China Food

Hillhead has invested in two milk tea shops: one with an estimated value of 20 billion yuan and the other with an estimated value of 16 billion yuan

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if we say that the ice city of honey snow obtains the market through the low price competition, then the tea is quite different.
 ”

At the end of April, Huashan issued a circle of friends: “the so-called B grid is to force yourself into a small grid, like Xicha. Even if there are more than 400 stores, it is only one twentieth of the top brand. Even if they all queue up, they can’t do much business. ”
Huashan is the boss of Hua and Hua, a marketing creative company based in Shanghai, which is serving the city.

As for the “Hi Cha B grid is too high to do big business!” “Some people are always confident to answer questions they don’t understand!” Nie Yunchen, the founder of tea, said

The way to start is a little similar to pinduoduo and Jingdong in the e-commerce platform. The former is to “encircle the city from the countryside”, first by laying down the sinking market and breaking through the encirclement on a large scale; the latter is to maintain the style, focus on the city, and demand quality and speed.
Pinduoduo had 700 million users in the shortest time, and its market value soared to $117.032 billion. The number of active users of JD reached 400 million, and the value of US stock market was US $129.038 billion (HK $1.02 trillion).

As we all know, Hillhouse was an early investor of JD. In the primary market, Hillard missed pinduoduo, but it bought in the secondary market crazily. I don’t know if it has learned from the experience of e-commerce. This time, Hillhead stood behind the two families of miyue icecheng and Xicha at the same time.
It is reported that mixue ice city is about to complete the strategic financing by hillhood capital and Longzhu capital of meituan, with a post investment valuation of 20 billion yuan. At the same time, according to people familiar with the matter, mixue ice city is preparing to go public, and securities companies have entered the market. Prior to that, Xicha and Naixue tea were in preparation for listing in Hong Kong in 2021. Recently, it has been reported that it has been contacted with many investment banks. From the perspective of action, the listing of these two top brands seems to be “settled”.

However, the attitude of the three is more consistent, and they all denied it for not receiving relevant information. But obviously, this nerve war has been extremely tense, who is the first milk tea?
 

“Pinduoduo” in milk tea industry

On October 13, it was said that the last round of financing before IPO was about to be completed. The investors were Hillhead capital and Longzhu capital of meituan. It was revealed that the round planned to raise RMB 1-2 billion. After this round of financing, the estimated value of mixue ice city after investment is about 20 billion RMB.

In addition, mixue ice city is also preparing for listing at the same time, and some securities companies have entered the market, and this round of financing may be the last round of financing before the IPO of mixue ice city.
 
Financing history of Xicha

In addition to the intensive layout of the ice city, Xicha completed the c-round financing jointly led by hillhood capital and coatue in March this year, with a post investment valuation of more than 16 billion yuan. Half a year before the deal, Xi Cha just won the B + round financing invested by Sequoia and Tencent. At that time, the post investment valuation was 9 billion. In eight months, the valuation increased by 80%.

Since 2016, Xi Cha has received financing from eight institutions including IDG, today investment, meituan Longzhu capital, black ant capital, Tencent investment, Sequoia, and Hillhead, which is worthy of being the capital darling.

If the new round of financing of miyue ice city is true, then hillhood and Longzhu capital both bet on the top two brands of milk tea. First of all, we should not improve the layout of Lingling, and take a close look at Longzhu capital. It is reported that Longzhu capital is the CVC of meituan, and with the support of meituan’s powerful data, it can quickly gain insight into the real sales situation of the enterprise’s takeout terminal. Longzhu’s choice to take all the two into the pocket is based on the real sales volume and real consumer demand.

When investing in Xicha, Zhu Yonghua, founder partner of Longzhu capital, once said, “meituan is optimistic about the whole beverage market, and is also optimistic about the keen sense of smell and rapid growth ability of Nie Yunchen, founder of Xicha.” In terms of cooperation between the two sides, Zhu Yonghua said that meituan has deep accumulation in data accumulation and operation system, and can provide assistance for Xi cha.

Meituan data shows that the growth of the number of tea shops in first tier cities in recent two years is far less than that in other low tier cities. The number of stores in Beijing and Shanghai even showed negative growth. On the contrary, seven of the top ten cities with the growth of milk tea sales in 2018 came from the second and third tier cities. It also seems to be this reason, so that Longzhu capital once again bet from the second and third tier cities of the honeymoon ice city.
 
The financing process of Naixue tea

In contrast, the value of naixueyi tea is relatively cheap. Just three months after Xicha completed its investment, Naixue tea also completed a round of financing of nearly 100 million US dollars, with Shenzhen Venture Capital as the leading investor. However, this round of investment has been more than two years since its last round of financing. In March 2018, Naixue tea obtained the “hundreds of millions of RMB” round a + financing invested by Tiantu capital.

In 2017, Naixue tea completed two rounds of financing, with Tiantu capital as the investor. In other words, in the case of Naixue tea, Tiantu has invested for three consecutive rounds.

According to the previous valuation calculation, Xicha and Naixue tea together can be worth a honey snow ice city. Who is this milk tea enterprise whose fame has risen rapidly in the past year?

No rival under 10 yuan
In 2017, when Xi Cha and Naixue tea were in full swing, mixue ice city had not conducted financing, and its market volume was not large. However, the number of its stores has exceeded 10000. In just three years, mixue ice city, a brand of milk tea started from the second and third tier cities, has realized the encirclement.

