"There is no high-end physique", "epidemic", "this market is too impetuous"... Has the hot tea market a few years ago gone down the altar? Head tea drinking front-line operators, telling their experiences and observations.
Written | Nandu Weekly reporter Zhan Danqing
The new tea drinkers who were once in the limelight have problems.
First, at the end of 2021, the management of Chayan Yuese set off a scolding war with employees for salary cuts, and the dispute exposed the business dilemma of losing 20 million yuan per month during the epidemic, before that, Chayan Yuese had just closed 87 stores.
Then Naixue's tea issued a performance forecast, which is expected to lose 135 million to 165 million yuan in 2021, and after two consecutive years of losses in 2018 and 2019, Naixue lost money again.
Immediately after, Xicha was blown up and was laying off employees, involving 30% of employees. Xicha responded that there is no so-called large layoff in the company, and a small number of personnel have been adjusted to normal personnel adjustment and optimization based on year-end assessment.
Along with the rumors of layoffs, Xicha announced a price cut and promised not to launch new beverage products of more than 29 yuan within the year, and the proportion of products priced at 15-25 yuan was adjusted to more than 60%.
Just now, Lele Tea announced the closure of the last store in Guangzhou, withdrawing from the South China market and shrinking the front. Xicha had intended to acquire Lele Tea, but finally chose to give up.
In addition to Xi tea, in March, Lele Tea and Naixue successively announced price cuts, and since then, the mainstream tea brands on the market have basically rarely had drinks of more than 30 yuan.
Since the 2017 queue frenzy in many places, the new tea has been in the limelight for a while, and at present, this light is fading.
Nandu Weekly reporter interviewed a number of managers who are working or have worked in head tea brands and chain tea brands, trying to understand what the new tea industry is experiencing and why the head tea brands are in collective distress.
The following is their self-description.
"The biggest reason is the epidemic"
Mr. Wang, former manager of a McDonald's and Head Tea Shop
He is now the manager of a lemon tea brand
In 2019, when I was in this tea shop, the frequency of product updates in the store was not very high, but it was particularly accurate, and the new products it launched could very well lock the appetite of customers.
At that time, tea brands also rarely copied each other, and the tea brands I belonged to were also very low-key, concentrating on the steady development of internal skills, and the domineering cheese strawberries developed by research and development were sold in every store. I was particularly impressed that on May 1, 2019, my store sold more than 500 cups of domineering cheese strawberries in one day, and at that time, the store in Guangzhou Wanling Hui sold more than 700 cups a day.
This brand is very persistent and strict with QSC (Quality Service Cleaning). Store managers value the monthly QSC more than performance. As long as the QSC has a problem, that month's salary is basically "frozen water", half of the bonus is subtracted in one month, demotion in the second month, and rolling away in the third month. After food safety problems in Beijing stores last year, third-party company inspections were also introduced.
Because more and more stores are opened, there is some impact on the original store business. The lemon tea brand I am now in is also like this, every two or three steps, each brand is frantically opening stores, seizing market share, in our jargon, is to continue to divide the cake, the cake that everyone can eat little by little.
In the food and beverage category I have been exposed to, I feel that tea shops have the lowest barrier to entry. Its gross profit margin is particularly high, and the drink of 10 yuan can basically earn 8 or 9 yuan. I used to make Hong Kong-style tea drinks, and the most expensive drink sold was 16 yuan, and the gross profit margin could basically reach 85%-90%. The cost of tea is nothing more than the raw materials for making tea, packaging, and these things are not worth much. Moreover, the production of tea is particularly foolproof, as long as the appearance and taste of a drink are online, the price is right, basically it can sell well.
R&D is the most valuable thing in this industry, which brand can develop new products, find exclusive suppliers to supply raw materials, and can seize the opportunity. Of course, it is also easy to imitate, so it also depends on who makes it delicious and whose price is more attractive.
After so many years in the tea industry, I feel that the most obvious change for consumers is that in the past, everyone valued the brand, and now it is the price. Before the epidemic, everyone may be more pursuit of health and quality of life, and now they will pursue cost performance. If Neixue has a product, there are also low-end brands, and maybe everyone will choose a cheaper brand. This is why head brands such as Neixue and Xicha have pushed a lot of products for more than a dozen dollars, and now everyone is tearing their faces to survive.
Nesher's tea was announced in March
The tea industry is getting more and more inward-looking, and when someone comes up with a new product, another brand will compete darkly and come up with a better new product, and now the competition is not so sunny, copying each other, because now the cake is getting smaller and smaller.
After leaving this tea brand, I came out to start my own business and made two catering brands, one of which is Hong Kong-style tea, but because of the impact of the epidemic, the two brands have closed two stores, and my personal debt has reached more than 600,000, and now I am also back out to work.
The impact of the epidemic on the catering industry is really too great, and what we are afraid of now is not to open more tea shops near the business district, but the most feared is the epidemic.
Tea shops will lose money, and the biggest impact is still the epidemic, because everyone's pockets are out of money.
"Tea drinking does not do high-end physique"
James, former starbucks and head tea shop manager,
He now works for a tea brand
This tea brand has always wanted to benchmark Starbucks and do the third space.
But its third space is very different from Starbucks, when I was at Starbucks, the first thing we did was to connect with each other, treat customers as mature customers, and from time to time there will be some coffee tasting, coffee classroom activities to enhance the stickiness with customers.
The third space of this brand is to give customers a good environment, warm and polite service, but lack of interaction with customers.
Tea drinking actually does not do high-end "physique". Some of our previous coffees at Starbucks sold for $58 or $68 because we had a meson in it. We don't just sell coffee, we sell coffee culture. We build the platform through coffee, so that customers can enjoy the coffee culture and the third space here, while the high-end tea drink does not give this service.
