Combing through the following sets of key data, we can perceive the power of Michelle, the power of the franchise model, the crazy expansion of the tea industry in the past few years, and the changes that coffee is about to overtake tea:
In the ready-made beverage industry, Mixue Bingcheng is the first company in China and the second in the world, second only to Starbucks, which has about 38,000 stores worldwide.
In the beverage industry, Mixue Bingcheng has ranked fifth, and the top one is Coca-Cola China;
The market share of the top five ready-made tea brands has increased to 44.3%;
Franchisees support 92% of the chain stores in the tea industry, and one of the fastest-expanding and most high-profile tea brands in the past year is Bawang Tea Ji;
The compound annual growth rate of domestic coffee has surpassed that of tea, and the scale is also expected to surpass, and the second curve of Michelle Lucky Coffee currently ranks fifth in the industry.
Author | Xiao Chao (Beijing)
Executive Producer | Shao Lele (Shanghai)
The advanced nature of the tea industry is once again reflected.
The industry's first Michelle Bingcheng and the industry's second ancient tea submitted on the same day, plus the already listed Naixue and the tea Baidao that submitted a prospectus in the middle of last year, if it goes well, the tea industry is expected to run out of the fourth listed company within the year. If the time is a little longer, Tianlala has also disclosed its plan to list on the Hong Kong stock market in 2025.
Listing is often regarded as one of the signs that a company has moved from a period of rapid growth to a mature period, but from 2022, the general pattern of the tea beverage industry has been determined, and the occurrence of several mergers and acquisitions in the industry and the adjustment of some brand price bands and business strategies indicate that the industry has entered the second half.
However, from the prospectuses of the two leading brands, we can still get a glimpse of some more specific business information of the two companies and some more comprehensive trend data of this industry. What does it mean for the industry to become the first store chain with more than 30,000 stores in the 10,000-store chain, how to manage the tens of thousands of franchised stores that still have the attributes of ready-made catering products, and how to manage coffee, as a dark horse that has risen rapidly in the ready-made beverage industry in recent years, has caught up with the scale of tea drinks, and so on, we can find the answers.
Coincidentally, the content of the "Industry Overview" section of the prospectus of these two companies has been entrusted to CIC Consulting to issue a report, which also retains the consistency of statistical caliber to the greatest extent. The reports that we often refer to below are also derived from this.
As we mentioned in "The "Halftime War" of New Tea Drinks", the uniqueness of the tea beverage industry lies in the fact that there has never been a fledgling star enterprise in any catering sub-category before, which can bring the industry to such a high level of high quality, strong innovation, strong social attributes, and strong brand power, and reshape the underlying logic of the industry with the emphasis on digitalization and the openness to capital.
On the basis of the high chain rate and high degree of catering retailing in the tea industry, the attributes of low entry threshold, low product barriers and low time barriers have raised the forming speed and competition intensity of the Red Sea market early. Observing the tea industry will have great enlightening significance for understanding the offline business format and the brand development of emphasizing its own channel attributes.
1. There are already 36,000 stores in Mixue Bingcheng,
Ranked second in the ready-made beverage industry
According to the report, as of the third quarter of 2023, Mixue Bingcheng has more than 36,000 stores in 11 countries in China and overseas, including about 32,000 domestic stores.
In the ready-made beverage industry, Mixue Bingcheng is the No. 1 company in China and the second in the world, second only to Starbucks, which has about 38,000 stores worldwide. At the same time, Mixue Bingcheng is also the only enterprise in the domestic industry that has reached the scale of 30,000 stores. Among the approximately 650,000 ready-made beverage stores in the country, the number of Mixue stores is almost close to the number of stores ranked second to fifth combined.
Image source: Mixue Bingcheng prospectus
In the first three quarters of 2023, Mixue Bingcheng will produce about 5.8 billion cups. If 1 billion cups is a unit of measurement for 3 times around the earth, then roughly calculated, the annual cup output of Michelle Bingcheng can be about 23 times around the earth. In terms of the number of cups, this data of Mixue Bingcheng exceeds the sum of the cups from the second to the fifth places in the ready-made beverage industry.
