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What is the process of branding to find differentiation and not to become an obscure enterprise? I think it is a process of differentiation, a process of forming your unique memory in the minds of consumers. Nowadays, in many categories, Chinese consumers have no shortage of choices. In the buyer’s market, an obscure enterprise is doomed to fail to complete the upgrading from brand to brand, and eventually disappear in the process of history. How can we find our differences? Do a good job in segmentation and positioning, and find a market blank with a low ceiling. The so-called segmentation positioning refers to the categories that the giants have been doing but have not focused on, such as sugar free bubble water; Or it is the category that the giant does not do, such as the middle end freshly ground coffee in the Ruixing card. First of all, freshly ground coffee is a broad and fast-growing market in China. According to Euromonitor data, from 2014 to 2020, the CAGR of coffee product income of coffee shops in Chinese Mainland reached 23.2%. According to the estimation of CITIC Securities, the market scale of the ground coffee in Chinese Mainland will reach about 200 billion in 2030, and the CAGR of 2020-30 will reach about 15%, far exceeding the global average growth rate of 2%. Secondly, there is no large chain coffee brand in the price band below 30 yuan. Before the rise of Ruixing, looking at China’s freshly ground coffee market, the high-end market of more than 30 yuan was mainly monopolized by old giants such as Starbucks and Costa; There is a large enough market gap for low-priced coffee of less than 15 yuan and middle-end coffee of 15-30 yuan. A simple business logic is that products with high customer unit price always have a larger profit margin. In the future, it will be easier for middle end brands to raise prices than for low-priced brands. Perhaps due to the above considerations, in the process of rebuilding the enterprise after the crisis in 2020, Ruixing resolutely suspended the milk tea sub brand of Xiaolu tea and chose to focus on the coffee track. By improving the product strength and brand strength, Ruixing actively got rid of the image of cheap coffee in the hearts of consumers in the early years and strengthened the middle-end brand image. In addition to focusing on the coffee tournament, I think that in terms of strategic positioning, xinruixing has also done one thing right – embracing young users. The popularity of the
coffee culture is inevitably accompanied by the emergence of a large number of new-type mental workers. This rule is not only applicable to the successful rise of Starbucks in China, but also to the global coffee market, such as France, the United States, Japan, South Korea and Singapore. Starbucks came to China in 1990 not by accident, because after China’s reform and opening up, the first batch of large-scale mental workers began to appear in the 1980s and 1990s. At that time, top foreign-funded enterprises in various industries such as P & G, L’Oreal, KFC, Nestle, general electric, Microsoft, McKinsey, KPMG and Ogilvy & Mather successively entered China to set up companies. While bringing modern enterprise management and technology, these foreign-funded enterprises also brought coffee consumption habits into China. The coffee consumption habits of that generation were educated by Starbucks in the same period. The barrier of brand is that once the consumer’s mind is formed, unless the differentiation of the new brand is obvious enough, it is difficult to transfer the consumption habits. Looking back to 2020
Without product power, the brand can only become a burst foam. Affected by the rising cost of raw materials, rent and manpower, Ruixing has repeatedly mentioned the price rise of products in the financial reports of the past few quarters, but the average number of monthly trading users has reached new highs year-on-year. The average number of monthly trading customers in the second quarter of this year was 20.7 million, an increase of 68.6% over the 12.3 million in the same period of 2021. There is no loss of a large number of users due to price increase, which indicates that the brand strength has withstood the test of the market and the brand potential has stood. Behind the improvement of Ruixing’s brand power is the product power. For the food and beverage enterprises of TOC, the products are not good enough to drink and taste. No matter how much the brand story is hyped, consumers will not easily re purchase. Especially for the new generation of young people, they are not stupid because they are not deeply involved in the world. Their consumption decisions are based on fully transparent information. They are actually the smartest generation of consumers who have experienced a lot of business routines since childhood, and it is not easy to get their approval. We can mainly understand Ruixing’s product strength from three dimensions: large single product serialization, continuous product innovation, and supply chain. First, large items + serialization. The new brand of food and drink needs to make every effort to make a large item with a score of more than 95 points, instead of just a bunch of small explosive products with a score of 60-80 points for a long time, and even a product that can make consumers remember deeply. Although people are fond of the new and tired of the old, they are relatively specialized in eating, drinking and drinking. This is also an important premise for food and beverage enterprises to take the big single product strategy – the single market space is large enough. Coca Cola, which is more than 100 years old, has hundreds of sub brands and new products. But when you mention this company, the original classic is the first thing you think of and often buy. “Serialization” is the most mainstream and effective way to extend the cycle of food and drink products, especially for large items. This R & D logic has been fully verified by numerous mature giants. On the basis of the perennial best-selling products such as raw coconut latte and thick milk latte, Ruixing has constantly enriched and improved the series of raw coconut family and thick milk family. For example, Yeyun latte, which sold well in the second quarter of this year (sold more than 24 million cups and contributed 400 million yuan to the store), has continued the previous series. The successful large item series of
