The tea industry is experiencing the process of “those who have won the market will win the world”.
The strategy of “encircling cities in rural areas” is what we are familiar with. Translated with today’s Internet language, it is to break through the sinking market – first develop the third and fourth tier cities, and then use the third and fourth tier cities to form a encirclement and suppression trend against the first and second tier cities. This method has become a consensus among many Internet enterprises.
“Developing third and fourth tier cities and laying down sinking markets.” It has been more than three years since this slogan was called out in China’s tea industry. Whether it’s tea like or Naixue’s, it has been announced directly or indirectly that great efforts should be made to lay out and sink the market.
But sinking the market layout is not easy.
Urban PK rural
At present, the tea market has formed a situation in which the tea like tea, Naixue tea and LeLe tea stand together. Comprehensive valuation and the number of stores, we can generally see who is the most influential leader in the industry.
According to market estimates, the value of Xi tea has exceeded 16 billion yuan (February 2020 data), with 498 stores; Naixue tea has an estimated value of 6 billion yuan (March 2018 data), with 349 stores.
Of course, it is not comprehensive to talk about big brother only based on the “influence of the lake”. One of the most fundamental reasons for the rapid rise in the valuation and the number of stores of Xicha and Naixue tea lies in the fact that both of them have obtained several rounds of huge financing, which provides a stable and powerful source of funds for large-scale expansion.
However, whether a tea enterprise can go on for a long time or not depends on its revenue status and profit scale.
Some people in the industry have estimated that the revenue of Xi cha in the past year has reached about 3.5 billion yuan, that of Naixue tea is about 3 billion yuan, and that of Lele tea is about 960 million yuan. This data may have errors, but even if the error is taken into account, the tea of Xi Cha and Naixue can hardly beat the ice city of honey snow.
At present, in the tea market, there are some brands which mainly focus on the first and second tier cities, such as Xicha, Naixue tea, Lele tea, etc., and the tea enterprises which are mainly engaged in the third and fourth tier sinking market, led by mixue Bingcheng.
In August 2018, the number of stores in mixue ice city just exceeded 5000, which became 7500 in 2019. At the end of May this year, the signing ceremony of 9500 stores was held in miyue ice city. If the growth rate is kept at this rate, it means that the first industry leader with more than 10000 stores will be born.
What’s more, what’s more shocking is that the revenue of mixue ice city in 2019 is close to 6.5 billion yuan, which is typical of making a lot of money in silence. Do you feel that the image of a sweeping monk in the tea industry is getting fuller and fuller?
Why is it that a tea enterprise, which focuses on sinking markets and has no financing experience, whose customer price is usually less than 10 yuan and even has a trace of local flavor, has not disappeared since its establishment in 1997, but its scale is like a snowball, growing bigger and bigger?
To answer this question, we might as well take a look at how the once popular health care product melatonin rose.
In 1996, Shi Yuzhu, who was almost bankrupt due to the break of capital chain due to his investment in giant building, owed a huge debt of 250 million yuan, becoming “China’s first burden”. You know, at that time, 250 million yuan was almost equivalent to several billion yuan now.
Two years later, Shi Yuzhu borrowed 500000 yuan of start-up funds, ready to rely on melatonin to make a comeback.
He finally chose Jiangyin, a relatively wealthy city in Jiangsu Province, as the base camp, and went to chat with the elderly people in the village every day. In this way, Shi Yuzhu gradually found out the mentality of these groups eager for health care products but reluctant to buy them.
The strategy of free gift of melatonin and the slogan of “no gift for this festival, but also for melatonin” were born one after another. After that, melatonin gradually established bases in Nanjing, Changshu, Changzhou and Jilin, and soon achieved tens of millions of sales performance.
For a time, the advertising language of naobaijin was almost household name in the whole country. During the Spring Festival, melatonin is the mainstream of its own holiday gifts. Even many migrant workers are also quite infected. They visit relatives and friends with large and small packages of melatonin.
In 1999, melatonin entered Shanghai, and then opened the national market. In 2000, it created a sales miracle of 1.3 billion.
In the battle for the rise of naobaijin, Shi Yuzhu used the strategy of “encircling the city by the countryside”. He used the profits from the sinking market to develop the market of the first and second tier cities, and finally realized the counter attack.
Naobaijin war not only let Shi Yuzhu pay off the debt, but also taste the sweetness. So in 2006, he started an online game “journey”, using the strategy of “encircling the city from the countryside”. First, we began to publicize in the countryside, and after harvesting a large number of players in the sinking market, we began to march into the encirclement and suppression of the first and second tier cities.