Based on the output of 5.8 billion cups and the terminal retail sales of 37 billion yuan, the average unit price of the cup is about 6.4 yuan, which is a low price.
2. Mixue Bingcheng is already domestic
The fifth largest beverage company
As we mentioned in our "Four Key Questions for Understanding Honey Snow Ice City", the competition of the company is not so much the other tea brands with a limited number of stores, but the fact that the beverage brands are closer to the small supermarkets and mom-and-pop shops that sell beverages.
In terms of revenue, the revenue of Mixue Bingcheng in the first three quarters of 2023 will be nearly 15.4 billion yuan and the net profit will be 2.45 billion yuan. However, the financial revenue of Mixue Bingcheng refers to the cost of selling raw materials, equipment and other services to franchisees, and is not the revenue that the store terminal receives from consumers. In terms of the latter, that is, terminal retail sales, Mixue Bingcheng contributed about 37 billion yuan in the first three quarters, of which about 34.6 billion yuan was for domestic terminals.
With a figure of 34.6 billion yuan, Mixue Bingcheng is already the fifth largest enterprise in the entire beverage industry, and the only ready-made beverage company in the top five (only the data of the beverage industry is counted, if the enterprise is a comprehensive food + beverage enterprise, the terminal retail sales of the food category are excluded). As a data reference, Dongpeng Special Drink, another listed company that did not enter the top five, disclosed its revenue in the first three quarters of 2023, that is, terminal retail sales of about 8.6 billion yuan, according to the financial report.
Image source: Mixue Bingcheng prospectus,
Caption: Company G and H are China-based beverage companies, Company H is a China-based food and beverage company, and Company J is the Chinese branch of a U.S.-based beverage company
In fourth place is Coca-Cola China, with terminal retail sales of about 64.4 billion yuan in the same period. In the beverage industry, it ranked first with 70.1 billion yuan, second with 69.5 billion yuan, and third with 67.5 billion yuan. Due to the small difference in numbers, we cannot correspond to determine which company they refer to, but according to industry experience, Wahaha and Master Kong are among them.
3. Franchisees support 92% of the tea industry
Chain stores
According to the report, by the end of 2022, franchised stores accounted for 91.8% of the total number of ready-made tea chains in China.
According to the "2022 New Tea Beverage Research Report" released by the China Chain Store & Franchise Association, the total number of tea stores at the end of 2022 was about 486,000, with a chain rate of about 55%. Based on these figures, among the approximately 267,000 chain tea shops, the number of stores opened by franchisees is about 245,000.
According to the number of stores and the number of franchisees disclosed in the prospectus, each franchisee of Mixue Bingcheng will open an average of 2.2 stores, and each franchisee of Gu Ming will open an average of 2.0 stores. So behind these 245,000 franchise stores, there are about 100,000 franchisee groups.
As we mentioned in "Why More and More F&B Brands Are "Letting Go Franchise"", usually due to the demand to optimize cash flow and rapidly expand the scale of stores, coupled with the maturity of other links in the industrial chain, and the formation of a collaborative ecological mechanism with professional companies and teams, more and more F&B stores choose to expand in the franchise model, especially in snack and drink categories with a high degree of standardization, low consumer-oriented service attributes, and a single-store model that is easy to replicate.
The growth rate of Heytea's stores after the opening of the franchise significantly reflects the quantitative expansion brought about by the franchise model. When it chose to open up the franchise in November 2022, Heytea, which has been established for many years, only has more than 870 directly-operated stores. By the end of 2023, the number of Heytea stores has exceeded 3,200, including more than 2,300 franchised stores. In other words, in the more than a year when the number of directly operated stores was almost stationary, Heytea only relied on the strength of franchisees to achieve nearly 270% store expansion.
