China Food

Xiangpiao tried to change, but kept entering the hinterland of “other home”

According to the data of
intelligent research consulting, China’s brewing milk tea market scale has shown negative growth in 2015; it has recovered in 2016, with a growth rate of 17.1%; in 2017 and 2018, the growth rate again dropped to single digit 2.4% and 5%. Obviously, the market of brewing milk tea has already reached the ceiling.

Milk tea is popular, but young consumers rarely mention old players Xiangpiao.

Xiangpiao is not willing to admit defeat. In late August, Xiangpiao renewed his contract with the popular star Wang Junkai, who continued to serve as the brand spokesperson, and launched six new solid milk tea products in one breath; in September, it launched the field of water and light food with milk shake instead of meals. In addition, Xiangpiao is still applying for “Xiangpiao mojito” and “Xiangpiao rum” and other beer and beverage trademarks. It is speculated that it may enter the field of alcoholic drinks.

Obviously, Xiangpiao is planning a change. However, the traditional categories are under pressure, and new categories are constantly launched to test the water. Can the fragrance of new racetracks recreate the new growth engine?

Trapped in milk tea

When it comes to the early “net red” in the milk tea industry, it should be fragrant.

Xiangpiao claims to be the founder of cup milk tea. In 2005, it replaced the “Pearl” in milk tea with coconut bag, and launched solid brewing milk tea with six flavors of original flavor, taro, wheat flavor, strawberry, chocolate and coffee. At the beginning of its establishment, Xiangpiao spent a lot of money on advertising products in Hunan Satellite TV and other TV stations with high ratings at that time.

As soon as the slogan “more than 300 million cups are sold a year, and the cups can go around the world together”, it has attracted public attention because of its unique memory point, and the brand has become a household name overnight. Large scale marketing has opened up the market rapidly. According to the official website of Xiangpiao, as early as December 2010, its sales volume has exceeded 1 billion cups. With the increase of sales, the number of circles of Xiangpiao’s advertisement “around the world” has also evolved from 1 circle to 3 circles.

With product differentiation, accurate positioning of marketing strategies and in-depth channel construction, Xiangpiao’s influence has been rapidly improved, which has opened the era of popularization and industrialization of solid brewing milk tea. By focusing on the main business of solid milk tea, Xiangpiao was able to deeply bind herself with milk tea, and was the first in the era when instant milk tea was not very prosperous.

After years of market selection of survival of the fittest, the competition pattern of solid milk tea has been basically determined. Xiangpiao, Youlemei and Xiangyue are the main players of cup and box packaged milk tea, and Xiangpiao has occupied half of the country. According to Zhiyan consulting data, the market share of Xiangpiao in cup milk tea has increased from 57% in 2014 to 63.1% in 2018.  

Photo source: Zhiyan consulting

However, the one who beats you will always be your invisible opponent, and the crisis will come from the outside. Like instant noodles lost to takeout, clothing stores lost to Taobao With the delivery platform infiltrating into the public’s three meals a day, the convenience of cup milk tea brewing by itself began to fade.

On the other hand, with the upgrading of consumption, Xiangpiao’s competitors are growing. With more sophisticated materials and various tastes, new tea drinks such as Xicha, Cha Yan Yuese, yidiandian and gongcha have become the favorite of consumers and even capital. In the expanding milk tea market, Xiangpiao has been built a hedge between consumption and capital.

According to the “report on the development trend of China’s beverage industry in 2019” released by meituan review, as of the third quarter of 2018, the number of existing tea shops in China has reached 410000, with an annual growth rate of 74%. The growth mainly comes from the substitution of new tea drinks for conventional drinks and the demand of consumers for “healthy tea drinks”.

In addition, according to the data compiled by the prospective industry research institute, by the end of 2019, there will be about 500000 tea shops in China. Despite the impact of the epidemic this year, there are still about 480000 tea shops by the end of June.

Milk tea shops are blooming everywhere. In the era of consumption upgrading, the living space of cup milk tea has been eroded a little bit.

