The herbal tea market has been erected by Jiaduobao and Wang Laoji, and more than a dozen pharmaceutical companies intending to enter the market have fallen in front of the barrier. After years of brewing, Tongrentang launched a yellow pot of herbal tea to get a piece of the pie, and it is not yet known whether the strength of this century-old brand is enough to attack the city.
At the Chengdu Sugar and Wine Conference on March 22, Beijing Tongrentang Health Pharmaceutical Co., Ltd. (hereinafter referred to as "Tongrentang") officially released its herbal tea and Maca oolong tea, and invited film and television star Gao Yuanyuan to help on the spot.
In terms of visual design of the two teas, it maintains a very consistent tone with the brand image of Tongrentang Royal Doctor, Tongrentang herbal tea chooses yellow cans, maca oolong tea chooses gold pots on a black background, which is also different from the red pots and gold pots of herbal tea giants on the market. In terms of price, the price of yellow can herbal tea is 5.5 yuan, and the price of maca oolong tea is 8.5 yuan, which is much higher than the average price of 3.5 yuan per pot of Jiaduobao and Wang Laoji.
In the face of Jijitang's dealers from all over the country, Tongrentang gives various preferential policies. As of the end of the sugar and wine party, Tongrentang released data showing that the total amount of the first batch of orders for the two tea drinks reached 300 million yuan.
The market space seems to be very large
For Tongrentang, who is involved in the FMCG market for the first time, the first batch of orders can be regarded as a good start. But how to go to the market and walk into the streets is the real challenge.
The pattern of the herbal tea market has long been formed. According to the "2015 Annual Beverage Industry Overall Operation Report" recently released by the China Food Industry Association, the sales revenue of the herbal tea market exceeded 50 billion yuan in 2015, an increase of 10.6% year-on-year, ranking the fourth largest category in the beverage industry; among them, JDB won the first place with a market share of 52.1%, and Wang Laoji ranked second. According to data from the China Chamber of Commerce, Wang Laoji's market share in 2014 was 40.7%, and Jiaduobao's was 37.4%.
The pattern of oligarchic competition between Jiaduobao and Wang Laoji in the herbal tea industry has not changed so far, and the market entry threshold is high. "From a brand point of view, as long as there are two brands in any category that monopolize the market, such as JDB and Wang Laoji, Pepsi Cola and Coca-Cola, KFC and McDonald's, Yili and Mengniu, then it is difficult for products other than duopoly to have a larger market share." Xiao Zhuqing, a FMCG marketing expert who once worked for Huiyuan and Wahaha, believes that as far as herbal tea products are concerned, it is difficult to catch up with Jiaduobao and Wang Laoji when it comes to creating a new brand, whether it is market, advertising investment, or consumer interaction, brand memory and other elements.
However, the size of this market is very large, the gross profit margin is very high, the product is relatively single, and it seems that there is a lot of room for entry. Such a tempting piece of fat, who wouldn't want to taste it? What's more, Tongrentang's life in recent years has not been comfortable - under the macro background of the national anti-corruption, its previously dominant share of cordyceps, bird's nest, sea cucumbers and other tonic health products, sales have been affected. And into the herbal tea industry, Tongrentang has no technical obstacles.
More than a dozen peers fell
As a pharmaceutical company, Tongrentang's transformation and upgrading is not an isolated case, and it is not the first spoiler to enter the herbal tea market.
In April 2015, Renfu Pharmaceutical, which mainly deals in narcotic drugs, condoms, sex toys, etc., launched Qingmu Sanhua Herbal Tea. Its initial ambition was to invest $300 million over three years with a view to achieving breakeven of $1 billion. However, after the listing of Qingmu Sanhua herbal tea, the sales situation was not ideal, and the sales staff disclosed that "limited by the market sales situation has not yet been opened, and the current amount is not much."
On March 29, Renfu Pharmaceutical said that at present, Qingmu Sanhua herbal tea is still in the cultivation period, and the company will promote the layout according to the sales situation, and the existing investment is not large. Changing the initial high profile seems to be gradually diluting this business.
Coincidentally, Xiangxue Pharmaceutical "Shangqing Drink", which once promised to be the largest brand in the herbal tea industry, has also fallen into the rumor of suspension of production. Xiangxue Pharmaceutical began to promote Shangqing Drink in 2007, but through the performance statement, it can be found that as of June 2010, in the three and a half years, Shangqing Drink lost a total of 26.7 million yuan.
