More than ten years ago, there was such a group of young people, they smelled the milk tea business experience earlier, not only found their own path to start a business, but also cultivated the milk tea consumption habits around the world.
As an early entrepreneur, Wu Jian witnessed the entire process of the tea industry from the barbaric growth stage of "low quality and low price" and "powder blending", to learning management experience from Taiwan-funded brands, and then to the birth of the head brand to lead the industry to upgrade and innovate to open up a new tea track. After experiencing a wave of capital running into the market and the climax of the brand running in the race, he also felt that the internal volume after the tide receded was serious and the profitability was difficult.
Nowadays, the tea industry has entered the "second half". In the industry's view, it is difficult to run a new brand with a scale of tens of thousands of companies, and future innovation will be a game between leading enterprises.
From the beginning of the business to the industry reshuffle, what has been experienced in this cup of milk tea?
Savage growth
At present, due to the epidemic situation, the throbbing burning immortal grass Shanghai district has implemented the closure of warehouses and stores, and Wu Jian, as the co-founder of the brand, uses "nervous" to describe. He and his team are always preparing for the resumption of work through live pre-sales and other forms. On the evening of April 9, Wu Jian stared at the live broadcast screen on his mobile phone, and when the news of the pre-sale of more than 10,000 tea coupons reached his ears, he had a premonition that retaliatory consumption after the epidemic was coming.
Throbbing Roasted Immortal Herb is a Shanghai tea brand, but Wu Jian is an authentic Fujian native. In her childhood memories, Grandma would collect fairy grass from the mountains every summer, "after boiling it, soak it in well water, add a little honey, and beat it to eat it." Such a bowl of sparse and ordinary "cold powder" was only two or three cents on the street at that time. Until the brother was admitted to college, the brothers saw a small shop opened by a Taiwanese couple at the entrance of the school, and they knew that the immortal grass could also be added with taro, taro balls, milk, milk tea and other ingredients, which became a dessert.
In 2007, with the skills they learned from the Taiwanese couple, Wu Jian and his brother came to Shanghai to start a business, and the first throbbing roasted immortal herb beverage store was selected next to East China Normal University, priced at 3.5 yuan a cup. Due to the low recognition of burnt fairy grass in the local area, many customers confuse it with the bitter taste of turtle paste, and the first day of the store's operation is dismal, with a turnover of only more than 80 yuan. Later, with the recognition of the student group, the business in the store gradually improved, and at its peak, 1500 copies of roasted immortal herbs could be sold a day, with an average daily turnover of nearly 5000 yuan. "This was a very high number at the time, and then we opened 3 stores in Songjiang University Town and 2 stores in Nanhui University Town, and the brand slowly rose, and then some people wanted to join, and by 2009, more than 100 stores had been opened."
In Wu Jian's eyes, the tea industry at that time was in a stage of barbaric growth, and although there were not many chain brands, the competition in Shanghai was already very fierce. Many of the "opponents" of the throbbing burning fairy grass are mom-and-pop shops, the door face is blocked by glass, leaving only a small window to collect money and pick up goods, and there is almost no emotional communication with customers, whether it is the form of the store or the product ingredients, it is still stuck in the era of powder hooking.
Also sympathetic is Hu Jihong, the founder of Yihetang. In 2006, with the skills he learned from a friend's store, Hu Jihong quit his sales job and opened his first milk tea shop next to a university in Wuhan. He recalled that at that time, milk tea raw materials were mainly tea powder, fruit powder, and jam, and the price of each cup was 2-5 yuan, which could be described as "low quality and low price"; most of the operation was campus stores, business circles, office building stores were rare, and tea brands were complicated but not large-scale.
In 2008, Hu Jihong went to Hainan's self-created tea brand "ChangshuGang", "At that time, there was no brand awareness, and I casually thought of a name, which was equivalent to moving Wuhan's milk tea experience to Hainan." Fortunately, "Changshu Port" has become a hit in Hainan, and more and more people are looking for Hu Jihong to join and cooperate, and by 2009, 7 directly operated stores and nearly 30 franchise stores have been opened. At this time, Hu Jihong began to realize the limitations of the Hainan market, so he decided to return to Wuhan to start a business.
