high-end tea drinks become high-end tea drinks is related to a common ideal called “China Starbucks”.
around 2015, consumption upgrading has become the main theme. When consumers no longer pay too much attention to cost performance and are more willing to pay premium for the brand, there will also be a Starbucks with high brand premium and focusing on the third space in the beverage field in China, which has become the starting point to promote the entry of founders and investors.
Starbucks represents American culture, so Chinese Starbucks must also be the product of combining Chinese culture, and tea is a good carrier.
in this way of thinking, there were two types of industry explorations that were almost enthusiastic about “China Starbucks”. One was the tea classical school, represented by yinwei tea (once invested by Liu qiangdong) and boiled leaves, which mainly focused on the mode of pure tea + third space (teahouse), with a unit price of 30-40 yuan, which was completely benchmarked with Starbucks, and the founding team was also old, The founders of the above two brands are former McDonald’s China executives and former Starbucks China executives.
the other is the new tea brand, represented by Xi tea and Naixue tea, which is different from the previous milk tea with creamer + fat powder, and adopts real milk + real tea + fresh fruit. The third space is also emphasized, but different degrees of attention are paid to it. Xicha is a standard store in the shopping center with an area of about 100 square meters. In the early stage of Naixue, it emphasizes one store and one design with an area of about 200 square meters. The unit price is about 30 yuan, which is slightly lower than that of Starbucks. The founders of the post-90s and the post-85s are almost equal to starting from scratch.
in an earlier interview, Zhao Lin, co-founder of Naixue tea, said, “we took Starbucks as our benchmark on the first day of entrepreneurship.” As we all know from the later stories of
, the classical school of tea drinking represented by yinwei tea and boiled leaves was far away from the focus of the industry early. Xi tea and Naixue opened a fire for a long time, waiting in line for a cup for a few hours, and there were frequent news about scalpers making profits.
behind this must represent what Xi Cha and Naixue have done right – in addition to truly meeting the new consumption needs of the new generation of consumers in drinks, the methodology precipitated from the two brands, such as the online popular playing method jointly signed with IP, the emphasis on private domain and user communication, the embrace and openness of capital, and the efforts made in digitization and standardization, are all leading the times It is still worth learning from.
in our communication with other catering companies, we have heard the high praise of “new tea is an advanced productivity” more than once.
but up to now, even though Xi Cha and Naixue have achieved considerable success and completed the transformation of the brand from “online popularity to evergreen”, they can hardly reach the height of “China Starbucks”. Even in the process of benchmarking Starbucks, some learning and reference were proved to be “learning from tables but not from inside”. Some actions were very necessary at that time, but they no longer adapt to the current reality with the development of the industry and the change of competition pattern.
after all, compared with Starbucks, which has been established for more than 50 years, Xi Cha and Naixue, which only became popular in the spring of 2017, have not even experienced a complete economic cycle.
but there is such a possibility that the future crisis has been buried in the initial top-level design. Among the many learning actions for Starbucks, the first one proved to be “this road is blocked” is the setting of the third space.
first of all, with the popularity of opening and exploding in the early stage, queuing and the third space itself have their own contradictory attributes. On the basis of failing to form such consumption habits in the early stage, for the customers aged 20-28 in the first and second tier cities targeted by Xicha and Naixue, they don’t need a third space in the shopping center, but the shopping center itself plays the role of the third space.
secondly, the small programs and go stores launched by Xi tea to alleviate the problem of long-time queuing further cultivated consumers’ buying habits of online and offline orders in the period when the o2o war was not over, and also laid the groundwork for the emergence of an online order rate of more than 60% in the whole industry in the future, and the third space was more redundant.
therefore, Naixue, which bet more and emphasized the design of store by store, failed to make a profit, and finally launched a new store type “Naixue Pro” at the end of 2020 on the eve of listing, which removed the existing bakery, reduced the store area, reduced the rental cost and labor cost as a whole, and expanded the site selection scope of the store. The establishment of Naixue Pro as the expansion main store type also indirectly acknowledged the failure of the early strategy.