can bring stable sales revenue to the enterprise for a long period of time. In this way, enterprises will have more space to try and error iterations with new products, expand the basic disk or innovate and explode. Comparatively speaking, if a food and beverage brand does not have such a basic large product that can stand the test of time, and it is unable to settle down by blindly seeking novelty, then employees will be particularly tired and the enterprise will be very anxious. A brand without a basic model poses a challenge to the supply chain, innovation, processes and standards, which is equivalent to starting from scratch every day. This is very terrible. Second, continuous product innovation. As an exotic beverage, coffee has a high acceptance threshold for bitter and sour taste, which is one of the reasons why it was difficult to be popular in China in the past. Compared with the number of coffee consumption cups around 300 cups per capita in mature markets, there are only a dozen cups in China. The penetration rate of freshly ground coffee in China is still very low, and it is still in the early stage of coffee popularization
Technology is a lever, not just a tool technical ability vs technical thinking: physical enterprises should not have Internet anxiety, but the power of technology must not be ignored. For many retail enterprises, technical thinking should be promoted more than technical ability. Cognition cannot keep up with the times. Technology can only help enterprises solve short-term problems, but can not break the boundaries of departments and deeply integrate with the business to play a leverage role. As a new retail company, Ruixing is different from traditional retail by using technology as a lever to change the freight yard. Ruixing’s approach is to accumulate high-quality data sources (cultivate users’ habit of placing orders online) from the very beginning, embed the technology in the specific business scenarios of different departments, and make the high-quality data flow smoothly across departments as much as possible, excavate and release the value of data from the real business needs, so as to continuously help enterprises obtain better business performance, For example, lower cost to sales ratio (proportion of raw materials, store operating costs, proportion of marketing and other expenses to sales revenue), higher ROI, larger user scale, higher same store growth rate, faster store growth rate, new stores with a longer one-year survival rate, etc. This better performance and more significant cost reduction and efficiency increase are not the result of a single department using digital technology, but the comprehensive result of technology driven marketing, user growth, products, supply chain, store operation and other business chains. To facilitate your understanding, I will give two specific business landing scenarios. 1. Why has Ruixing not put too much pressure on the store’s operation due to its high-frequency launch of new products over the past year? How to ensure the consistency of the taste of hundreds of thousands of stores? From the perspective of scale, the good products of chain enterprises are excellent and stable in their own price. The latter is often ignored by new brands, but it is actually very important. The expectation of consumers for chain catering brands is that I can buy products with high consistency of taste at any time and in any store. Consumers are amazed by the first cup, and if they think “Oh, how is it different from what I used to drink” in the second cup and the third cup, they will be lost because they have too many choices. And if he gives you another chance after a period of time and finds that it is not the taste in his memory, he may not pay attention to you anymore. The Red Sea market is so desperate. In an interview with the media, Cao Wenbao, the person in charge of Rui Lucky’s business line, said that the new rhythm of high frequency has not caused pressure on the store partners at the operation end. One of the major reasons is that at the product R & D end, the production process is simplified by means of formulation and unified SOP for each product, which is not only predictable and easy to manage, but also reduces the occurrence of errors in the production process. At the store side, Ruixing has realized the automation of many work contents with the help of technology, helping store clerks save a lot of time, such as automatic management of product validity, automatic scheduling, automatic ordering of raw materials and packaging materials, automatic thawing of materials, and automatic alarm of abnormal conditions of coffee machines and refrigerators with the help of IOT intelligence. In addition, Ruixing adopts fully automatic coffee equipment and
Social responsibility + Corporate Governance: do what you should do. At the second quarter financial report of Ruixing, Ruixing also announced the establishment of the Sustainable Development Committee and planned to release the first ESG report in the fourth quarter of 2022. This should be regarded as an important symbolic event for Ruixing to shake off the historical burden and further move towards normal and steady growth. To a certain scale of Chinese companies, we must pay attention to the transparency and open disclosure of corporate social responsibility and corporate governance, which is beneficial to the long-term development of the company without harming it. The most direct benefit is to gain the trust of sustainable investment funds and financing opportunities. In recent years, the scale of sustainable investment funds has been growing and has not been affected by the epidemic. According to the calculation of CICC, from the beginning of 2012 to the beginning of 2020, the compound annual growth rate of sustainable investment funds was 13.02%, far exceeding the overall growth rate of the global asset management industry (6.01%). By the middle of November 2021, more than 4500 institutions in the world had joined the United Nations principles for Responsible Investment (PRI), an increase of nearly 30% over the end of 2020, and the total asset management scale reached about US $120 trillion. With the gradual deepening of the opening of the capital market to the outside world, the internationalization of China’s stock market will become higher and higher. While more and more Chinese stocks are included in the global benchmark, the continuous inflow of foreign capital into A-shares also puts forward higher requirements on the performance of Listed Companies in ESG. Chinese companies that actively disclose and pay attention to ESG for a long time can gain the trust of investors and reduce the financing cost. Although Ruixing is currently in the powder list market, it insists on regularly disclosing financial reports, establishing a sustainable development committee, and putting ESG reports on the agenda, which further verifies the firmness of Ruixing in “becoming a world-class coffee brand”.