Learn from a teacher
Only 3 years after its establishment, throbbing burning immortal grass opened more than 100 stores in Shanghai, but the bottleneck period also came soon. In 2009, Wu Jian found that the number of stores has never been able to break through, and the biggest problem is that the management is lagging behind. "At that time, only my brother and I were responsible for management, one external, one internal, investment promotion, site selection, research and development, operation, store preparation and other things must be involved, limited energy."
In the same period, Taiwanese tea brands CoCo Duke and Happy Lemon have been entering the mainland market for 3 years, followed by not only open stores, hand-cranked milk tea, juice jam raw materials, but also standardized chain management concepts. According to media reports, at that time, CoCo could stipulate that all teas in the store should be based on the first tea juice, and the storage time should not exceed 3 hours; the taste needs to be repeatedly tested, and only if it meets the triple standard of "balance, stability and good taste" can it be eligible for the counter... With a series of standardized management methods, CoCo has opened 197 stores in the mainland by the end of 2009.
Throughout the development of the entire tea industry, Taiwan-funded brands play an important role in it. According to Nai Xue's tea prospectus, bubble tea was founded in Taiwan in the 1980s. Since the advent of the first bubble tea, not only have more ingredients and flavors been introduced, but the overall quality has also been improved, and many brands have established standardization of production processes.
"It can be said that The Taiwan-funded brand has driven the initial iteration of the entire tea industry, including SOP standardized management." Wu Jian said frankly that when the throbbing burning immortal grass was started, it happened to step on the node when taiwan-funded tea brands entered the mainland market. "At that time, the market demand was greater than the supply, and as long as the store was good, it would be successful, and there was no need to operate and manage how strong it was." Later, we saw the gap between ourselves and Taiwan-funded brands, and began to adjust and improve in management. So far, the overall standardization of mainland tea brands has been equal to that of Taiwan-funded brands, and even surpassed. ”
After breaking through the management bottleneck, the throbbing burning fairy grass returned to the growth track in 2010-2012. At this time, in Wuhan, more than 600 kilometers away from Shanghai, Hu Jihong also began to adjust the brand image and product structure, trying to make the operation and management more standardized, so he founded "Yihetang" in 2012.
Hu Jihong frankly said that Taiwan-funded tea brands started early and realized the importance of chain brand management earlier, "Before they entered the mainland, they thought about how to operate brands for a long time and in a standardized way, and their ideas were mature." At that time, mainland tea brands had not yet emerged, and at least until 2014, Taiwan-funded brands were leading the market. ”
Innovation leads the way
In Hu Jihong's eyes, before 2015 is the storage period of the tea industry, "Taiwan's experience has been absorbed by mainland brands almost." Around 2015, the three major fruit tea brands in Guangdong, "XiCha", "Naixue's Tea" and "Youcha" have taken the forefront of the industry with product innovation, opening up new tea tracks; before some obscure brands, such as Hunan's Tea Yan Yuese, Hubei's Yihetang, Henan's Mixue Ice City, Sichuan's Tea Baidao, Zhejiang's Ancient Tea, etc. have also begun to take shape, regional leading brands have begun to form, and the entire industry has entered a period of rapid rise.
The so-called "new tea drink" usually refers to a liquid or solid mixture made by on-site processing with one or more of the original leaf tea, fruits, freshly squeezed fruit and vegetable juices, and dairy products as raw materials, without adding solid beverages. The new tea drink emphasizes the real materials with tea, milk and fruit, and no longer popular for the simple blend of powder or jam. Under the joint action of modern planting industry and logistics development, the "2021 New Tea Beverage Research Report" of the China Chain Store and Franchise Association believes that the mainland tea industry has entered the 2.0 era of "tea + milk + fruit" from 2012 to 2019, and a large number of tea brands have continued to iterate.
