Xi tea and Naixue "era after price reduction": exploding orders and "forcing to stop" online orders

In 2022, when the costs of main raw materials, labor, transportation and energy continued to rise, even the old milk tea enterprises, "the first share of A-share milk tea" Xiangpiaopiao Food Co.Ltd(603711) could not bear the pressure to choose to raise prices, many new tea brands chose to go against the market and played the "price reduction" card one after another.

Plants and trees on earth are called "tea". Plants and trees have withered and flourished, and the tea industry naturally has ups and downs.

After several years of "lively" period of the industry, such as frequent online popularity, resident hot search, Shenqu brainwashing and long queues, at present, the growth rate of the new tea industry has slowed down periodically and entered a "calm" period.

However, the heat is still there, and the dividend is still attractive. Today, the wings of the new tea head brand are becoming fuller and fuller, and the competition between brands is escalating. In 2022, when the costs of main raw materials, labor, transportation and energy continued to rise, even the old milk tea enterprises, "the first share of A-share milk tea" Xiangpiaopiao Food Co.Ltd(603711) could not bear the pressure to choose to raise prices, many new tea brands chose to go against the market and played the "price reduction" card one after another.

Like tea and Naixue's tea "bid farewell to the 30 Yuan era" and press a new round of traffic war. What is the truth of the commercial war behind the civilian route?

One of the could be used to \ Yuan era

It's rare to have a weekend without overtime. Xia Nan (a pseudonym) plans to have afternoon tea with Murong Xi (a pseudonym), a close friend of her classmate whom she hasn't seen for a long time, and call for milk tea.

Naixue's tea rings the bell at the Hong Kong stock exchange. Behind it is the new tea brand, carrying the banner of "changing lifestyle", quietly occupying the minds of consumers, with countless supporters - a table of happy tea is delivered at the time of team celebration. When shopping at heshenghui, consumers don't forget to pack a happy tea before leaving

The wings of the new tea brand are becoming fuller and fuller, and the competition between brands is also upgraded. In 2022, when the costs of major raw materials, labor, transportation and energy continued to rise, the "price reduction" brand was launched by China's high-end new tea drinks.

Xi tea took the lead in breaking the window paper in February, and Naixue's tea chose to "bid farewell to the era of 30 yuan in an all-round way". The shell finance reporter of the Beijing News noted that 15 yuan to 25 yuan has become the mainstream price band of happy tea, while Naixue's tea has launched the "easy purchase" series and promised to launch a new "1 prefix" product every month.

In March, Lele tea seemed to take a bigger step of "price reduction". In the statement of no discount on quality, it announced that the price of some drinks was finally controlled below 20 yuan, and a cup of fresh jasmine green could be drunk for a minimum of 8 yuan.

For this change, Guo Sihan, CMO of Lele tea, told the shell finance reporter of the Beijing news that Lele tea made adjustments on the product line some time ago. The new product line is not only a price adjustment, but also a commitment to adhere to the use of fresh fruits and good tea. "Lele tea has a rich menu of products, which are new every week. There are products for users to choose from in each price band."

Price cuts and new product lines are just a hint. The three giants of new tea have focused on "affordable products" and tried to provide consumers with a wider price band and a lower consumption threshold.

The price of products was reduced, and the "explosion order" hit.

Chenxiaolei, the relevant person in charge of Naixue's tea, told the shell finance reporter of the Beijing news that since the launch of the relaxed series, the number of takeout and store orders has increased significantly for more than a month, especially during peak order periods such as noon and holidays. In order to ensure a good customer experience, sometimes the online order business has to be closed temporarily.

"Within a few days after the news of price adjustment was sent out, there was a continuous explosion of orders in many stores across the country. Many stores in most cities in China, such as Beijing, Chengdu, Jinan, Shenzhen, Guangzhou and Shanghai, had to temporarily close online orders because there were too many orders. Therefore, we reasonably allocated the number of employees in some stores." Cheng Hao, senior director of Xi tea, told the shell finance reporter of the Beijing News.