Starbucks was the innovation at the product level. For example, it brought Italian concentration to the United States (1985), and the taste of Italian concentration is thicker and heavier, which is more irreversible for addiction; Another example is the introduction of a more beverage product, xingbingle (1994), which has been exposed to a wider range of non coffee customers.
previously, Starbucks sold coffee beans in line and went to work after buying them (Note: Starbucks’s first business was coffee bean retail, and then set up a bar in the store). After these two steps of product innovation, Starbucks accumulated a class of loyal consumers through products, and these people have high-end social needs or space needs. Therefore, Starbucks made some adjustments and upgrades to the space of the store, Completed the final establishment of the concept of the third space.
and the time Starbucks entered China (1999) happened to be after the third space concept was formed and mature. “It’s right to imitate Starbucks, but not completely —— You should learn how a winner succeeds, not what he does today. ” Xiao Yao thinks. The design of
business model should be linked. In the absence of the strong protection of the brand premium of the third space, how to support the brand premium of Xi tea and Naixue and how to avoid being dragged into the vortex of cost-effective competition are the problems they are facing and waiting to be solved.
happy tea, once described the pricing of happy tea: “we obviously have a price advantage for products that make consumers feel that the quality of products is similar; while products with lower prices can’t be compared with us.”
here, we do not doubt the correctness of the price position of Xi cha Naixue at that time. In the early stage of brand development, the price difference means that the brand is mentally poor, which is very valuable and important for category founders such as Xi cha Naixue.
such pricing also has realistic factors under the real cost. As the pioneer of new tea drinks, no store form needs to integrate the supply chain of real tea + real milk + fresh fruit at the same time, and complete the processing and production in the store. The common characteristics of
tea and fruit are: firstly, its huge volume and billions of market means that the new tea brand is only a small part of the industrial chain and cannot control the bargaining power; Secondly, its own non-standard degree is very high. In order to achieve the stability and standardization of products, the brand needs to make efforts against the scale effect, and the previous milk tea industry has no talent reserve related to this.
at the same time, the store operation mode, standardization and SOP process at the store end also need to be polished and improved a little, and even the joint participation of upstream and downstream. For example, the automatic tea making machine, which has now become the standard in the industry, was not seen in the market demand until 2017, and equipment suppliers invested in research and development and gradually launched it.
these practical problems are in front of start-ups, which put forward high requirements for the execution ability and comprehensive background of the team, and are also the key link for the long-term and stable development of the brand in the future. In this sense, Xi chanaixue has withstood the test.
but from the current perspective, the question we are discussing is whether the market space set aside by Xi chanaixue is too large.
this part of space is first geographical space. The 30 yuan price band determines that their target customers can only be white-collar workers in first and second tier cities. Limited by the LBS attribute of offline stores, even in that era when information dissemination is still centralized, they are phenomenal online Red brands and streets. No one knows that the market area covered by Xi chanaixue can only be directly related to its own expansion speed.
in order to maintain the brand tone of holding high and fighting high, Xicha and Naixue gave priority to the core points of the core business circle of the first and second tier cities, and under the background of the chaos of investment promotion and alliance and the mountains of quick recruitment companies at that time, in order to ensure the product quality, they always adopted the direct business model expansion. The result of
direct sales is that the absolute value of the growth in the number of the two stores is limited.
but on the other hand, a tide of opening milk tea stores is in full swing across the country. According to the 2019 China tea industry trend development report, during 2016q3-2018q3, the growth rate of the number of existing tea stores in the first and second tier cities was 59% and 120% respectively, and the growth rate in the third tier and below cities was up to 138%. By the end of 2018, there were about 450000 existing tea stores in China, including 163 happy tea stores and 155 Naixue stores.
behind this, first of all, the research and development and production threshold of milk tea is not high. It is more about the fine-tuning of formula and proportion and the improvement of taste brought by fresh raw materials, which can be easily used by ordinary people; Secondly, the investment threshold of a milk tea shop is not high. A small street front in ordinary cities can open smoothly with an initial investment of tens of thousands of yuan, which seems to represent the latest lifestyle. Quitting to open a milk tea shop once became one of the best choices for young people to start a business.
