are quickly attracted to the cost-effective Michelle Ice City.
According to Vietnamese media, early franchisees of Michelle Ice City can return their capital in 6-7 months.
It is precisely because of this that Vietnam has set off a honey snow franchise fever, so that now many franchisees complain:
"The storefronts are only 50 meters apart, which is too dense."
And it is the main small profit and high sales, franchisees want to reduce prices to compete, there is no space.
A Vietnamese franchisee named Trung only earned 10%-15% of the invested principal in half a year.
Trung said that not only is the return on capital slow in the store, but Michelle Ice City also uses too many discount programs, the system must run these programs, the product sells a lot but the merchant is not profitable...
There are no miracles in China, but they are just good at lifting foreign businessmen into the ICU.
Computers, mobile phones, cars... It turns out that Chinese always knocks the price down.
In fact, not only Vietnam, in China, the new tea market is more rolled, want to return the cost in half a year?
From the data point of view, it is getting slimmer.
Third-party reports disclosed that the net profit margin of major milk tea franchise stores in the market generally does not exceed 10%, and the net profit margin of Heytea is about 5%-6%.
Naixue's tea prospectus shows an overall net profit margin of just 0.2% for the 420 stores.
Michelle Ice City is better, with a net profit margin of 13% per store.
But even so, let's roughly calculate that with a net interest rate of 13%, it will take years to join a Michelle Ice City store to pay back.
Therefore, for domestic franchisees, choosing the track to join is particularly important, because if you are not careful, the dream of making a fortune will become "accompanying shareholders".
After facing rapid growth, the cyclical correction faced by new tea drinks is inevitable.
Not to mention that the general environment is here, and the overall consumption power of society has fallen into a flat market.
As for the microclimate of the tea market, it is even more rolled up.
Young people's pockets are also not encouraged, and under the concept of unnecessary consumption, the most likely consumption item to be cut is tea that is not just needed.
Wu Xiangjun looked at it, the market size of new tea drinks and the growth rate of the number of tea shops in first- and second-tier cities in the past two years have slowed down significantly in recent years.
Source: 2021 New Tea Drink Research Report
According to the "2021 New Tea Beverage Research Report", from 2018 to 2020, the revenue growth rate of China's new tea drink market was 26.5%, 23.4% and 26.2%, respectively, and the growth rate will drop to about 19% in 2021-2022.
Moreover, the report predicts that the growth rate will further narrow to 10%-15% in the next 2-3 years.
Under this circumstance, many high-end franchised brands have chosen to enter the sinking market.
For example, Heytea launched Go stores, and Nai Xue's tea focuses on Pro stores with smaller areas; And they all buck the trend and reduce prices, and there are more and more products under 10 yuan per product...
Although from a business point of view, this is called "pyramid layout".
But the discerning person knows that this is in the roll.
Capital always believes in the story, but it also judges how long the story can be told.
At present, brands such as Michelle Ice City, Chabaidao, and Heytea are lining up to list, and they are all facing a problem, that is, many VC capital dare not invest.
Internet giants are busy reducing costs and increasing efficiency, how can the money be enough to burn?
Everyone has to spend the winter together.
In winter, it is difficult for corporate model innovation to create subversive creation in the short term.
A better direction to focus on is either polishing products and refined operations, and constantly looking for good products with low unit prices, thereby increasing short-term customer flow and long-term reputation.
In the other direction, it is:
Sea.
For the new tea beverage industry, if you want to continue to obtain financing, and even the favor of the capital market, it is the last word to be able to make a big plate.
"IPO early know" pointed out in a foreign interview:
"One of the challenges facing Chinese tech companies right now is that they are 'succeeding' too quickly. In international markets, however, the reality is that such tactics are often seen as a concern by competitors and governments and regulators who lack trust.
If we look back at the 'successful' Chinese tech companies that have emerged in recent times, they have been so quick to challenge established companies in the US and India. They 'steal' market share and popularity from these companies, but they did not dispel the doubts of various stakeholders about their strategic intentions. ”
Replicating the Chinese experience in Vietnam will naturally succeed quickly, but the biggest risk is the cultural and government regulatory risks from overseas markets.
Some time ago, Indonesia publicly tore its face with the overseas version of Douyin, saying that Douyin's e-commerce model is too easy to squeeze the interests of local sellers.
Source: Indonesia Daily
The expansion of Michelle Ice City in Vietnam also tastes like this.
Rapid expansion can easily cause resistance from local businesses and governments, and over time, the pressure of resistance from local interests will be put in front of the "Michelle Ice City".
This requires our overseas enterprises not to blindly make everyone "unprofitable" through "concessions".
It is more to shape the cognitive status of the brand, just like McDonald's and KFC, to form a brand culture effect.
The "new" of "new tea drink" is not only new ingredients and new tastes, but also new marketing and new interaction.
Source:
"Analysis of the Development Trend of China's New Tea Shop Market in 2023"
"2021 New Tea Drink Research Report"