As early as 1997, when he was only 20 years old, Zhang Hongchao went to school in Zhengzhou. At that time, there were not many beverage brands on the market in Zhengzhou. He rented a stall during the summer vacation and started the ice shaving business. It was not until 2000 that, with the venture capital of 3000 or 4000 yuan from my grandmother, the shaved ice stall was developed into a shaved ice shop, which was renamed as “Snow Ice City”.

In 2006, “Rainbow cap” ice cream appeared in Zhengzhou. At that time, the price of “Rainbow hat” ice cream was 10 yuan,

Zhang Hongchao also opened an ice cream shop next to the rainbow hat store. The name of the ice cream shop is honey ice city, and the price is only 2 yuan.

Through low-cost competition, a long line began to line up in front of the gate of miyue ice city, and Zhang Hongchao began to expand its territory by joining in. In 2007, there were only 36 in miyue ice city, and by 2008, there were 180. From 2013 to 2015, the number of stores doubled and the turnover tripled every year. From 2016 to 2018, the number of stores was 2500, 3500, 5000 and 7500 respectively. By 2019, the city has about 7500 stores with revenue of nearly 6.5 billion yuan.

This year, mixue ice city announced that there were more than 10000 stores in China, making it the largest tea chain brand in China.

In addition to the number of stores, low price has always been the key factor for MI snow ice city to dominate the second and third tier markets. After this year’s epidemic, the price of Xi tea has stepped into the threshold of 30 yuan, and the prices of Naixue tea and Xiaolu tea have been adjusted. On the contrary, the price of a single cup is around 8 yuan, the cone is 3 yuan, and the lemonade is 4 yuan. In addition to the conventional location of tea brands around shopping malls, office areas and schools, the site selection of Michelle also includes communities, streets and urban-rural fringe.

It is also because of the low price, so that the snow ice city harvest the largest number of consumers. This is almost the same as pinduoduo’s strategy.

According to people close to the city, the income of the city will be about 6 billion yuan in 2019, with a net profit of about 800 million yuan. At present, the income of mixue ice city mainly comes from charging material fees from franchisees, that is, supply chain costs. The proportion of franchise fees in the overall revenue is not high.

In terms of the supply chain, the advantages of miyue ice city are not small. It is understood that relying on the upstream advantages of the supply chain, the cost of a single cup of miyue ice city can be maintained between 2-5 yuan. According to the official website of mixue ice city, the gross profit rate of its products is about 50%.

If honey snow ice city is through low-cost competition to obtain the market, then tea is very different.
 

30 yuan ceiling

Pinduoduo tells a story of sinking, and Ruixing has copied it. From the perspective of expansion speed, the opening speed of mixue ice city is faster than that of Ruixing.

But in fact, opening a milk tea shop is far from easy.
Different from the low price strategy of snow ice city, the price of tea has entered the 30 yuan mark. As for price, Xiao Shuqin, CMO of hi tea, once said, “tea is always a daily consumption. In terms of unit price, it will not be a scarce product. Spending more than 20 yuan for a cup of tea should not make consumers feel that it is a heavy burden. “

Even if it is 30 yuan for a cup of tea, the net profit is between 5% and 10%.
According to the survey of China Merchants Securities, a milk tea shop sells 800 cups a day and begins to make profits. When the cost of rent, water, electricity, and staff salaries are included, a milk tea shop has an annual revenue of 10 million yuan, and eventually reaches about 1 million yuan, with a net interest rate of about 10%. In other words, a cup of fruit tea with cheese and milk for more than 30 yuan can earn about 3 yuan.
According to public data, the average single shop can sell 1500 cups a day. In addition to the promotion and co branding expenses, the interest rate may drop to about 5%, and the annual profit of a single store is about one million.
At the beginning of this year, Xicha set a target of 800 stores. According to the number of stores listed on its official website, more than 700 stores have been promoted.
According to the calculation of 800 companies, the annual profit this year may reach 800 million yuan. According to the 30 times P / E ratio, the current valuation of 16 billion yuan is also reasonable. However, the basis of this valuation is that all stores are profitable. After all, capital can support the speed of opening new stores.
However, the market is also changing. According to the white paper on new tea consumption in 2019, only 30% of the audience with a unit price of more than 25 yuan. At the same time, the tea market in the first tier cities tends to be saturated, and the tea brand in the first tier cities tends to gradually sink into the market.
In addition to the decrease in price, the number of similar tea brands is also increasing. At the same price, not only Naixue tea is on the side, but also low-end brands such as mixue ice city, yidiandian, coco, shuyishaoxiancao and yihetang occupy the passenger flow. In addition, there are also brands with regional protective covers such as tea Yan Yuese.
In order to strengthen the attack barrier, Xicha launched a new brand “xixiaocha”. Xixiaocha’s positioning is around 10 yuan. It is not difficult to see that this move is to penetrate the low-end market through sub brands, form dislocation with existing brands, and occupy a broader market share. But the range of 10 yuan is just the range of snow city.
Compared with the tea loving situation, Nai Xue tea is more urgent, both the financing rhythm and the speed of opening a shop are not as good as tea. At present, multi brand, multi category, multi scene, multi-channel and multi consumer groups will be the future development trend of China’s consumer goods industry. Under the heavy pressure of the head brands and the challenges of the cross-border players, it can be predicted that the new tea industry will speed up the reshuffle in 2020.
Author: Abu; source: ID: the capital, reprinted with authorization. Join the community: Cherry (wechat: 15240428449); business cooperation: Amy (wechat: 13701559246). high quality original selection column one week hot news | innovation interview – Ling listen | new Xu brand | trend insight | packaging outpost food people are “watching”

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