the second space set aside by Xi cha Naixue is the price space.
a 2018 Research Report of Huachuang Securities pointed out that one of the conditions needed to cultivate the consumption habits of ready-made beverages is the continuous improvement of the level of disposable income. At that time, the price of a cup of ready-made coffee in the United States was about one thousandth of the median monthly income (the price was US $3 / month, with an average of US $3000), while China’s first tier cities accounted for about five thousandths of the median (the price was 30 yuan / month, with an average of 6000 yuan). The five fold gap needs to be reduced.
with the advance of time, the difficulties faced and advanced experience accumulated by Xicha and Naixue as category founders do not actually have absolute barriers in the process of rapid growth of the whole industry, which can be used for reference and even copied directly by latecomers.
Xiaoma song, a well-known marketing consultant, once mentioned that Gu Ming (with a unit price of about 15 yuan and a number of 5000 stores +) will analyze the trend of first and second tier cities, achieve better taste and innovation through its own research and development, and launch new products. This strategy will significantly reduce the risk of new product development and launch.
at the same time, even if the brand is “partial to science”, a number of professional b-end service providers and suppliers have been nurtured in the huge market space. They provide various solutions for new tea brands and replicate them in batches, which directly plays a role in reducing costs and increasing efficiency.
for example, it is difficult to build a fresh fruit supply chain. Yu Huiyong, chairman of Baiguoyuan, mentioned in a speech in August 2021 that for tea brands dominated by fruit tea, the consumption of fruit will account for about 10% of the whole revenue, “but few of these tea brands know fruit”.
saw this opportunity. An internal team of Baiguoyuan incubated xiaomengxia supply chain management company to provide fruit supply for tea brands, with sales of nearly 100 million in three years. Xianmu farm invested by C capital and good sense also has similar businesses. It faces tea shops, leisure coffee shops and leisure catering stores, and has served nearly 200000 customers in more than 130 cities across the country. The whole case marketing consulting scheme of
brand is also provided by service providers such as Xiao Ma song and hezhonghe. Xiao Ma song mentioned a few days ago that there are 18 milk tea brands with more than 1000 stores in China, and he has served 6. As one of the first batch of comprehensive design companies for subdivided catering in China, hezhonghe serves more than 800 chain catering brands, including more than 50 tea brands.
with the help of more perfect infrastructure and the design of more compliant franchise mechanism, a large number of tea brands with unit prices in the range of 10-25 yuan have grown in shopping centers, roadsides and communities in various cities with lower raw material costs and smaller store models.
and the price band of 25 yuan and below also happens to be the range with the highest acceptance of tea consumers. According to the survey results of AI media consulting in the first half of 2021, 36.1% of consumers chose the range of 15-20 yuan in the range of the highest unit price of acceptable new tea drinks, accounting for the highest proportion; Followed by 19.5% of consumers choose 11-15 yuan; 17.8% of consumers choose the unit price of 21-25 yuan, and only 12.6% choose the unit price of more than 25-30 yuan.
the price band of more than 25 yuan is dominated by Xicha and Naixue, with a solid head foundation. The price band of less than 10 yuan at the lowest end is dominated by mixue ice city with the ultimate cost efficiency system (self built food company and agricultural company on the basis of absolute store scale). The middle price band takes the average value between the ultimate brand strength and the ultimate cost performance, with the lowest barrier, the most brands and the most fierce competition and internal volume, Even every 2-3 yuan is a enclosure.
but this is not an ideal situation for the brand, as a natural party pursuing sustainable growth. The brands in the middle price band are struggling, and they are not without attempts to break through the price band, but up and down seem to be two iron plates, which are difficult to shake.
for example, according to Naixue’s prospectus, in the high-end tea market, the CR2 market share of Xi tea and Naixue is 46.5%, while the Cr5 market share is only 58%. This also means that the life of other high-end tea brands is not easy: Fu Xiaotao, with a unit price of about 24 yuan, has 17 stores in Shenzhen in early 2021, but after a year, the number is halved to 8.