"parity product" traffic password

Over the years, in order to win this traffic war, the new tea drinks brands have frequently used marketing tricks, such as star endorsement, creating IP, cross-border joint branding, helping small groups of fruits out of the circle, building a "milk tea social" Scene... Trying to shorten the distance from generation Z and capture the stomach and heart of young people.

Around this price reduction, there are many doubts and concerns in the market. "The rising cost is visible to the naked eye. Will the price reduction degrade the quality?" "Is it because no one pays for high-priced products, so they are forced to reduce prices?"

In this regard, Xi tea, Lele tea and Naixue tea gave almost the same answer, "this price adjustment is based on the accumulation of brand, digitization and supply chain, and does not affect the product quality and materials".

On the surface, this is the head brand of new tea drink. After years of exploration and accumulation, it has established a set of supply chain system with good cost efficiency, so as to choose to share dividends with consumers, so as to launch products with "high quality and low price".

From a business perspective, the logic is not so simple.

"For Xi tea and Naixue, adjusting the cup type and launching products with smaller capacity will not affect the cost, but only the customer unit price. This is worth it. First, the two brands have a large volume and a large number of stores. The economy is not very optimistic affected by the epidemic. In addition, the tea industry will also have periodic fluctuations, and it is difficult for the overall stores to obtain customers, so the threshold of obtaining customers is reduced." Insiders analyzed the shell finance reporter.

Getting customers has become the key to "reducing body shape" of tea giants. Wu Daiqi, CEO of Shenzhen siqisheng company, told the reporter of shell finance that Xicha and other brands have reduced prices one after another in order to expand the customer base. When some middle and low-end brands have to raise prices due to rising costs, these original high-end brands cut prices, further narrowing the price gap with middle price band brands, which is expected to attract new customers to try.

As for the cost pressure of enterprises, Wu Daiqi said that whether the price reduction of products will aggravate the cost pressure of enterprises depends on the original profits of enterprises. If the operation efficiency of the original enterprise is relatively high and the profit space is large, the increase of store customers and revenue through certain profit transfer can cover the reduction of income brought by price reduction. On the other hand, the enterprise has actually made some improvements in its products, so it is possible that the formulation cost has decreased.

Zhang Xuefeng, a financial commentator, and Wen Zhihong, an expert in chain industry, believe that small profits and quick turnover itself is a classic marketing strategy. It is actually a wise move for tea lovers to make themselves more people-friendly and popular by reducing prices.

In fact, as far as the new tea brand is concerned, "it's too cold at a high place" is becoming more and more obvious. The customer base behind affordable products is a new battlefield of traffic.

According to the report on the development of Chinese new tea industry from 2020 to 2021 released by ncbd, in 2020, nearly 60% of consumers can most accept milk tea of 10-15 yuan, and the market below 20 yuan accounts for more than 80%.

"The stickiness of users in the tea industry is not high, which requires brands to constantly innovate.

At this stage, the head brand of new tea drink has realized that this is a traffic competition. Therefore, it is a very good way to do event marketing through the topic of price reduction, which is very eye-catching and easy to attract public attention. " Insiders analyzed the shell finance reporter.

expansion and pressure behind "fever reduction"

After Naixue's tea was listed, the capital actions of Xi tea and LeLe tea remained last year.

In June 2021, it was reported that the latest round of financing for Xi tea was about to be finalized, and the valuation reached an unprecedented 60 billion yuan, setting a new financing record for China's new tea drink. In September of that year, Lele tea came out that it was discussing with the bank to list in Hong Kong as soon as next year, and planned to raise US $300 million to US $500 million through IPO. However, both companies denied the news.

Under the covid-19 pneumonia epidemic, the life of new tea enterprises is not easy. Naixue's tea lost about 145 million yuan in net profit last year. Lele tea withdrew from the Guangzhou market not long ago, and Xi tea was exposed to a large number of layoffs at the beginning of the year. At that time, Xicha responded that "there is no so-called major layoffs in the company, and a small number of personnel were adjusted and optimized based on the year-end assessment".

The B side of the phased slowdown in the growth of new tea is a more intense R & D competition and market expansion.