According to Zhiyan consulting data, in 2015, China’s brewing milk tea market scale had a negative growth; in 2016, it recovered, with a growth rate of 17.1%; in 2017 and 2018, the growth rate fell again to single digit 2.4% and 5%. Obviously, the market of brewing milk tea has already reached the ceiling.

Photo source: Zhiyan consulting

Bao Yuezhong, a new retail expert, told “bullet finance” that there is a big gap between the experience of solid milk tea and ready to drink milk tea. The whole milk tea market is becoming more and more ready to drink, and the market share of solid milk tea will continue to decline.

Xiangpiao’s performance is still heavily dependent on cup milk tea. From 2014 to 2018, its brewing products accounted for about 90% of the total revenue. In 2019, the revenue of Xiangpiao brewing products was 2.936 billion yuan, still accounting for 74.48% of the total revenue.

This also means that 15 years after its establishment, Xiangpiao is still eating solid milk tea. In the trend of changing consumer preferences and slowing down the growth of solid milk tea market, Xiangpiao’s leading advantage in this respect is likely to become a disadvantage in the future.

New products hard to start

I don’t want to change.

In 2017, after the third IPO shock, Xiangpiao was listed successfully. Perhaps it was Xiangpiao who finally realized the crisis, or that she needed to tell a new story when she entered the capital market. This year, Xiangpiao, which has been established for 12 years, finally launched new categories of MECO milk tea and lanfangyuan silk stockings milk tea for the first time, and entered the field of liquid milk tea. In 2018, Xiangpiao also launched MECO honey Valley juice tea.

After the launch of the new category, Xiangpiao’s performance has been improved.

From 2012 to 2015, Xiangpiao, which relies on brewing milk tea business, has obviously entered a bottleneck period. Most of its revenue is around 2 billion yuan. In 2014 and 2015, there was even negative growth, and the net profit was mostly below 200 million yuan. In 2018 and 2019 after the launch of the new category, the year-on-year growth rate of revenue of Xiangpiao will reach 23.13% and 22.36% respectively, and the growth rate of net profit will reach 17.53% and 10.39% respectively. In 2019, Xiangpiao’s revenue is nearly 4 billion yuan, and its net profit is nearly 350 million yuan.

It is a consistent pattern for enterprises to diversify and expand by introducing sub brands and distinguishing them from main brands. Xiangpiao has a good idea, but in the early years, she focused too much on her main business, and only did taste innovation in the field of solid milk tea for more than 10 years, ignoring the expansion of new categories. She missed the opportunity of transformation when she was at its peak, which also laid a hidden danger for Xiangpiao’s subsequent development.

Whether it is liquid milk tea or fruit juice tea, there are many players in the market when they enter the market. Large enterprises such as Master Kang and uni president have occupied most of the market share of instant tea (including milk tea and tea drinks).

With the launch of the new brand, Xiangpiao, who has always been good at marketing, once again waved the banner of “marketing for growth”, and the sales expenses also increased. From 2014 to 2017, the sales expenses of Xiangpiao remained at 520-676 million yuan; in 2018, it exceeded 800 million yuan, with a year-on-year increase of 29.65%; in 2019, the sales expenses reached 967 million yuan, with a year-on-year increase of 20.83%.

But the present situation is: the new brand of fragrant fragrance is inevitably inferior to the main brand in popularity, and there is no “out of circle” in marketing. After the slogan of “around the earth x circle”, Xiangpiao’s later marketing has no new memory point.

Under the influence of various factors, although Xiangpiao strives to develop new products, after two or three years’ efforts, that is, beverage products have not become the new popular products of Xiangpiao, and liquid milk tea has shown a declining trend.

Among the categories of fragrant liquid milk tea, lanfangyuan is the main brand. Xiangpiao positioned lanfangyuan as the originator of Hong Kong style milk tea, trying to create a brand image for the high-end market. However, in 2018, the income of Xiangpiao liquid milk tea products was 218 million yuan, with a year-on-year growth rate of only 0.55%; in 2019, the income dropped to 137 million yuan, a year-on-year decrease of 37.33%.