4. The head brand opened stores rapidly,
The concentration of the industry has been further improved
According to the data of Narrow Door Dining Eye (the specific data may be slightly different from the prospectus and the actual situation, only look at the relative ranking and trend here), tea brands are ranked by the number of stores, and the top ten are Mixue Bingcheng (27920), Gu Ming (9028), Tea Baidao (7939), Shanghai Auntie (7613), Shuyi Burning Xiancao (6843), Tianlala (5789), Yihetang (4965), CoCo (4356), Bawang Chaji (3200), Heytea (3197).
Data source: Narrow Door Dining Eye
Among them, Bawang Tea is undoubtedly one of the fastest-growing and most high-profile tea brands in the past year, with about 2,300 new stores opened throughout the year, compared to the low triple-digit number of new stores in previous years.
Even at the end of 2023, as a new Chinese brand that focuses on milk + tea like Chayan Yuese, and was once considered to be the biggest beneficiary of Chayan Yuese's slow outward expansion, Bawang Chaji finally opened a store in Changsha, the base camp of Chayan Yuese, to face the competition with Chayan Yuese.
Another notable tea brand is Shanghai Auntie. In the early days of the epidemic, when various tea brands expanded rapidly and quickly raised the threshold of the first echelon to 5,000 stores, Shanghai Auntie, who had previously taken the differential route of freshly brewed grain tea, only opened less than 3,000 stores, which was considered to be at risk of falling behind.
In this context, Shanghai Auntie was forced to transform into the mainstream fresh fruit tea in the market, and vigorously recruited franchisees by lowering the investment threshold and increasing rebate measures, which achieved overtaking in less than two years and increased the number of stores to the fourth place today.
While the leading tea brands are vigorously opening stores, by 2022, a number of mergers and acquisitions in the industry have occurred, the tea market has continued to integrate, and the concentration of the industry has been further improved. According to the report, the market share of the top five ready-made tea brands in terms of GMV has increased from 38.5% in 2020 to 44.3% in Q3 2023.
5. Roll but roll out differentiation,
It's still store efficiency
In addition to the high chain rate and high saturation competition, the category characteristics of tea drinks also include low product barriers, high digital applications and high capital embrace.
Low product barriers refer to the fact that it is difficult to make differentiation in products, the fact that each company plagiarizes each other is on the bright side, and due to the attributes of consumers who like the new and hate the old, it is difficult to say how much loyalty to the tea brand itself can account for. For example, the report shows that the average quarterly repurchase rate of brands in popular freshly made tea shops (referring to the average cup unit price in the range of 10-20 yuan) is less than 30%.
In this case, frequent new listings and co-branding have become the usual operations to stimulate orders. According to the Gu Ming prospectus, Gu Ming will launch 94, 82 and 107 new products in 2021, 2022 and the first three quarters of 2023 respectively, which is equivalent to launching about 8, 7 and 12 new products per month. On the order page of Gu Ming's latest mini program, the total number of SKUs currently on sale is only about 50.
New products are constantly being introduced and eliminated, but the most popular ones will always be the classics (of course, the classics will also have some fine-tuning and innovation in the formula).
For example, Gu Ming mentioned that its annual cup sales champion in the past three years is Gu Ming milk tea, which was launched at the beginning of the brand's establishment (then probably in 2010); Gu Ming's super A cheese grape, one of the most popular in fresh fruit tea, was first launched in June 2019 and has undergone 11 formula upgrades so far; and the succulent grapes mentioned in the annual report of Heytea for 6 consecutive years were also launched by Heytea in 2018 six years ago.
When the overall situation of the product side has been decided, the single-store model, expansion rhythm and franchisee management between different brands have become the focus of competition, and these are inseparable from the blessing of digital capabilities. The CTO of a certain brand once commented to us that Gu Ming is one of the most prominent digital capabilities in the tea industry.
According to Gu Ming's prospectus, Gu Ming operates a "smart store" system in each store, including digitization, standardization and automation of operating procedures, so as to improve the operational efficiency of the stores and enhance the quality of products and services.
For franchisees, first of all, Gu Ming has established a point library containing more than 18,500 store locations, providing store location suggestions for franchisees, and secondly, store recruitment, training, raw material ordering, and store visits and inspections are also completed online.
