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The price of
is falling. But the cost cannot be reduced.
Naixue’s tea story is still difficult to tell with the support of the labels of “the first share of new tea”, “the head of the industry” and “China Starbucks”.
On August 5, Naixue tea issued a profit warning: in the six months ending June 30, 2022, it will record a revenue of about 2.02 billion-2.07 billion yuan, and an adjusted net loss of about 230 million-270 million yuan.
Earlier, its 2021 financial report showed that the adjusted net profit of Naixue tea in 2021 was RMB 145 million. Loss has been a common topic, but what puzzles the outside world is that loss has not stopped Naixue’s expansion.
In 2021, Naixue’s tea has a net increase of 326 Naixue stores. At the same time, it clearly stated in its financial report that increasing the density of stores can help cultivate consumption habits. It is expected that 350 new tea stores will be opened in 2022.
Going against the trend, the market can not help questioning Naixue’s tea. Many people in the industry said that Naixue’s tea loss came from his “big shop” behavior.
In fact, as the capital boom fades, the overall temperature of the new tea circuit drops, but the competition becomes more and more intense. High end tea brands are seeking customers with low prices, and opening large stores means an increase in costs. Naixue’s tea is hard to hide its decline because of its high cost and high price.
During this period, Naixue’s tea also realized that she needed to tell a new story. Make investment, expand the track, and make “Naixue coin”. Naixue’s tea moves frequently. However, too much force has led to the question of excessive marketing and sidestepping.
With the half of the new tea fighting, the competition among players in the high-end finals is becoming more and more fierce, and new brands are constantly emerging. For Naixue’s tea, it is difficult to become the “sword of Damocles” hanging over its head. After many years of operation, it has not reached the turning point.
One year after listing, it is still difficult
On June 30, 2021, Naixue’s tea was officially listed on the Hong Kong stock exchange, becoming the first share of new tea.
However, when the market opened, it seemed that the capital market was not optimistic about Naixue’s tea.
In the year after listing, Naixue’s tea was difficult to make a profit, which became a more thorny problem. Recently, Naixue’s tea issued a profit warning for the first half of this year. Not surprisingly, Naixue’s tea lost money again.
As for the reasons for the loss, Naixue’s tea pointed out in the announcement that in addition to the impact of the epidemic, the expansion of stores in the first half of this year brought about an increase in the relative fixed costs such as store manpower and rent, which also further led to the loss. Meanwhile, due to the influence of foreign exchange rate, the net unrealized loss of Naixue tea in the first half of the year was about 24.4 million yuan.
In addition, Naixue tea said that although the number of stores of the group in the first half of 2022 increased compared with the same period of 2021, the group’s revenue decreased compared with the same period of 2021. This means that under the epidemic situation, the mode of dense store opening is not Naixue’s tea
One year after listing, even Naixue’s tea, as the industry leader, is still a “big problem” in terms of profitability.
Prices that cannot rise and costs that cannot fall
At the beginning of 2022, the news of price reduction of high-end tea brands has been spread in the industry.
At that time, Xi tea announced a price reduction of 1-7 yuan, and Naixue’s tea launched a “relaxed series” of up to 19 yuan. In March this year, it was officially announced that at least one new relaxed series tea drink of less than 20 yuan per month. Lele tea has also reduced the price to less than 20 yuan, and the lowest eight yuan can buy a cup of tea.
Naixue’s tea relaxed series, tuyuan Naixue’s official tea microblog
In June, the price reduction trend continued. Xi tea lowered the prices of many tea products again, claiming that there were no more drinks with more than 30 yuan, and Naixue took advantage of the situation to launch a product with the lowest price of 9 yuan per cup.
Price reduction is the general trend of the new tea market this year.
This is not good news for high-end tea brands such as Naixue tea, because the price cannot rise, and the profit space of the whole new tea industry will face a new round of shrinking.
In the 2021 new tea research report, the China Chain Management Association mentioned that in the next 2-3 years, the overall growth rate of new tea will slow down in stages, and 10% – 15% is a stable medium speed development.
This shows that the new tea market has bid farewell to the high growth, and the biggest purpose of price reduction is to attract vacant markets and consumers, while the sinking of high-end brands is to seek a broader market space.