According to the data of enterprise investigation, there are currently 331,500 milk tea-related enterprises in the mainland, and the number of related enterprise registrations has been increasing in the past 10 years. In 2012, 09,100 new milk tea-related enterprises were added, and 85,600 new enterprises were added in 2021. According to the data reported by the China Chain Store & Franchise Association, the revenue scale of the new tea market in mainland China will increase from 42.2 billion yuan to 83.1 billion yuan in 2017-2020, and it is expected that the compound growth rate of the industry will reach 20% in 2021-2023, and the revenue of the new tea market in 2023 is expected to reach 142.8 billion yuan.
Beijing News Drafting/Xu Yingjian
The rapid development of the industry is not unrelated to the demonstration role of the two major head brands of Heytea and Naixue's tea. In 2012, the predecessor of Xicha, "Imperial Tea", started in an alley "riverside" in Jiangmen City. In 2016, due to the inability to register trademarks, "Huangcha" was renamed "Xicha", and in the same year, it received a 100 million yuan investment from IDG Capital and angel investor He Boquan. After receiving capital support, Heytea began to expand nationwide since 2017, successively entering Hangzhou, Beijing, Nanjing and other cities.
In 2015, another new tea brand in Guangdong, Naixue's Tea, opened its first high-end ready-made tea shop in Shenzhen. In 2017, Nai Xue's tea was assisted by Tiantu Capital, and in November of the same year, it went out of Guangdong to face the national layout. In March 2018, it completed the A+ round of investment, with a valuation of 6 billion yuan, becoming the first unicorn in the tea industry in public information.
In the view of Wang Qinglin (pseudonym), an investor in the consumer field, Xicha and Naixue's tea have found a different development idea from Taiwan-funded brands, using differentiated products, good raw materials and the location and design of shopping mall stores, etc., to make the tone and sense of value of tea drinks, which is equivalent to upgrading the entire industry, and Nie Yunchen, the founder of Xicha, is also known as a "genius product manager".
"2016 and 2017 are the first years of the two major head brands, which have raised the original 10 yuan price band of Taiwan-funded brands to 25 yuan and 35 yuan, which has also created soil for our new brands to launch high-end products." In 2017, Tan Li introduced the Taiwanese milk tea brand "Deer Horn Lane" into Guangzhou and Shenzhen, and grabbed the traffic dividend with the help of the newly emerging Douyin platform.
Driven by the head brand, the entire tea industry has set off an upgrade tide and continuously improved in operation management, talent introduction, raw material quality and other aspects.
In 2013, in the face of the rapid development of the industry, Wu Jian decided to launch a tea sub-brand, and handed over the throbbing roasted immortal grass to the company's executives, resulting in a sharp turn in the operation of the main brand, and the number of stores in 2014 fell rapidly from 400 to 200. In 2015, Wu Jian re-adjusted the product line, operation system, and price system of throbbing roasted immortal grass one by one, and introduced fresh fruit production, and by 2016, the number of stores has exceeded 500, and the current number of stores has exceeded 2500.
Also in 2015, the number of Yihetang franchise stores reached 200, but problems such as operation, training, and store decoration have emerged, which also made Hu Jihong begin to realize the importance of talents, so he dug people from international chain restaurant brands, "The early research and development was all I was doing, and later it has been completely handed over to professionals in the food field." "In 2017, Yihetang carried out the third brand upgrade, the number of stores exceeded 1,000, and by 2021, the number of stores nationwide has exceeded 5,600.
The rapid development of the tea industry has also driven the growth of upstream raw material enterprises. In April 2021, Jiahe Food went public as the "first share of plant fat", and a number of tea brands were its customers. In the financial reports of "condensed milk first share" Panda Dairy and "cheese first share" Miaoke Lando, tea brands are also its key B-end customers.
The inflection point has arrived
From 2020 to the first half of 2021, with the listing of Naixue's tea, the valuation of Xicha 60 billion, and the breakthrough of 10,000 Stores in Mixue Ice City as the landmark event, the entire tea industry ushered in a climax of development, and one of the important performances was the entry of capital running.