hi tea and Naixue also struggled when they almost carved up the high-end market and faced the bottleneck of growth. Earlier, they all launched an attack on the middle price belt through sub brands and launched Xixiao tea and stage cover, but at present, the response is flat. The enthusiasm and attention of the team to internal incubation projects are always far from that of other brands, which is the courage of all their lives.
is difficult to sink, and Xi tea and Naixue can only stick to the price band of more than 25 yuan. Although the competitiveness in this range is still unshakable, consumers’ choices are mobile, especially after the overall downturn of the consumer market.
the answer is almost No. In another survey on brand loyalty conducted by AI media consulting, 60% of new tea consumers chose to “often try new brands” or “have no fixed preference”.
of course, there are still many preconditions to be met in order to make consumers have so many options.
one of the preconditions is that the middle price band brands such as Qifen sweet and chabaidao should also appear in the vision of white-collar workers in the first and second tier cities based on the LBS attribute of offline stores, and drive the stores into the core business circle or around the business circle. The change of offline business forms and the upsurge of consumer financing have become the direct driving force during the
the internal volume and growth slowdown of the tea industry began in 2019. With the continuous opening of a large number of new stores and the closing of a large number of old stores, the net growth of stores in the whole industry was only 50000 in the whole year, with a total stock of 500000. In 2020 and 2021, affected by the epidemic, the total number of stores in the industry even began to decline, reducing to 480000 and 378000.
among them, many self-employed and chain brands with a small number of stores, due to their weak ability to resist risks, some choose to close stores and exit, give up market space and store locations, and some choose to switch to large franchise brands to obtain greater business stability.
the direct result of this is the improvement of industry concentration, and the direct beneficiary is the low and medium price band brand with chain franchise as the core expansion strategy. In the environment of market fluctuation, contrarian expansion is usually more likely to happen to franchised brands. Compared with Direct stores, franchised brands have higher awareness of risk preference and more sensitive response to market changes.
in March 2020, the compensatory consumption of the epidemic temporarily came to an end also added a small fire: according to the big data released by wechat, the number of single transactions of small programs for tea at that time increased by 744% month on month, much higher than snacks (229%), desserts (139%) and fast food (118%), which recovered the fastest in the catering industry.
store location, market space and other factors are available, and the last puzzle opened by the expansion tide is capital. At that time, the most important thing was capital. According to the data of red meal brand research institute, there were at least 32 financing cases in the new tea industry in 2021, with a total disclosed amount of more than 14 billion yuan, and the number and amount of financing events were the peak in recent 10 years.
therefore, we can see that many brands in the middle and low price belt quickly run horses and enclose the land. The number of stores in honey snow ice city increased by 6200 in 2021, and tea Baidao opened 3300 in half a year. Many excellent brands previously developed in the region have also begun to expand nationwide – many brands have opened their stores to the door of Xi tea and Naixue.
secondly, the second prerequisite for these brands in the middle price band is that their own product strength and brand strength are also sufficient.
as mentioned earlier, the middle price band is originally the range with the most brands and the most fierce competition and internal volume. Take the example of a regional tea brand we have been in contact with, percent tea (unit price is about 20 yuan, number of stores is 300 +, mainly in Jiangsu Province). The brand has a special fruit procurement team to carry out direct production of specific varieties throughout the country; Great emphasis is placed on the product innovation of original fruit tea, and the rational collocation between different fruit categories and accessories is constantly tried from the R & D library containing dozens of fruits; Maintain the new rhythm of the series once a quarter, and match the corresponding theme activities in the last new period, such as joint branding, IP marketing, etc. The same is true for
regional brands. In this competition pattern, brands that can stand out from regional brands and do a good job in national expansion, not to mention all enterprises with excellent strength. For example, Guming is the only tea brand that can deliver fresh and cold chain to stores across the country every other day. Chabaidao controls the details of takeout operation and has the largest number of takeout “10000 single stores”.
