On February 9, some media reported that Xicha was laid off, involving 30% of employees, and all departments were laid off.
Xicha responded to the 21st Century Business Herald that the rumors are false information. There is no so-called major layoffs in the company. A small number of personnel were adjusted and optimized based on the year-end assessment before the year. At the same time, the year-end bonus of employees has been normally distributed to employees before the Spring Festival according to their performance.
Behind the rumors of tea like layoffs is the change of growth logic under the change of the new tea industry.
According to the 2021 new tea research report released by China chain operation association, the growth rate of the new tea market in 2020 was 26.1%, and the growth rate decreased to about 19% from 2021 to 2022. The market growth rate is slowing down periodically.
In terms of the demand for human resources, the growth of people’s demand will not be too good at the current stage. In terms of the supply of human resources, the impact of the epidemic will not be too high an investor who has long paid attention to the consumption field said in an interview with the 21st Century Business Herald.
He said that for the companies of the new tea drinking track, in the face of the current situation in which the expected improvement of future revenue weakens, Xicha, as the leading company, has heard the news of layoffs, and chayan Yuese, as a company with good product power, has also been exposed the news of layoffs, and the situation of some other companies in the industry may be worse.
new tea leaves barbaric growth
Before the rumors of tea like layoffs appeared, the challenges of the new tea industry were already on the horizon.
Last November, chayan Yuese, the “king of new tea”, announced that nearly 100 stores had been temporarily closed in Changsha in response to the sharp decline in passenger traffic during the epidemic. This is the third centralized temporary closure of chayan Yuese in the year.
“Prepare for the worst and hope for the best.” Chayan Yuese stressed that it would be normal for some areas with high density to temporarily close their stores.
The impact of covid-19 pneumonia on the catering industry is an indisputable fact. According to the data of the National Bureau of statistics, before 2019, the sales of the catering industry basically maintained an annual growth rate of 10%. As of October 2021, the total sales of the catering industry was basically the same as that in 2019.
Naixue’s tea, which has been listed on the Hong Kong stock exchange, issued a profit warning on February 8. It is expected that by December 31, 2021, the group will obtain a revenue of about 4.28 billion yuan – 4.32 billion yuan, with a year-on-year pre increase of more than 40%, and an adjusted net loss (not measured by international financial reporting standards) of about 135 million yuan – 165 million yuan.
According to the prospectus, from 2018 to 2020, Naixue’s tea revenue was 1.087 billion yuan, 2.502 billion yuan and 3.057 billion yuan respectively, and the adjusted net profit was – 56.6 million yuan, – 11.7 million yuan and 16.64 million yuan.
In addition to the impact of covid-19 pneumonia, the phased slowdown in the growth of the new tea industry has also occurred.
The 2021 new tea research report shows that the overall growth rate of the new tea track will be adjusted to 10% – 15% in the next 2-3 years. The brands mainly engaged in direct marketing have opened stores steadily, while the brands mainly engaged in franchise have developed and differentiated and entered the shuffle period.
The slowdown in growth will be phased, and new tea enterprises need to make appropriate adjustments to achieve thick accumulation and thin development. China Chain Operation Association believes that if all enterprises solve important problems such as brand, operation ability and food safety management in the next 2-3 years, the compound growth rate of new tea enterprises will quickly return to more than 15%.
expand category and scene
With the slowdown of industry growth, new tea is seeking sustained and rapid growth through more diversified ways.
Li Yu, investment director of Qingtong capital, previously analyzed that the logical growth of chuntuo store tends to be saturated, and the new tea must further expand the growth space from multiple categories and consumption scenarios.
The first is the category expansion. The typical action is the coffee business and products launched by Naixue’s tea and Xi tea. In addition to self built businesses, Xicha, chayan Yuese and miyue ice city also carry out category layout through investment.
The second is the exploration of diversified scenes. This kind of exploration includes not only building personalized and themed offline stores outside the standard stores, but also providing diversified consumption experience by means of APP / applet and third-party takeout platform.
