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head players show greater ambition.
An opponent who is not in a hurry to make money is terrible.
Hi tea, the head brand of new tea drink, recently launched a “price war”, which immediately received a warm response from the market. On the day of the official announcement on February 24, the topic of “happy tea farewell 30 yuan” rushed to the microblog hot search, and the happy tea stores in many cities burst orders.
Hot search on tea price reduction
Happy tea is clear: drinks above 29 yuan will not be launched this year, and the prices of all drinks will never rise this year.
In 2022, price increase is the main theme of the catering industry.
Due to the drag on raw materials and costs, Starbucks, Rui Xing, TIMS, tea yenyue, tea 100 Road, Coco can make complaints about coffee and tea brands, and the price rises by 1-3 yuan. Starbucks’s price rise also caused a sharp online tuckus.
In the same market, we are also faced with rising prices of raw materials, labor costs and repeated blows from the epidemic. We like tea and reduce prices against the trend. Why?
price war “horse race enclosure”
In the view of “retail krypton planet”, at the current market node, the price reduction is an active attack of the self iteration of this new tea head brand.
On the one hand, we are happy to seize more market share for consumers.
Even, it can drive the “flat substitutes” out of the most advantageous front-line and new front-line markets of Xi tea to the greatest extent.
Guming, a middle waist brand, has 5000 stores nationwide+
According to the white paper on the development of China’s new tea industry in 2020 by frost Sullivan, a consulting agency, 40.7% of new tea consumers will choose products with a price of 16 ~ 25 yuan.
Through the hi tea Go applet, we can see that the price adjustment of Xi tea covers nearly all the products. The 15-25 yuan products account for more than 60% of the products sold. After the price adjustment of pure green Yan tea is only 9 yuan, there is no more than 30 yuan in the sale of drinks.
This means that Xi tea has the opportunity to bring a wider range of consumers into its own ability circle, especially the post-95 and Post-00 consumers who are most sensitive to prices, so that Xi tea can encroach on the sphere of influence of “flat replacement” such as tea Baidao and ancient tea.
In recent years, the new tea market has initially formed a clear echelon: Xicha, Naixue’s tea and mixue ice city with tens of thousands of stores are located in the first echelon, and the middle waist players such as tea Baidao, Lele tea, Yidian and tea color are the second echelon
According to the 2021 Research Report on China’s new tea industry jointly issued by China Cuisine Association and several institutions, mid-range brands priced at 10-20 yuan occupy nearly 50% of the market share, focusing on many brands such as tea Baidao, tea Yan Yuese, ancient tea, coco Duke, 1 Dian Dian, aunt Hushang and so on.
Some views believe that the biggest advantage of Xi tea is brand awareness. It is expected to form a new pattern in market share and revenue scale by rolling the profit space of competitive products through price advantage and attracting consumers.
Head brand price war makes passive followers very uncomfortable, especially Naixue’s tea, which has just issued a profit warning.
Shortly after the price reduction of Xi tea, Naixue launched “limited time easy purchase”, adding affordable fruit tea hot drinks, tea drinks and coffee. The price of drinks is between 9 yuan and 21 yuan, and the overall price reduction range is 5-7 yuan.
In the business world, there are always cases where the boss and the second “fight”, and the third disappears or is marginalized.
The lethality of Xi tea is that all direct stores have strong execution. However, many mid-range brands are dominated by few direct stores and most franchise stores, so it is not so easy to reduce prices.
In recent years, there have been vicious incidents of cutting corners and using expired food in tea franchise stores on the market from time to time, which has made the middle waist brands worried. They follow up the price reduction, which will undoubtedly make it worse for the “flat substitutes”.
On the other hand, the price war itself will also become a catalyst for Xicha to urge its own ability and positioning iteration.
It can be seen from the figures of expanding stores of head brands including hi tea in recent years that the new tea industry is entering the stock stage from the period of rapid expansion.
In terms of efficiency and operation, the deliberately set lower gross profit can forcibly stimulate the improvement of Xi tea’s own supply chain and operation efficiency.
Xi tea’s reply to the external price reduction query is: “the brand potential energy and scale advantages of the supply chain, as well as the continuous accumulation in the supply chain and deep cultivation in the upstream, Xi tea will adjust the price of some products without changing the product formula, materials and quality.”
Nie Yunchen, founder of Xi tea, told “retail krypton planet”. In the new menu, the classic non stepping thunder series is the same as the raw material formula in the past. The difference of some products is that they do not add cheese and do not modify the raw materials or formula.
