New tea drinks cannot escape the “seven-year itch”

What will be the next target?

New tea drinks cannot escape the “seven-year itch”

Text | New Eyes, Author | Ye Jing, Editor | Sang Mingqiang

If counted from 2015, the new tea drink has been in China for 7 years.

Taking 2018 as a watershed, the potential market size of new tea drinks in the first half is close to 50 billion yuan, which has already surpassed the coffee industry in name. “Drinking a cup of milk tea” has become a daily social way. At present, the competition in the high-end, middle-end and low-end markets of new tea drinks is approaching 1:2:1, forming a situation of “high-end Xicha Naixue, clear waist brand, and low-end Mixue Bingcheng”.

The threshold is low, the model is easy to be copied, and the phenomenon of homogenization has become the “hardest hit area” for new tea drinks. According to the first financial survey, in 2021, only 18.8% of the milk tea shops in the country will survive for one year, and nearly 80% of the new brand tea shops will close down. Nai Xue’s tea, which has been listed soon, a prospectus revealed the dilemma of making money in the new tea market: the cumulative loss in three years has exceeded 100 million yuan. So far, Nai Xue’s market value has shrunk by nearly 60% compared to before, and is still at a loss state.

On the one hand, the rapid expansion of scale under the ripening of capital, the shortage of supply chain, and the intensification of competition have made new consumer players in a dilemma. Chayan, Chabaidao, etc. chose to increase prices to solve the high cost, and “big brother” Heytea seems to have arrived. During the platform period, the sales growth rate in 2020 will be lower, and the net profit rate will also be lower than the 8.97% in the C round; on the other hand, waist and downstream brands have also begun to seek transformation and change of lanes, and the new tea market has begun to fall into “new brands are difficult to take root.” , the low-end brand is not easy to explore, and the high-end market loses money and earns an embarrassing situation. To this end, in this article we will mainly discuss:

7 years of new tea, what are the players competing for?

Standing in 2022, how do you view the new tea drinks in the future?

A hundred schools of thought contend

2015 was a special year for new tea drinks.

Nai Xue’s tea and Hey tea appeared one after another, and they launched homemade fresh fruit tea and cheese milk tea, which were also the early prototypes of new tea drinks. The appearance, taste, and production process of the new tea are clearly different from traditional powdered milk tea. In the integrated marketing communication of the mobile Internet, Heytea and Naixue have become the first batch of Internet celebrity shops with their own traffic: Yiheytea For example, the limited-edition “succulent grapes” for the season were launched. The daily sales volume reached a maximum of 100,000 cups, and the order volume accounted for 17%.

With the support of capital, many traditional milk tea shops choose to transform, and a number of new brands are emerging: Lele Tea, Chunyang Tea, Gongcha, Gu Ming, CoCo, Yidian, etc. New and old players get together and roar, and the fire of new tea drinks is getting bigger and bigger. According to the incomplete statistics of Xinmu, there are currently nearly 500,000 milk tea shops in China, and there are more than 160 new tea brands. The fierce competition can be imagined. According to the unit price of customers, the new tea drinks can be roughly divided into 3 echelons:

 

Figure: New tea drink player structure diagram (drawn by Xinmou)

In the beginning, each brand was relatively localized, mostly in the founding place and surrounding provinces and cities, occupying regional characteristics and advantages, such as Changsha’s Tea Yanyuese, Jiangsu, Zhejiang and Shanghai’s Shanghai Aunt, Beijing’s Zhuye, Nanjing’s Fu Xiaotao and Shi Sancha, etc.; there are also a group of “small and beautiful” brands that rely on single-point breakthroughs and are deeply cultivated in the vertical subdivision of the track, such as Yangzhigan’s seven-point sweetness, and a half-cup book that also burns fairy grass, focusing on soybean milk The half-fairy beanie with milk cover, etc.

Later, on the basis of products, it gradually differentiated into a tiered consumption pattern of low-end (cost-effectiveness), mid-end (quality-price ratio + taste), and high-end (high-quality experience + social attributes).