In the semi annual report of 2020, Xiangpiao Zichen “due to its high-end positioning, more focused market and channel, less affected by the epidemic situation”, but the current sales revenue of this category was only 68.6687 million yuan, with a year-on-year increase of 9.72%.

In contrast, the performance of Xiangpiao fruit juice tea is much better. In 2019, the revenue of this category will reach 868 million yuan, with a year-on-year increase of 332.43%. In the first half of this year, the sales of juice tea decreased by 39.25% year on year.

The old business market is awesome, and the development of new products is not enough. It also brings crisis to the fragrance. Under the epidemic situation, Xiang Piao Piao handed over the worst report card since its listing: in the first half of 2020, Xiangpiao deducted a non net profit loss of 92.5264 million yuan, with a sharp decline in earning power.

“Behind the upgrading of China’s consumption is the decline of solid milk tea. Xiangpiao is the leader of solid milk tea. The industry has become oligarchy, and no one competes with it, so its development will be relatively stable. Even in the area of drinking, Xiangpiao is also in the layout, but its brand tonality, core market and core channels are not enough to support this high-end product, so it is in the stage of “green and yellow” Zhu danpeng, an analyst of China’s food industry, analyzes “bullet finance”.

Although before the epidemic, Xiangpiao’s performance was still on the growth track, and at the same time, it was constantly promoting innovation, but the opinions of the outside world about its “outdated” and “losing to the times” have always been lingering, and the aging of the brand has long been a fixed number.

“Xiangpiao’s entire product system, marketing system and channel system have great problems, and have not kept up with the needs of the current transformation.” Bao concluded.

In his opinion, Xiangpiao hasn’t found the feeling of new marketing. It is still the traditional communication system, and the brand has largely separated from the young target audience. In addition, Xiangpiao’s channel is basically based on the traditional supermarket channel, which is not paid much attention by the young consumers.

“At present, the most critical problem is that there is something wrong with the product system. In recent years, great changes have taken place in the milk tea market, that is, the development of milk tea is very fast, but Xiangpiao is still dominated by solid milk tea with poor user experience, and the product adjustment has not kept pace with it, resulting in being replaced by Xicha, Naixue and other brands. In terms of communication and marketing, it has been surpassed by brands like Yuanqi forest. Yuanqi forest mainly cuts into the new communication system, and the brand has a strong sense of interaction with young users. ” He added.

Simple innovation

The development of solid milk tea has entered a bottleneck period, and there are many voices in the industry that are not optimistic about the development of this category.

But Jiang Jianqi, chairman and general manager of Xiangpiao, did not think so. In his opinion, the solid beverage industry is not a sunset industry. We should adhere to innovative thinking, strengthen the leisure, healthy and functional products, so as to achieve broader development space and transformation. In the future, the solid beverage industry is bound to become the mainstream industry.

For the main business, Xiangpiao is still increasing efforts to develop. A significant performance is: Xiangpiao signed a contract with Wang Junkai as the brand spokesperson for two consecutive years, striving to make the brand image younger and try to be close to the consumer groups of generation Z.

In terms of marketing, Xiang is also trying to make a change. Jiang Jianqi said that Kwai tiktok will shift the main marketing positions to mobile terminals, such as jitter, fast hand, micro-blog and Xiaohong book, and other new social platforms that gather KOL (opinion leaders) and other high exposure App.

In addition, in the taste of solid milk tea, Xiangpiao is also promoting product innovation. In the late August of this year, Xiangpiao launched a total of 6 new products including Bobo pearl, black sesame blood glutinous milk tea and so on, which are similar to the popular milk tea in the market.

It is necessary to face up to the fact that most of the new tea brands adopt the concept of health, and use fresh milk, fruit and original leaf tea as raw materials, while the upgraded solid milk tea products still use plant fat powder (milk essence) as raw materials. From the essence of such innovation, it is inevitable to have the suspicion of “changing soup without changing medicine”.