The shell finance reporter of the Beijing News learned from insiders that the price of Naixue's tea has been reduced in January before the lunar new year, and Xi tea took the lead in announcing the price reduction after the lunar new year, and Naixue's tea is not willing to be weak to follow up.

From the replacement speed of new products, the number and scale of stores, the location of stores to the means of product marketing, the construction of supply chain and the improvement of digital ability, the "competition" between new tea brands is everywhere.

For the head brand, even in the calm period of the industry, the horse racing enclosure can not stop, and the market share is related to the life and death of the brand.

In terms of the number of stores, at present, Xicha has opened nearly 900 stores in more than 70 cities around the world; By the end of last year, Naixue's tea had 817 stores in 80 cities. In 2022, it is planned to open 350 new stores.

Lele tea has 100 full Direct stores, and has arranged 14 first tier and new first tier cities such as Shanghai, Beijing, Hangzhou, Suzhou, Nanjing and Chengdu. In 2022, Lele tea will further improve the opening speed, focus on the first and second tier markets in East China, and open 250 stores.

In recent years, the new tea industry has become one of the hottest tracks in the venture capital circle. 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 of financing events and the disclosed financing amount have been higher than that in 2020, reaching the peak in nearly 10 years.

The track is crowded and the competition is brutal. This wave of price reduction tide set off by hi tea has also triggered new thinking in the industry, "has the competition of new tea race track entered a white hot stage?" And how much impact will it have on tea Yan Yuese and honey Snow Ice City, which are already in the affordable product area?

Bai Wenxi, chief economist of IPG China, believes that the price reduction of hi tea and other brands can be described as a dimensionality reduction blow to affordable tea enterprises such as tea Yan Yuese and honey snow ice city. On the one hand, it will erode and occupy the corresponding market share of these affordable tea enterprises. On the other hand, it will also bring great pressure on the market expansion of these affordable tea enterprise brands.

"Xi tea and other brands have strong potential. According to my observation, the passenger flow of many of their stores has increased a lot after the price adjustment. If the market is compared to a cake, some people will divide more and others will divide less. Therefore, for brands that are already in the affordable product area, it is bound to bring pressure and challenges." Wen Zhihong said.

However, Wu Daiqi has different views. He believes that strictly speaking, there is still a big price gap between brands such as Xicha and brands with a price band of 10 yuan to 16 yuan, and they are not necessarily the same consumer groups. Consumers who pay attention to price may not buy high-end milk tea repeatedly even if they try it. Therefore, it is difficult to say that the price reduction of happy tea will have a great impact on the beauty and color of tea.

In the face of the price reduction brand thrown out by the head brand, Cha Yan Yuese, who just raised the price at the beginning of the year, said that he would face the market competition with a "normal mentality" and "do things that match his own reality and ability", and pointed out that "although the price is relatively close, the situation of each brand is different, including business philosophy, development direction, etc."

Four or two thousand catties of replies led the question to another direction. How should milk tea enterprises build their own moat? After all, the competition will not disappear. Only when our strength is strong enough can we develop in the long run.

"The milk tea shop brand belongs to a chain enterprise. To establish its own competitive advantage, in addition to the chain scale advantage, the single store success model is still very important, including a series of contents such as store image, business district location, products, operation efficiency and so on." Wu Daiqi pointed out.

Brand fancy competition is still focused on this golden land. According to the 2021 new tea research report released by China chain operation association, the scale of China's new tea market revenue increased from 42.2 billion yuan to 83.1 billion yuan from 2017 to 2020, and is expected to reach 142.8 billion yuan in 2023.

However, in the next two to three years, the growth rate of new tea will slow down periodically, adjusted to 10% to 15%. According to the analysis of the report, from the perspective of enterprises, in the face of the superposition of intensified competition, high rent, limited talent reserve, food safety management to be further strengthened, high proportion of takeout and low profit, rapid growth will have great management risks; From the perspective of external competition, the consolidation of sinking market and the development of Western and northern market all need market verification.

"If all enterprises solve important problems such as brand, operation ability and food safety management in the next two to three years, the growth rate of the new tea industry will quickly return to more than 15% The report said.

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