According to the "2021 New Tea Beverage Research Report" of the China Chain Store & Franchise Association, 2020 is a key year for the capitalization of tea brands, and the industry chain rate and brand concentration rate have been further improved. According to the data of enterprise investigation, there have been 85 investment and financing incidents of tea brands in the past ten years, and the total amount of disclosed financing has reached 8.832 billion yuan. Among them, there were 12 in 2020 and 14 in the first six months of 2021.
In the financing list disclosed in the "2020 New Tea White Paper", in addition to the major head brands of Xi Tea, Nai Xue's Tea, and Mi Xue Ice City, you can also see the figure of waist brands such as Ancient Tea, Tea Picking, Seven Points Sweet, and Lushang Auntie. Among them, the head brand of the direct sales department, Xicha, and the head brand of the franchise department, Michelle Ice City, are the most concerned.
In June 2021, Nesher's tea was listed and became the "first stock of tea drinking"; the news that heytea's latest round of financing was about to settle was also out in the same period. According to the "Investment Community" reported at the time, "After multiple confirmations, the investors in this round of Heytea are all old shareholders, the financing process lasted for several months, and the valuation reached an unprecedented 60 billion yuan, once again refreshing the financing record of China's new tea drinks." ”
According to the information of enterprise investigation, Mi Xue Bingcheng completed the first round of financing of 2 billion yuan in January 2021, which was jointly invested by Dragon Ball Capital, Hillhouse Capital and CITIC Industry Fund. After the financing is completed, the valuation of Michelle Ice City is about 20 billion yuan. Immediately before the National Day in 2021, Michelle Bingcheng completed the IPO counseling filing at the Henan Securities Regulatory Bureau.
The heat of capital is piping hot and attractive.
With the change of consumer demand, in February 2021, Tan Li withdrew from "Deer Horn Lane" and founded the lemon tea brand "Lemon Season" in Changsha, which completed tens of millions of financing from ByteDance and Shunwei Capital in only 150 days, and obtained hundreds of millions of yuan of investment from ByteDance and Tencent in January 2022, and the number of signed stores by February 2022 has exceeded 400.
Unlike the previous direct brands such as Xicha, Naixue's tea, and tea yan yueshi, which are favored by capital, according to Wu Jian's observation, there will be a large amount of capital entering the tea drink franchise system in 2019-2021, "direct operation and franchise are two different models, we must consider clearly what capital is for, is it for resource integration, market expansion, or for cash flow?" If you don't think it through, capital isn't necessarily a plus. ”
Soon, the tide receded. Since the end of 2021, the tea industry has successively reported news of price reductions, losses, layoffs, and store closures. The report of the China Chain Store and Franchise Association predicts that the overall growth rate of new tea drinks will be adjusted to 10%-15% in the next 2-3 years, and brands based on franchise will enter a period of differentiation and reshuffle.
In Wu Jian's view, the rapid development experienced by the tea industry after the epidemic in 2020 stems from a kind of retaliatory consumption growth. After a large amount of capital entered the tea industry, it accelerated the expansion of the brand, but it also promoted the industry's internal roll, and many previously profitable brands became no longer profitable. With the recent price reduction of head brands, it is tantamount to a dimensionality reduction blow for mid-range brands, which reflects the fierce competition in the industry to a certain extent.
"The 2018 industry reshuffle has already begun." According to Wang Qinglin's estimates, the tea industry has entered the "second half", and each price band has given birth to a national head brand. In terms of sales, the top five in the industry have accounted for half of the market share. "In the future, capital will still pay attention to the tea track, but prefer 5-10 head brands." In the case of exhaustion of innovation space and insufficient financial strength, it is difficult to run a new brand with a scale of tens of thousands, and future innovation will be a game between the leaders. ”
Beijing News on April 19, 2022 Sankei Weekly "New Tea Drinking Jianghu".
Guo Tie, chief reporter of the Beijing News
Edited by Qin Shengnan Proofreader Zhai Yongjun