From the perspective of operation mode, the stores in the first echelon are mainly directly operated, and are directly invested and operated by the headquarters of the tea brand. Compared with the traditional franchise chain method, directly-operated stores are easier to manage in integrating internal resources and brands, but the weakness lies in the need for the “three high investments” in the early stage, namely high assets, high capital and high manpower, and their development is completely dependent on their own. Resources are theoretically not conducive to quickly seizing the market.

HEYTEA is a little different. According to CEO Nie Yunchen’s idea, the store is the only output window for the brand, and it directly cuts into the high-end market. First, it uses the store with a sense of tonal design to attract young people’s attention, and then uses imaginative collocation to make catering catches. After living in the stomachs of young people and accumulating a certain degree of brand popularity, the bargaining power also increases (the strategy of “burning money shop”). Corresponding to it, Nai Xue’s tea has a single store area of ​​more than 200 square meters. The store construction focuses on providing urban women with a leisure and social life scene. The popcorn effect of “soft European bags + drinks” has also been tried and tested.

This expansion strategy is favored by capital. Since 2016, the two companies have received hundreds of millions of financing for many times, and the expansion speed is getting faster and faster. Up to now, the number of stores of Nai Xue and HEYTEA has exceeded 800, but from the perspective of market feedback, food safety problems have frequently occurred during the rapid expansion, and the problems of the internal quality control system have begun to be exposed.

The third space of Starbucks has inspired new tea drinkers to a certain extent: On the basis of standard stores, HEYTEA has successively opened theme stores such as Black Gold, PINK, DP, etc., using stores as a medium to spread brand culture; Duan has also upgraded some stores, and the overall decoration has improved the sense of design; small stores have become larger stores, and leisure areas have been added.

From this point of view, HEYTEA, which runs faster, still uses “sales tension” as its marketing strategy. New products are released every week, such as Raspberry Peaches and Mango Raspberry, in order to retain old fans and create a sense of expectation; with the help of online media to refresh the popularity, it essentially spreads drinks as a kind of “social currency”, allowing people to buy Users of new products have a show-off satisfaction.

Peng Xin’s idea is that the future should be a state of coexistence of classics and new products, so we can see that Nai Xue’s tea products are not focused on soft European buns, but have added desserts such as strawberry magic sticks and cheese taro hills. Relying on the advantages of the digitalized supply chain, Nai Xue’s tea uses niche seasonal fruits, and after a small batch of tests and iterations, the popular “Domineering Yuyou Tangerine” has been created. On the other hand, HEYTEA is good at using user creation to create popular products, fine-tuned marketing management of private domain traffic pools, tracking data of users’ mix and matching ingredients, and accumulating the most repeatable mixes, and developing them into standard products, such as the popular “Zhi” Cheeseberry Peach”.

Where is the itch?

The launch of Nai Xue’s tea is a highlight moment for the new tea drink.

At the same time, it also makes us understand that the first share of the beautiful tea drink did not actually “make money”. According to the prospectus, Nai Xue’s revenue has exceeded 2 billion yuan since 2019, but profits have always been a problem. Despite this, Nai Xue still plans to open about 300 and 350 standard stores in first-tier cities and new first-tier cities in 2021 and 2022, respectively, of which about 70% will be planned for “Nixue PRO”, which focuses on high-end coffee business. shop.

Behind the rapid expansion of stores, there are actually hidden crises: food safety, product quality control, internal management, high expansion costs, low net profit and other issues are all the swords of Damocles hanging over the heads of new tea companies. From this point of view, Nai Xue’s plan was a little too hasty.

The problems exposed by Nai Xue are not unique. In a sense, the expansion of tea brands is not an independent decision of the company, but there is a strong drive from investors behind it. After multiple rounds of financing, companies have the opportunity to go public only after their valuations continue to rise. The profit logic of investors is not consistent with that of companies.