with this idea, the product power and brand power of such brands can usually be guaranteed. It is worth mentioning that product homogenization has long been a common phenomenon in the tea industry. Hotelling’s law in game theory also believes that in a rational market, sometimes the best solution for competitors is to make their products very similar to each other.
in November 2018, Peng Xin, the founder of Naixue, pointed directly at the plagiarism of hi tea products in the circle of friends and made the contradiction public. However, according to the big data of Alibaba’s local life, since then, the average number of SKUs in a single store in the whole industry has increased rapidly, doubling from 40 at the end of 2018 to 70-80 by the middle of 2020.
as a result, the tea brands with the middle price band positioned in the subdivided categories or subdivided themes are still likely to launch one or two unique taste POP products, but Xicha and Naixue, whose every move is closely watched by the whole industry, are completely forced to show their cards, and similar products may be late and difficult to be absent.
in terms of brand power, including our previous premise, “consumers five years ago still have consumption demand for milk tea five years later”. Assuming that the first batch of loyal users of Xi tea and Naixue in 2017 are over 22 years old after graduation from university and over 27 years old now, it is debatable how much their consumption demand and consumption frequency of milk tea will be weakened when the social trend is close to sugar free as a whole.
under this age group, they were the next generation of consumers of middle school students or college students at that time. Their tea consumption habits were cultivated by the middle price belt with more people-friendly prices, or even honey snow ice city. It seems that it is not absolute whether such people will automatically turn into loyal users of tea loving and Naixue after their consumption power is improved.
after all, the absolute price difference between high-end tea and the middle price band is only about 10 yuan, and tea is more inclined to daily consumption, which brings less consumer identity than “from perfect diary to Dior” and “from jiangxiaobai to Maotai”.
the same is true in terms of time span. The difference between Xi cha Naixue, which became popular in 2017, and Mi Xue ice city, which became popular in 2021, is only four years. Compared with the domestic development timeline of Starbucks (entering China in 1999) and other competitors such as Ruixing (founded in 2018) and Tim Hortons (entering China in 2019), the window period left for them to occupy their minds exclusively is actually very short.
products is one of the countermeasures taken by Xi tea. At the beginning of 2022, Xi tea announced that it would adjust the price of most products by 1-10 yuan, and the lowest price of products was 9 yuan. It promised not to launch new products with “3-prefix” price within the year and not to increase the price of existing products within the year. Affected by this, Naixue soon announced the price reduction.
for this measure, in our exchanges with many relevant people in the tea industry, “happy tea should be adjusted” has been a consensus, but all parties have disputes about the time and method of adjustment. Some people believe that “the price should have been reduced long ago”, while others believe that it is easy to reduce the price and difficult to increase the price. Compared with the direct and rough price reduction of single products, it is a better way to adjust the price band by adjusting the price of new products and marketing activities.
but in conclusion, the focus on price reduction is still the focus on cost performance. When high-end brands do not form differentiated users and markets, and the premium space is not effectively supported, the difference between brands is essentially the difference in operating efficiency of the same market, just like the current catering takeout market.
one way to get rid of possible low price competition is to re-examine the role of the third space. Since last year, the site selection scene of happy tea has been more than RMB yuan, and stores with a more sense of design have been opened outside the shopping center, such as yongningli store in Xi’an, handmade store in Nantou ancient city in Shenzhen and Qianmen Street store in Beijing. All three are located on the street, and the store design has integrated local unique historical and cultural elements.
if the competition dimension can be successfully pulled out of the product, the third space can indeed become a barrier. Thirdly, corresponding to the development history of Starbucks, gathering some loyal user groups like tea or has been done, but what kind of social space these people need and whether street style stores are the perfect answer still need to be tested by practice.
on the other side, looking at the whole tea market, the third space of low-level cities may also be an idea for regional brands. For example, the northwest characteristic tea brand “Fangha” mentioned to us that when other tea brands adopt the national standard small store type and expand in the northwest, Fangha will open larger stores on the street to meet the needs of Northwest consumers for heating areas.
