Author丨Yuki
Editor丨Tangerine
"A Dongpeng drink is worth 30 Naixue's tea" - in the era of involution, another representative brand of consumption upgrading is in a survival dilemma.
Recently, Nai Xue's tea, the "first share of new tea drinks in Hong Kong stocks", released a performance forecast, with an expected revenue of 2.4 billion to 2.7 billion yuan in the first half of 2024 and an adjusted net loss of 420 million to 490 million yuan.
In the report, Nai Xue's tea board of directors believes that the group's adjusted net loss (measured in non-IFRS measures) for the six months ended June 30, 2024 was mainly due to two factors: cost and store closure.
First of all, there was no significant recovery in consumer demand, and store revenue was under pressure, while the Group's store-side cost optimization was basically in place, and there was limited room for optimization and adjustment of costs such as manpower, depreciation and amortization in the short term, resulting in greater pressure on store operating profit margins. Secondly, the Group plans to close some stores that have performed less than expected, and has made an asset impairment provision for this.
It is worth noting that Nai Xue's tea recently released the operation of the second quarter of 2024, saying that the company has not seen a significant recovery in demand in the second quarter, and it is expected that the scale of new direct stores opened in 2024 will be lower than in previous years, and some direct stores with poor performance will be adjusted or closed.
According to the announcement, as of June 30 this year, Nai Xue's tea operated 1,597 directly operated stores and another 297 franchised stores, mainly concentrated in mid- and low-tier cities. Compared with the store data on March 31 this year, in the second quarter of this year, the net growth of "Nai Xue's Tea" directly operated stores was 0.
It should be mentioned that in March this year, Naixue's management said that the company's franchise business target for the next two to three years is 2,000 to 3,000. At the current rate, it will be difficult to achieve this goal.
An industry insider said, "At a time when new brands are rising, competition in the industry is intensifying, and consumption habits are changing, the tea business is indeed becoming more and more difficult to do." In fact, all brands are under pressure, and compared with those down-to-earth brands, 'Nai Xue', who still has some idol baggage, is still burdened with large operating costs. In addition, the strong substitutability of products and the explosion that does not impress the market too much are also problems for these old brands. ”
Judging from the current situation of the tea market, opening up to joining, fighting the quantity and scale have become the new rules of the tea track.
According to the open letter, Nayuki's tea was established in 2015. In the past few years, Nai Xue has adhered to the pure direct sales model, believing that this model helps to ensure the consistency of the brand image. In June 2021, Nai Xue's tea was listed on the Hong Kong Stock Exchange. Even if it broke on the day of listing, it was also the company's brightest moment in the capital market, closing at HK$17.12 per share on the same day, with a total market value of nearly HK$30 billion.
However, since its listing, Nai Xue's tea share price has fallen from a peak of HK$18.98 per share to HK$1.76 per share. As of the close of trading on August 2, the total market value of Nai Xue's tea was HK$3.014 billion. Three years have passed, and Nai Xue's market value has evaporated by 9%. Some industry insiders ridiculed that "a Dongpeng special drink is worth 30 Nai Xue's tea".
However, in the increasingly fierce market competition environment, it seems that Naixue has been difficult to adapt to new challenges. Especially around 2020, the number of Guochao tea brands has grown rapidly, and many brands are highly similar in terms of product and tonality, so the milk tea industry has begun to enter a state of "rolling to take-off".
In terms of pricing, Nai Xue's tea belongs to the middle and high price range, but recently, with the price of the tea industry, many of its products can be bought for more than ten yuan. In the face of the price encirclement and suppression of many juniors in the "10 yuan range", it has to bow its head and enter the game with its head bowed, in order to retain its place in the market.
When the expansion of direct business slows down, Nai Xue's tea naturally has to pin more expectations for growth on the franchise. But it wasn't until 2023 that he opened up to join for the first time.
According to people familiar with the matter, at that time, Nai Xue's tea requirements for the area of franchisee stores were clearly limited to 90-170 square meters, and the budget for opening a franchise store started at 980,000 yuan. Including decoration costs of 400,000 yuan, equipment and props costs of 350,000 yuan; In terms of labor, a store needs at least 5 employees; And Naixue stipulates that the turnover is over 60,000 yuan, and the actual income will be 1%.