Under the objective reality that covid-19 pneumonia has seriously affected the sales of offline stores, digitization is an important starting point for new tea enterprises.
The digitization of new tea refers to the whole link digitization with digital management as the core, including front-end digital operation and marketing, back-end digital supply chain, digital product innovation, etc.
The white paper on the development of China’s new tea industry in 2020 jointly launched by Xi tea and Sullivan disclosed that Xi tea’s “Xi tea go” applet can improve the operation efficiency of stores and business operation efficiency while improving the consumer experience. with the support of higher online and digital level, supply chain management, product R & D, marketing, customer operation and other modules can carry out better digital operation, improve efficiency, reduce costs, and bring broader imagination space to the business.
Xi tea is still an unlisted company, and it is difficult to see the direct data of its digitization on reducing operating costs and improving the company’s revenue. Naixue’s tea is a listed enterprise, and the stage effect of its digital operation can be found from the public information.
Naixue’s tea has been implemented in digital tactics in stages since the beginning of 2020, accelerating Wuxi Online Offline Communication Information Technology Co.Ltd(300959) integration through online channels such as small program ordering, third-party takeout platform, wechat mall, live broadcast and tmall flagship store. The company’s financial report shows that its online revenue accounted for 72.2% in the first half of 2021.
In addition, Naixue tea has started to develop its own digital operation system and automation equipment since 2018. According to the information disclosed by the company, the selection of manufacturers and trial production of its self-developed automation equipment began at the end of the fourth quarter of 2021. The equipment has been put into trial use in some stores during the idle period of operation, and is expected to be officially applied in the tea shops in Naixue before the end of the third quarter of this year.
Naixue’s tea said that the investment in automation equipment and measures will reduce the group’s labor cost and reduce the rigidity of labor cost.
investment enthusiasm remains unchanged, and the liquidity pressure increases sharply
The reason for many rumors of layoffs is to analyze the reasons for its listing.
Previously, there have been repeated rumors about the listing of Xicha in the market. Nie Yunchen, the founder of Xicha, publicly said that there was no listing plan in 2021. Similarly, in 2021, the news of listing was also heard from honey Snow Ice City, tea Baidao, etc.
Therefore, some market participants said that 2022 will be the listing year of new tea enterprises.
Looking back on the past, the new tea drinking track has attracted more and more money since 2016. Even with the slowdown of industry growth and the intensification of market competition, the enthusiasm of investment institutions for the track has not declined. According to the statistics of red meal brand research institute, as of November 25, 2021, there were 32 financing cases in the new tea industry in 2021, with a total disclosed amount of more than 14 billion yuan.
The number and scale of financing transactions of the new tea drinking track exceed that of the whole year of 2020. More than $10 billion of financing includes the $500 million new financing of Xi tea. The valuation of this round of financing reached 60 billion yuan, setting a new financing valuation record for China’s new tea enterprises.
Investors are optimistic about the broad prospects of new tea. According to the 2021 new tea research report, from 2017 to 2020, the revenue scale of China’s new tea market increased from 42.2 billion yuan to 83.1 billion yuan. It is estimated that the industry’s compound growth rate will reach 20% from 2021 to 2023, and the new tea market revenue is expected to reach 142.8 billion yuan in 2023.
The pace of new tea enterprises does not stop at tea. According to Li Yu’s analysis, tea is more educated than the coffee market, and making coffee will not dominate the new tea. On the other hand, the cross-border business model of “tea +” innovates the product portfolio and opens the growth ceiling.
In addition, the underlying logic of China’s consumer market has changed, evolving from the era of “product is king” to the era of “people’s dividend” aimed at maximizing the value of consumers’ whole life cycle.
Ding Jie, senior global partner of Bain company, previously proposed that the brand should focus on consumer life cycle value management (clvm), focus on improving the number of “people” and the value contribution of “people” to the brand, form a complete view around consumers, and explore the “sustainable growth path” with different partners under different business formats, so as to stimulate the medium and long-term value of the brand.
When the reshuffle of the industry is inevitable, the new tea enterprises are experiencing pain in the stage or on the road of sustained growth.