It has always wanted to be big stores, but some big stores used to lose money. It continued to expand the model of some storefronts, but in the end it found that this road was not feasible.
Therefore, now many of its stores have changed from standard stores to pro stores, the store is still open in the same shopping mall, but the area has shrunk a lot, rental costs, labor costs have also dropped a lot, but I learned that like its stores in Guangzhou Grandview and Zhuying Plaza, the performance can be maintained at 100% of the past.
This brand of tea shop used to think a bit more, it wanted to make coffee, it wanted to make wine, as long as there was something with a lot of market potential, it probably wanted to touch it. But coffee and wine are not its strengths, its strengths are to make European bags, to make tea. In this way, its energy will be more dispersed, and for the people below us, the training pressure will be greater.
The outside world thinks that the soft European package in the store has dragged down the performance, in fact, in the past, in the office building, comprehensive business circle, its soft European package in the turnover accounted for 30%-40%, its cost is a little higher than tea, about 10% higher.
I think that this tea brand has not yet made a profit, a large reason is that the store is too fast, the input cost is too large, and the domestic epidemic situation has also a small part of the impact. This year, it has completely adjusted its store model to a smaller pro store, reducing manpower operations, optimizing the supply chain, and strengthening store training. In my opinion, from the data point of view, it is expected to reverse the loss situation this year.
In the future, the demand for tea in the country will definitely continue, especially in the summer, people will definitely have to drink tea. What's the problem — consumers may be able to afford to drink Nesher two times a week, but four times a week to drink a little cheaper tea. That is to say, in the future, tea brands may have fierce competition in price.
Tea drink crazy store opening is more of a capital operation, this year there must be many tea shops can not survive, after all, the two giants have taken action, now tea brands must do is to combine the price and customer experience (products, services), so as to retain customers. Moreover, now is an information age, and channels must be opened from online in order to achieve real and long-term development.
"This market is too impetuous"
Wen Shuo, engaged in the tea industry for 10 years,
Now he is the founder of Guilin's independent tea brand "Tea Full of Long Companions"
When I was a sophomore, I began to pay attention to tea brands such as Big Cass and Happy Lemon.
In 2012, I joined a tea brand, in 2016, I tried to run a self-created brand tea shop in Hangzhou, in 2018, I joined guangzhou's new tea brand 19TEA and stayed for two years, and now I run a self-created tea brand "Tea Full of Long Companions" in Guilin.
My first store in Guilin opened in June 2021, the rental cost here is relatively low, the labor cost is relatively low, so now the store is profitable, and the return cycle is about 6-8 months.
Tea full of long-term companions is not like the first-tier city of the tea shop, at every turn in front of the door long queue, a day tens of thousands of turnover, but its operating pressure will be much smaller than the first-tier cities, so we opened a second store, in March ready to open a third store, and then open a fourth.
I have done independent brands in Hangzhou, where people's consumer awareness will be relatively high, their acceptance of some new things will be relatively high, as long as the product has characteristics, people may pay. But in Guilin, many things cannot be widely publicized, and it is difficult for products to "become popular overnight".
Tea shop opens, courtesy of the interviewee
Guilin does not have any more famous local brands, on our side, Neixue, Xicha also opened relatively little, Yihetang, Shuyi Burnt Immortal Grass, Honey Snow Ice City and so on are more popular among young people.
If Neixue and Xicha want to come to Guilin, these third- and fourth-tier cities to develop, they may not be competitive, and it depends on how it is positioned. There are already many brands in the low-end market, and all aspects of the supply chain are relatively perfect, and they have also accumulated their own consumers, fighting a price war, Andi tea and Naixue may not be able to win.
I have been in 19TEA in Guangzhou before, 19TEA was originally very popular in Guangzhou, when it was done best, some people said "Shenzhen has Naixue, Guangzhou has 19TEA". 19TEA, like NaiXue, is also making tea and soft European bags, and then why didn't it work, one is that the team management is immature, the other is hesitant to open the franchise, and the operational ability cannot keep up after the opening of the franchise; the third is to open a store in the later stage, there is no new financing, and the capital chain is broken.
Tea and European bags were once also the main products promoted by 19tea, pictured from Weibo@19tea_ first tea
I think to be a tea brand, the product is important, but not the most important, to see how to perfectly integrate the brand culture and product characteristics, through product naming, packaging characteristics, services, etc., to produce their own recognition and memory points, this degree of recognition and memory points is the core competitiveness of the brand.
Tea is a young people's business, and we must pay more attention to grasping the preferences of contemporary young people and understanding which part of their characteristics they value more. But then again, make tea to try to lead young people, not be led by them, let them feel that you are different, feel that you are unique in love with your brand.
After so many years in the tea industry, I obviously feel that in the past two years, the tea market has not been as crazy as before.
Wen Shuo opened a tea shop in Guilin, courtesy of the interviewee
In the first two years, when Xicha and Naixue were particularly hot, many people were squeezed here, and there were many brands in the cottage, but now they tend to be gradually rational, the people who should invest have invested, the people who should lose have lost, many people are slowly waiting and seeing, I think this is conducive to the development of the industry.
I once heard that there is a well-known founder of a milk tea brand in Taiwan, who feels that he can't understand the tea market in the mainland: some brands are obviously not making milk tea, but they are selling very hot, and those who do things seriously are drowned in these brands. The founder therefore did not dare to open a store on the mainland.
I think this is a very thought-provoking point, what is wrong with this market, why is it so impetuous? As a tea drinker, you may also have to concentrate more on doing a good job of the product itself, in the case of excellent products, and then extend to do a good job of your own brand culture, corporate culture, and employee literacy, these things are the last things that can make you precipitate.