The former pays more attention to valuation. The key indicators are the number of stores, urban layout network and revenue level. As for whether the company itself is profitable or not, it is not the most important. Some time ago, the official explanation for the price increase is that the accumulated brand dividends and the purchasing dividends brought by the expansion of the scale are no longer enough to support the superimposed increase of raw materials and other costs year by year. The implication is that the brand’s traffic dividend is gradually dissipating.

The decline of the flow effect is also due to the serious homogeneity of tea products. The short-term advantages formed by pure beverage play are not enough to stabilize the market position of new tea brands. Although Hey Tea and Tea Yanyue Se have been innovating, the most accepted ones on the market are still classic models, which are “innovative” but not bought. This is also the root cause of the low customer acquisition rate and repurchase rate.

May be aware of these problems, the price reduction of HEYTEA stands out from the recent price increases, covering many single products such as fruit tea, milk tea, pure tea, etc., and the reduction range is 3-7 yuan; now open the applet happy tea When ordering at Tea GO, you will also see that HEYTEA has launched two categories of products, “to be cheap” and “to be simple”, with a price of around 20 yuan.

Although HEYTEA claims that “it’s not a high-priced drink”, the reasons are worth pondering: first, it benefits from its brand potential and scale effect; secondly, the company’s upstream supply chain is relatively complete, and its bargaining power is also strong. Reduce the price on the premise that the product formula, materials and quality do not change; finally, HEYTEA tries to use the high-end brand potential to superimpose the “cost-effectiveness” method to harvest a larger consumer market and compete for low-end brands such as Qifentian. customer group.

The price reduction is not the first sinking operation of HEYTEA. In 2020, HEYTEA will launch a low-priced sub-brand “Xixiaocha”. In contrast, the former focuses on low-end consumers in the high-end market, while the latter directly penetrates into the sinking market. , HEYTEA adopts the strategy of combining the inside and the outside. Looking at Michelle Bingcheng again, the launch of “M+” in the high-end market means that different echelon brands have also fallen into a melee. In the red sea of ​​the sinking market, the smoke of gunpowder is still permeating.

No way, no itching

The new tea drink has the characteristics of “fast” of fast-moving consumer goods and “logic of explosion” of clothing.

On the one hand, the distribution of new tea drink stores is wide enough and convenient, with high consumption frequency and large number of users, and short purchase decision-making time; ” and “Innovation”, at least one of them must be cut in order to make an explosive success.

The new tea drink is like a combination of “event marketing, topic marketing, IP creation, hunger marketing, emotional marketing”. The young generation Z group and white-collar workers are the main force in the consumption of new tea drinks. They pursue individual fashion trends, are highly receptive to new things and new concepts, and dare to try. Based on this current situation, most of the new tea drinkers have adopted the current mainstream media platform of “two micro and one shake to speed up the hand”.

For example, the early “Answer Tea” released a small video on Douyin that integrates constellation fortune-telling culture, and successfully entered the “fun + delicious” market segment of new tea drinks; HEYTEA has understood the flow of traffic, and widely placed commercial advertisements , with the help of the seven-hour queuing effect, it has become an Internet celebrity place that consumers “must check in”, but this also exposes the dilemma that the new tea market is highly iterative and cannot be separated from Internet celebrity genes.

It is exactly the same as the prosperity and decline of some new tea brands: the meaning of “net red shop” is often separated from the product itself, preferring to tell stories and feelings, and focus on marketing routines. Most people think that it would be meaningless to go to an Internet celebrity restaurant for the purpose of taking pictures and posting them on the Moments. After following the trend, it is also common to change to a new online celebrity shop to check in.

Zhang Lei once mentioned a point of view in the book “Value”, “Keeping the right and using the odd”.

The “positive” of the new tea comes from the product itself. At the beginning of the brand’s establishment, it often followed the “product is king” rule, developed products according to consumers’ preferences, sought feedback and updated iterations, and built a supply chain. “Using odd” is a way of revolving around products, whether it is expansion, or innovation in formulas and materials, marketing methods, and business models. In today’s consumption upgrade, what entrepreneurs tend to ignore is the public’s high level of innovation in consumption and service. Expected value, often under the premise of good product quality.