From the brand card position, the price reduction will promote the change of the positioning of Xi tea in the hearts of consumers.
“Happy tea has never been a high priced tea drink”. After the price reduction, the relevant person in charge of happy tea has repeatedly stressed this view.
From the feeling of “high-end” in the past to high-quality parity, lowering the threshold will improve the consumption frequency, help turn the brand into a “daily ration” choice accepted by most people, and even help the sinking and penetration of the brand market.
It seems that the ambition of liking tea is not only to meet the people at the top of the pyramid, but to become a high-frequency business to meet the daily needs of most people.
strategic combination: price reduction and product iteration
The price reduction in 2022 is obviously one of the combination boxing of annual adjustment of Xi tea. From the latest menu recently adjusted, Xi tea made a large-scale adjustment in the product menu in 2022.
In the past, Xi tea was more classified according to raw materials, highlighting fruits, Bobo, oil oranges, lemons and other materials. The new menu jumps out of this logic and adopts “seasonal fresh fruit”, “refreshing but not greasy”, “more meat”, “rich”, “simple”, “affordable recommendation” and “eat in the afternoon”, which are classified according to taste and scene to avoid the competition for raw materials in the tea industry in the past few years.
Brands actively seek change and iteration, which is a new stimulus to young consumers who like the new and hate the old.
The new trend is that people don’t like heavy tea more and more. The popularity of light lemon tea is a taste counter attack on new tea drinks with more and more materials.
In recent years, the competition for new tea drinks has been fierce, and the track players “Eight Immortals cross the sea and show their magic powers”. The whole industry is highly homogeneous and involutive.
Therefore, many enterprises take the initiative to adjust based on the macro market environment, industry development cycle and law. The “price war” launched by Xi tea is a typical embodiment.
Like tea, obviously not in a hurry to make money.
Since 2016, Xicha has completed five rounds of financing and won the favor of head financing institutions including IDG, meituan Longzhu, Sequoia China, black ant capital, Tencent, Gaoling and so on. The latest financing was in July last year. The round D financing was US $500 million, and the post financing valuation was as high as 60 billion yuan.
A person close to Xi tea revealed that there are billions of funds lying on Xi tea’s account. It has been repeatedly circulated that Xi tea promotes the progress of listing, but in fact, Nie Yunchen, the founder of Xi tea, is not in a hurry.
After all, with the financing ability and reputation of the head brand, at present, the post-90s founder cares more and has patience to discuss how to make Xi tea larger and stronger.
In the long run, to achieve ambitious goals, there are still many lessons to be made up. Only through different nodes and campaign catalysis, can we have the opportunity to go further.
New tea is far from mature
On the surface, the new tea competition pattern is emerging. However, there are also different voices that, in addition to the appearance of various volumes in the three aspects of product, design and marketing, the participants in the new tea industry are far less powerful than they thought.
Wang Jie, founding partner of Ningji, told krypton retail, “it looks like a red sea, but the whole industry is still in the era of cold weapons. Under the iceberg that most people can’t see, the investment of new tea enterprises is not enough, including strategic deployment, talent planning, organizational structure, digitization, systematization and process.”
Wang Jie believes that there are still many basic skills to practice in this industry. At the same time, there is still a large market gap to expand.
“Happy tea has received a lot of attention now. But for practitioners, how many people really care about happy tea? Or happy tea is too far away from them and there is not much reference at all.”
Lemon season is a cutting-edge brand of lemon tea invested by giants such as byte and Tencent in recent years. At present, it is eyeing to become a dark horse in the industry.
For Xi tea, whether this “price war” can bring greater increment to the industry or just squeeze the share of competitors needs to be watched continuously.
Of course, the current “price war” is also a double-edged sword. Tea lovers need to prove that they are qualified to dance this sword and get real growth in it.
Author: Nicole; Source: Retail krypton planet (ID: ls-kxq), reprint authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246); Foodaily Expo 2022] in line with the original intention of providing the whole value chain and one-stop industrial innovation services for the industry, foodaily Expo 2022 (2022.05.31-06.02, Shanghai) is further upgraded. In addition to the upstream and downstream of the food industry, it also covers and gathers multiple resources such as e-commerce, social media, traffic, channels and capital, aiming to bring you an annual innovation feast. Here, products, content, technology, marketing and other aspects related to food & brand innovation will be presented in the form of “professional exhibition + innovative content + interactive experience”, breaking through and differentiating in the consistent form of industry exhibition.
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