"To join a Heytea, the cost is about 500,000 yuan, and the investment of Mixue Bingcheng is 370,000 yuan. The franchise fee of other brands in the industry is mostly between 350,000 and 400,000 yuan, such as a little bit of 380,000 yuan, and the tea Baidao is even lower to about 350,000 yuan. An industry insider revealed.
Compared with its peers, Nai Xue's tea not only has a higher franchise fee but also starts later.
According to the data provided by Naixue, as of the end of February 2024, Naixue's tea has more than 1,800 stores nationwide, of which more than 200 have opened franchise stores. Based on this calculation, from the first round of opening to that time, Nai Xue opened an average of about 28.6 new franchise stores every month.
However, the competitors in the same period have run out of different "acceleration".
According to the data provided by Heytea, by the end of 2023, Heytea has opened more than 3,200 stores, including more than 2,300 franchised stores, with an average monthly net increase of about 164 alliance stores, about 5.73 times that of Naixue.
According to the prospectus, in the nine months ending September 2023, there will be a net increase of 7,170 stores in Mixue Bingcheng, 2,332 stores in Guming, and 1,990 aunts in Shanghai; In the whole year of 2023, there will be a net increase of 1,440 stores in Chabaidao.
It is worth noting that in 2023, Nai Xue's tea has achieved good performance data, but it also contains some signals of inadvertent optimism.
According to the financial report, in 2023, the company will achieve operating income of 5.16 billion yuan, a year-on-year increase of 20.3%; Net profit turned into a profit. However, in the second half of that year, the company's performance growth slowed down significantly, and the net profit fell into a loss again, at -52.874 million yuan. In addition, in 2023, the average daily order volume of Naixue's tea direct stores will be 344.3, a year-on-year decrease of 1.1%; The average sales per order was 29.6 yuan, down 13.7% year-on-year; Under the combined impact of volume and price, the daily sales of a single store were 10,000 yuan, a year-on-year decrease of 14.7%.
In this regard, an industry insider believes that it is still difficult for Nai Xue's tea to achieve profitability, which is the result of the optimization of the single-store model and the continuous compression of costs.
In order to further seek change, in February this year, Nai Xue's tea adjusted the investment amount of a single franchise store to 580,000 yuan, and the store size limit was reduced to about 40 square meters. At that time, Nai Xue said that since the opening of the franchise last year, the enthusiasm for the national intention to apply is high, in order to allow more high-quality talents to join the new tea beverage entrepreneurship business and realize the easy opening of stores, Nai Xue has upgraded the store model and optimized the investment cost.
However, in the view of some franchisees, new tea brands will generally control the franchise cost within 500,000 yuan, and some brands will also give franchise subsidies according to the situation. Although the new policy is "a lot shrunk" compared with the original requirements of 980,000 yuan and 90 square meters, it does not have much advantage in horizontal comparison of the joining conditions of friends.
However, the competition in the industry is intensifying.
On the one hand, the new tea drink track has entered a "big year of listing" in 2024, and various players are menacing. On January 2, Gu Ming and Mixue Bingcheng submitted a prospectus to the Hong Kong Stock Exchange; Brands such as Shanghai Auntie and Bawang Tea Ji have also reported that they are preparing for IPO; On April 23, Tea Baidao was listed on the main board of the Hong Kong Stock Exchange, becoming the "first share of franchised tea drinks" on the Hong Kong Stock Exchange.
On the other hand, the increment of the new tea beverage industry has gradually peaked. According to iiMedia Consulting data, in 2023, the market size of new tea drinks in mainland China will be 333.38 billion yuan, a year-on-year increase of 13.5%, and it is expected that the market size growth rate will further decrease to single digits in the next few years. At the same time, starting in 2024, in order to seize the "9 pieces of 9" market, new tea beverage brands will collectively hit the product price to within 10 yuan, which also reflects the market characteristics of the zero-sum game from the side.
The pessimistic view is that "the new tea drink is for young people's business, and it is actually the same as liquor for middle-aged people's business, middle-aged people begin to quit drinking, and young people begin to reduce sugar and not drink milk tea after entering middle age...... Ultimately, it's demographics that make all the difference. ”