and in terms of the flexibility of disposable time, young people in small towns do have more needs to kill time than urban white-collar workers. When opening a large store in a low-level City, in addition to tea and drinks, making category superposition (such as snacks) and providing more comprehensive and richer SKU supply are also a good way to improve the output of a single store. Yao Zhe, co-founder of
united group, once described this part of the market as “tea has entered a stage of competition that cannot be supported by a single person. The next tea is a combination of eating and drinking. Whether you match it with fried chicken, doughnuts, small cakes, eggs and pineapple buns.” “I have investigated my customers. The most profitable franchise stores are those with snacks. The supply in the following cities needs to be comprehensive, and SKUs also need to be selected many times. If they are too single, they may hang up.”
in addition, in addition to the attempt of the third space, going to sea to occupy a broader incremental space is also the direction that some tea brands will consider at present.
for example, Bawang chaji, which focuses on Chinese style, clearly aims to “serve consumers in 100 countries around the world”. There are more than 400 domestic stores. With the development of markets in Malaysia, Singapore and Thailand, there are more than 500 stores around the world. Bawang chaji’s plan is to enter the North American market after the number of domestic stores exceeds 5000, and take overseas as the focus of the core team. Zhang Junjie, the founder of
overlord chaji, believes that there are many preconditions for globalization, among which the most basic ones are organizational strength, brand strength and financial strength, so as to have the qualification to cooperate with the best agency joint venture in the local market and have sufficient funds to ensure long-term development.
we are also concerned about the existence of tea brands that focus on overseas markets from the beginning. The different standards of available raw materials in different countries and the current situation of high labor costs in developed countries are the problems they are focusing on.
in addition, no matter how to make space, whether at home or abroad, the current tea is still a catering business in essence, and the brand liquidity is limited by the limited coverage of stores. This actually limits the playing space of Xi tea and Naixue at the peak of brand power.
in order to break this shackle and transform from bounded store business to unbounded retail business, launching retail products is one of the ways. Among these excellent cases, such as Starbucks cups and tea Yanyue ribbons, cultural and creative products and tea bags with the nature of travel gifts.
in a meeting minutes in the first half of 2021, relevant persons of chayan Yuese also made it clear that “chayan Yuese will not completely focus on milk tea, and the significance of new retail (from the perspective of the boss) is greater than milk tea”, and mentioned that the business format of the company will be expanded from tea to stationery, household, daily necessities and other fields. The bubble water introduced by both
hi tea and Naixue is also an attempt to retail products. Compared with Naixue bubble water, which is only sold in stores and e-commerce platforms, Xicha bubble water was spread into convenience stores and other retail channels early, and achieved the result that the sales volume of some stores is second only to Yuanqi forest for a period of time. Recently, it was reported that Naixue plans to invest 500-1 billion yuan to acquire the ready to drink beverage production line, which is also considered to be one of the signals to vigorously develop the bottled beverage business.
however, ready to drink drinks have always been an industry with a narrower price range and a higher dimension of competition. Entering third-party retail channels and service dealers is not the strength of Xi tea and Naixue. It is still unknown how much market they will eventually win.
until the eve of Naixue’s listing, when Naixue described its competitive relationship with Xi tea, she said, “in fact, now the two companies are going hand in hand. It’s not who grabs whose business, but Starbucks.”
but facts have proved that in the years when the growth rate of the industry is limited and the brand concentration increases rapidly, the arrival of the stock market is so rapid that even if it is not well prepared, it may be involuntarily dragged into the price vortex.
it is true that offline catering will never be monopolized or monopolized by one or more brands, but in the new tea industry with chain rate far exceeding the average, the sparks of collision and extrusion between big brands, the cracks of small brands or the dilemma of merger will be particularly wonderful.
industry integration is taking place, and the new tea is going to the midfield, even not far from the end. A consumer investor summed up and commented to us: “it is an honor for any industry to form an industry, which shows that it is a great track, but at the same time, it will also face an inevitable stage of industrial development.”
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