In Zhu danpeng’s view, the innovation and upgrading of solid milk tea will help Xiangpiao in the third, fourth and fifth tier markets, but it is impossible to form an explosive product.

“Xiangpiao is currently doing the balanced development in the light and peak seasons. In the past, it was relatively prosperous in the first and fourth quarters, but relatively weak in the second and third quarters. It is trying to reverse this situation. Therefore, it has action in the layout of instant drink and promotion of solid milk tea innovation. But the key is that, limited by the brand tonality, market, channel and consumer groups, it is impossible to say that if it has a product upgrade, consumers will immediately pay for it. ” Zhu danpeng further analyzed “bullet finance”.

In addition to solid milk tea, liquid milk tea and juice tea, Xiangpiao also entered the light food track, planning for a new situation. In 2019, Xiangpiao launched the “joyko” substitute cereal cereal; on September 9, this year, Xiangpiao launched the “one meal light food” milk shake.

“Bullet finance” visited many offline supermarkets in Beijing and found no Xiangpiao oatmeal and milkshake products. No cereal products were found in the flagship store of Xiangpiao tmall. The sales volume of milkshakes is not high. As of October 7, the price of milkshake products after 8 cups of coupons was 69.9 yuan, with only 225 sales per month.

Source: Taobao

It is worth noting that Xiangpiao pointed out in the financial report that when launching some new products, they will test the sales in the e-commerce channel first, collect the evaluation and opinions of the target consumer groups, and improve the products in combination with the product development direction, and then lay out the products for trial sale online after the products are finalized.

It can be seen that Xiangpiao also adopts the same operation method for new products such as milkshakes. However, the online channel is not a strong point, and it is a good thing to be cautious when launching new products. However, there are not too many special features in the product, and the channel promotion is not good at, and the lack of innovative marketing means, I am afraid it is difficult to cause too much water splash in the industry.

Xiangpiao was very secretive about the new products of solid milk tea, the progress of cereal and milkshakes, and the future planning of the company. Xiangpiao only said, “there is no information that can be disclosed to the public about the expansion plan of new categories.”

Light food this track, the competition is more intense, eventually Xiangpiao will firmly go down or shallow water test, let go, the answer is a mystery.

As for the development prospect of Xiangpiao in the field of light food, Zhu danpeng said frankly that the future of light food must be a wind outlet, but the key problem is that the heavy consumers of light food pay great attention to the brand tonality. If the brand tonality, service system and customer stickiness are not good, then getting involved in new categories will not help Xiangpiao. “Although many enterprises see the trend and want to layout, but whether they have the strength to realize the trend is the most critical.” He said.

“In recent years, whether it’s jiangxiaobai, Yuanqi forest or Zhong Xuegao that can be made up, they basically rely on new communication.” Bao Yuezhong, for example, “so when it comes to the development of new products, there must be some adjustments in the brand communication system. Another is to cut the channel, find new channels, new users, if these do not have, new products are very difficult to make. “


Liquid milk tea, juice tea, light food In a short period of more than three years, Xiangpiao has made a new attempt that has not been seen in more than ten years before, which shows that she is anxious to break through.

However, Xiangpiao started her career with the first cup of milk tea and started to compete differently. However, none of the new products launched in recent years are the core hinterland of “other families”. And in these new categories, it is difficult to have a product that makes people shine in front of their eyes, and it is even more difficult to see the courage to go down the drain.

Xiangpiao wants to make a new change, but she is stuck in the crossroad.

Many cases of the decline of old brands reveal a rule: if we just stick to the old glory and try to stop on the new things, we will be abandoned by the times. Especially in the food industry, where consumers’ preferences are changing with each passing day and fierce competition, such elimination may come faster than expected.

Author: Xu Yun; source: Dan Dan Finance (ID: wwwhygc), reprinted with authorization.
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