The system can rely on the analysis of historical sales data to guide the store's marketing, inventory distribution, shift scheduling, etc., and the raw material expiration management module will track and update the expiration time of raw materials after each step of raw material processing (such as washing, cutting and cooking), and use this as one of the credentials to verify whether the franchisee is operating in a standardized manner, so as to decide whether to initiate an alarm and subsequently retrieve the store camera video for further verification.
In the production process of the product, the store is also equipped with five proprietary smart devices, such as an automatic tea brewing machine that automatically adjusts parameters such as tea brewing time according to factors such as water quality, pH and tea variety, to ensure the consistency of tea production.
High capital embrace refers to the fact that since Hey Tea and Nai Xue, the tea industry is a rare subcategory of actively embracing capital in the catering category. Although Mixue and Gu Ming, which have expanded through the franchise model, have sufficient cash flow and relatively limited dependence on capital, they have also brought in several external capital, and interestingly, Meituan Dragon Ball is the largest external shareholder of both.
To a certain extent, this also reflects the high closeness of tea drinks to takeaways. According to the report, the GMV of the industry contributed by food delivery has soared to 41.8% in 2022, from 13.1% in 2017.
6. Coffee has chased halfway up the mountain
Also as a ready-made drink, in addition to tea, the market for freshly made coffee is also growing rapidly. According to the report, in 2022, tea and coffee accounted for about 51% and 32% of the ready-made beverage market in terms of GMV, respectively, while the remaining 17% was contributed by ready-made fruit drinks, ice cream and yogurt.
In terms of terminal retail sales in the first three quarters of 2023, the coffee industry occupies two of the top five positions in the ready-made beverage industry, ranking in the order of Mixue Bingcheng (34.6 billion yuan), Luckin (23 billion yuan), Starbucks China (19.2 billion yuan), Gu Ming (13.8 billion yuan) and Chabaidao (12.5 billion yuan).
Image source: Mixue Bingcheng prospectus,
Caption: Company C is a freshly ground coffee company headquartered in Fujian, China, Company A is a multinational company listed in the United States and headquartered in Seattle, Washington, USA, Company D is a freshly brewed tea company headquartered in Zhejiang, China, and Company E is a freshly brewed tea company headquartered in Sichuan, China
Qing Yong, the founder of Tomato Capital, once quoted the opinion of some tea brand founders in his speech: "The final scale of the domestic coffee track will exceed that of tea". From the perspective of the industry scale in terms of terminal retail sales, the latest data for 2022 is that the industry scale of ready-made tea drinks is 213.7 billion yuan, and the industry scale of freshly ground coffee is 134.8 billion yuan.
Assuming that the compound annual growth rate of ready-made tea and freshly ground coffee are expected to grow at a CAGR of 18.3% and 21.2% in the next few years, the terminal retail sales of freshly ground coffee will officially exceed that of freshly ground tea in about 2029.
However, in terms of the actual situation, the two compound annual growth rate data are expected to be quite optimistic, the growth rate of the tea industry is declining year by year, and whether the coffee industry can maintain rapid growth for many years still depends on the feedback of the market.
Of course, today, the chaining of coffee still has more room for growth than that of tea, and the industry chaining rate will be 27% in 2022. Still based on the terminal retail sales in the first three quarters of 2023, in the coffee industry, after Luckin and Starbucks China, there is still a big gap between Cudi (3.9 billion yuan), which ranks third, and the first two, and Lucky Coffee, which is owned by Mixue Bingcheng, ranks fifth with 1.5 billion yuan.
In terms of the number of stores, according to Narrow Door Restaurant, the top 10 coffee companies in the coffee industry are Luckin (16,196), Starbucks China (7,733), Cudi (6,926), Lucky Coffee (2,781), Shanghai Coffee (1,810, Shanghai Auntie's coffee brand), Nova (1,127), Manner (1,088), Tims (851), M Stand (510) and Costa (448).
Data source: Narrow Door Dining Eye
Note: The cover image is from the official account of Mixue Bingcheng Xiaohongshu.