Annual sales fell from 13.9667 million cans in 2007 to 3.3219 million cans in 2009, and sales revenue shrank by 21% in two years. According to the 2010 annual report of Xiangxue Pharmaceutical, the operating income of beverages (including herbal tea) was 26 million yuan, accounting for 5.3% of the total income of the main business, which was seriously inconsistent with the statement that one of the main businesses in the prospectus was herbal tea.
Industry insiders believe that the reason why Shangqing Drink has not occupied a place in the herbal tea industry is that the management team has not positioned the development path of its brand according to the characteristics of Shangqing Drink, and the marketing strategy is improper.
A staff member of the sales department of Xiangxue Pharmaceutical, who did not want to be named, said that Shangqing Drink is still producing and selling, but it is currently doing group buying and is also given to customers as a gift.
In addition, in recent years, there have been at least a dozen pharmaceutical companies that have successively tested the herbal tea business, including many large brand pharmaceutical companies such as Guangzhou Pharmaceutical Group, Yunnan Baiyao, Baiyunshan, China Resources Sanjiu, Taiji Group, etc., but most of the herbal tea brands are only short-lived.
Tongrentang's confidence
Walking on the road where the "former cars" have walked, where does the confidence of Tongrentang herbal tea come from?
Zhang Hong, deputy general manager of Tongrentang Health, said that Tongrentang herbal tea has a century-old brand endorsement, not to be a spoiler, but to make this market bigger, from the early trial operation, dealers are also recognized. Zhang Lin, general manager of Beijing Haojiawei Trading Co., Ltd., said that as a distributor, it is indeed the brand effect of Tongrentang, although herbal tea has been two males and two stands side by side, but the long-established brand is now entering the herbal tea market at the right time, and the success rate is very large.
Tongrentang claims that herbal tea continues its century-old production process - the sugar content of Tongrentang herbal tea is far lower than that of similar products on the market, and its total flavonoid content reaches 46mg per 100ml, which is much higher than similar products on the market, and the sugar content is only half of similar products, and there are no additives.
The most critical part of FMCG sales is the channel, and Tongrentang also has its advantages. At present, Tongrentang has more than 1,800 terminal retail stores and more than 60 flagship stores nationwide. At the same time, Tongrentang has also settled in many third-party platforms such as JD.com, Yihaodian, Tmall, Taobao, and Good Pharmacist. "This is our solid backing." Zhang Liping, promotion director of the third-party channel business department of Tongrentang Health, said that developing third-party channels is one of the key points of this new product launch, and their channel strategy is to first use North China (including Beijing, Tianjin, Hebei, Shanxi, and Inner Mongolia) as a model market, and plan to complete the laying of Beijing and North China this year. The second step is to expand to other regions, and supermarkets and catering channels will account for about 70% of the plan.
How to survive in the cracks?
Even so, there are still "bad" voices in the industry about Tongrentang's involvement in the herbal tea industry. "In the short term, it is easier for Tongrentang herbal tea to achieve phased results. But in the long run, Tongrentang herbal tea will also be tested by the market. Li Zhiqi, chairman of Beijing Zhiqi Future Consulting Marketing Group, said.
"The probability of Tongrentang's success in making herbal tea is very low." Xiao Zhuqing directly said that there is a threshold for making herbal tea now, the first threshold is the team, JDB has more than 1,000 marketing teams in each province in the country, and Tongrentang Health does not have such a team.
At present, Jiaduobao and Wang Laoji are still constantly adding competitive barriers to this industry. JDB's marketing level has always been praised by the industry, and in its close contact with the market and consumers for many years, it is comfortable on how to mobilize public emotional resonance. On March 16, it formally formed a strategic partnership with Chongqing Hotpot Industry Group, which will enable about 3,000 well-known brand hotpot stores under Chongqing Hotpot Industry Group to digest 200 million cans of Wang Laoji herbal tea every year.
How does Tongrentang survive in the cracks? At present, Tongrentang has set up a "herbal tea listing combat group", strategically focusing on the northern market; and has a pre-research, trial market to test the water; also hired an image spokesperson; and also cooperated with Haier to customize a "digital all-in-one machine" (similar in appearance to vending machines, in addition to selling herbal tea and maca, but also through 3D film stereoscopic display products), planned to be placed in office buildings in first- and second-tier cities; online sales have also been widely laid out.
The next test is Tongrentang's strategic determination, as well as tactical speed and accuracy. Obviously, it is impossible to do a brand, and the circulation of products, the layout of channels, and the promotion of brands need to be fast and accurate. Allowing consumers to contact the yellow pot herbal tea in the most convenient place at the first time and buy the yellow pot herbal tea is the victory of Tongrentang.
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