You know, after 2005, the domestic online game market competition is no less fierce than the “thousand regiment war” and “bike sharing war”. However, “journey” bypassed Netease’s “Dahua Xiyou 2”, “dream journey to the west” and Tencent’s “QQ fantasy”, which mainly focused on the first and second tier cities, and easily achieved overtaking on the curve. Later, Shi Yuzhu also brought giant network to NASDAQ.
The largest consumer market is in the lower
Health products and online games are two products that can’t be matched by eight poles. However, they all rely on the strategy of “encircling the city by the countryside”. The Internet enterprises such as pinduoduo and interesting headlines targeting at the third and fourth tier cities have also achieved remarkable results. They have not only bypassed the encirclement of industry leaders, but also successfully entered the market.
Now, we can answer the question just now. Instead of declining and disappearing, why does the enterprise scale become bigger and bigger like a snowball?
The reason is that China’s consumer market is pyramid shaped. The biggest market is not in the upper class, but in the lower level. For health products, online games, tea products, sinking the market is a real gold mine.
If we look through the appearance, we can find that these products meet several conditions: first, they meet the taste and interest of the people in the sinking market; second, they meet the demand of “face” and “communication”; third, they weaken the price sensitivity of the people in the sinking market.
In an official introduction of miyue ice city, it said: since its establishment in 1997, it has always adhered to the principle of high quality and low price, and its brand has developed rapidly. It has its own independent central factory, R & D center, warehousing and logistics center, and a complete industrial chain closed loop.
In brief, the business model of “research, production, transportation and marketing” has been realized in miyue ice city, and this business model is very mature. The only thing to do is to continuously expand its influence, that is, the more “points” are, the larger the “area” will be, and finally form the scale effect of the brand.
In theory, the more stores there are, the stronger the profitability will be.
Of course, it is not easy to open a store. First of all, we should consider two core issues: first, where is the location of the store? Second, who is the target group of the city?
In the early days, the ice cream city started with ice cream and lemonade. The ice cream price was low, and the profit was low. It was a new product. Because of its low cost, lemonade took on the responsibility of profit. At the same time, the answers to these two core questions have gradually become clear.
If you have observed it carefully, it is not difficult to find that the stores are often set up in the places with huge passenger flow such as the school surrounding the third and fourth tier cities, the traffic turnover points, the commercial supermarket complex, and the pedestrian street. However, it is not enough to have a huge passenger flow. The students and young people are the main attraction of the city, and these locations are usually gathered by students and young people Place.
A fact that can not be ignored is that in the tea market, although the sense of existence of mixue ice city is not as strong as that of online Red brands such as Xicha and Naixue’s tea, the tea drinks with a cup of about 6 yuan and the ice cream of 3 yuan can be consumed by students and young people or other users in the sinking market.
For students and young people, there are two most significant characteristics: one is strong consumer demand, the other is weak consumption capacity, and this penetrating price not only makes these groups “ignore” the price, but also forms a stable repurchase rate.
While the major tea brands have entered the first and second tier cities to seize the high-end market, mixue ice city has been quietly cultivating in the third and fourth tier cities which are ignored by most people, and firmly grasp the needs of the target groups.
It can be seen from this that the fundamental reason why the scale of the enterprises in miyue ice city is getting bigger and bigger is the strategic idea of “encircling the city by the countryside”, that is, to go deep into the target groups, see their needs, tap these needs, and make use of these needs.
Go to the countryside
Nowadays, the sinking market is getting more and more attention from tea enterprises.
According to AI media data, from 2016 to 2019, the growth rate of tea shops in second tier and third tier cities was far higher than that of first tier cities. The growth rate of second tier cities was 120%, and that of third tier and lower tier cities was up to 138%.
Generally speaking, it is very difficult for tea enterprises to get through the high, medium and low market through a unified brand. Therefore, in order to seize the users of different circles, tea enterprises often subdivide the market by incubating a sub brand, and make cross circle penetration with the help of the market advantage of the main brand.
Therefore, in order to maintain the original brand tonality and at the same time take into account the sinking market, Xicha has hatched a sub brand “xixiaocha” around April 2020. Xixiaocha is priced at 6-15 yuan, which is half cheaper than Xicha, focusing on affordable drinks.
At present, about 80% of the stores of Xicha are concentrated in the first tier cities, while the second tier and third tier cities are relatively small. Xixiaocha is considered to compete for users with other tea brands in the sinking market with a lower price range and brand influence.
With more and more tea enterprises gradually sinking, how to resolve the enemy potential energy, defend their own mountains and rivers, and build a moat wide enough, this is also a great test of the miyue ice city.
In addition, there is a test that the construction of high brand value is still the highest competitive barrier of tea racing track. In the face of many tea brands, how to give users a reason why they will still choose honey snow ice city is very important.
After all, in a sinking market where the number of tea brands is enough to dilute the attention of users, high brand value represents the possibility of high quality, trust and more consumer demand in the future.
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