The price war of high-end tea brands is imminent. This puts a lot of pressure on Naixue’s tea. Earlier, Peng Xin, the founder of Naixue tea, mentioned in an interview with Phoenix technology that “high-end milk tea is not profitable because its cost is very high.”
According to the 2021 annual report, Naixue’s tea raw material cost is 1.4 billion yuan, accounting for 32.6% of the revenue, with a year-on-year increase of 20.8%, which is the second largest cost expenditure of the group after the staff cost. This includes tea, dairy products, seasonal fruits, fruit juices and other raw materials.
Zhang Yi, chief analyst of AI media consulting, once said in an interview with 36 krypton, “the direct cost of a new cup of tea is about 1 / 4 of the price. With the development of the whole industry, the entry threshold is decreasing and the production cost is gradually decreasing.”
However, the decline in production cost is the overall trend of the industry. For a single brand, the production cost of Naixue tea is still high in the industry. When the price reduction has become a new way of playing for peers, Naixue’s tea can only keep up with it.
Compared with peers, Naixue’s tea cost is indeed not small. In 2021, the total cost of Naixue employees was 1.42 billion yuan, a year-on-year increase of 54.3%. This is mainly due to the fact that Naixue has more tea shops than its peers. According to the Research Report of Guojin securities, the number of employees of Xi tea single store is 18-20, while that of Naixue tea is 25.
In order to control labor costs, Naixue’s tea
According to the report on the development of China’s new tea industry in the first half of 2022 released by AI media consulting, the scale of China’s new tea market in 2021 is 279.59 billion yuan, and it is expected to reach 333.38 billion yuan in 2023. Although the market demand is increasing, the overall growth rate is slowing down.
The store is expanding and the flow cannot keep up with it; In order to find new growth points, Naixue’s tea has also made some attempts other than new tea drinks.
On June 30, Naixue’s tea wechat official account said that users can get one Naixue coin for every 1 yuan spent, and they can become virtual shareholders by buying / selling virtual stocks with Naixue coin. Naixuebi can exchange gifts, vouchers, discount coupons, etc. at naixuebi mall.
The launch of Naixue coin seems to be a marketing means to improve the stickiness of consumption, but it has caused controversy in the market. Some people believe that although Naixue coin is a narrow non-two-way circulating token and is not regulated by financial management regulations, corporate behaviors such as “card drawing through games and lottery through large manufacturers’ tokens” have always been considered as “gambling like”.
In addition to marketing to attract people, Naixue’s tea has also made investment in recent years.
In June, the tea brand supplier “Tianye shares” landed in the capital market. According to the announcement, Naixue’s tea subscribed for 12 million shares at a price of 38.64 million yuan. In addition, Naixue’s tea is the largest customer of Tianye shares.
Investing in new tea brands is nothing new. Seesaw and teayan Yuese have made great achievements. Under the premise of limited market growth, it is not surprising that brands use investment to expand the market and support the valuation.
As the brand side, Naixue’s tea investment in its own suppliers may also be due to the consideration of reducing raw material costs and extending its own industrial chain.
Although Naixue’s tea has extended its tentacles to a wider area, it has not changed its main strategy. It is still accelerating its expansion and adhering to the “encryption” strategy. In the financial report of 2021, Naixue’s tea clearly stated that increasing the density of stores can help cultivate consumption habits. It is expected that 350 new tea shops will be opened in 2022.
Despite years of losses, Naixue’s tea still insists on paying for the “original heart”.
Many people in the industry told wired insight that a large part of Naixue’s tea loss is due to the cost of opening a store. Although the store is the key to seize market share, it still needs to consider the cost and rent.
At present, shop simplification has become the trend of the new tea market. The shop types of “Xi tea go” and “Naixue tea Pro” are good examples.
However, after reducing the baking area, Naixue’s tea Pro is still large. According to the comparison of wired insight, the area of Naixue’s tea pro shop is 80-200 square meters, while the area of “Xi tea go” is 60-70 square meters.
The large area and high cost affect the floor efficiency of Naixue’s tea store. Northeast Securities Research Report shows that naixuebiao
Naixue’s tea hasn’t reached the turning point yet
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