“The first stock of new tea drinks” Na Xue no tea, why is it expensive but not profitable?

After getting what he wanted, Naxue's Tea was listed in Hong Kong yesterday and officially became the "first share of new tea drinks."

It's just that the glamour of the "first stock" is far inferior to the popularity of "breaking when the market opens." Naxue’s first-day issue price was HK$19.8 and closed at HK$17.12, down 13.54%, with a total market value of approximately HK$30 billion.

Before going public, "selling expensive but not making money" has been plagued by Nayuki, so the embarrassment on the first day is not surprising. Naxue's listing is to finance expansion of the tea shop network, promote the digitalization of operations, and improve the level of the supply chain.

Different from the performance on the first day, Nayuki closed the IPO one day earlier than originally planned due to hot subscriptions during the IPO period. Perhaps the top player Nayuki's "Bleeding on the Market" can help the new tea-drinking track that is advancing all the way to get rid of bubbles.

Is new tea expensive?

Many consumers' first impression of Nayuki is "expensive," and it is true. Naxue's prospectus shows that the customer unit price in the first three quarters of 2020 is 43.3 yuan, which ranks among the forefront of China's high-end freshly made tea chain stores, with an industry average of about 35 yuan.

The average value of the new tea industry is 35 yuan, which is already very high.

Teas before 2015, such as Yidian, Michelle Bingcheng, CoCo, are usually used to make base tea with powdered tea or ordinary tea, and blended with creamer powder; since 2015, new teas have been launched in the tea industry. Drinking trend, using high-quality tea extracts, adding fresh fruits or fresh milk and other flavors, Xicha, Naixue's tea, Lele tea, Cha Yanyue Se are the representative brands.

Therefore, there are reasons why new teas that emphasize quality in the selection of materials are higher than traditional chain teas. According to Nayuki's prospectus, material costs and staff costs are the bulk of Nayuki's tea costs. In 2020, the two will account for 68% of the total, of which material costs will account for 37.9%.

However, high costs are one thing. When the top new tea brands have increased their prices by more than 30 yuan, consumers feel it is unreasonable. It is the same new tea brand, and the raw material costs are similar. Even some milk tea with a cup of more than ten yuan can have a taste of thirty yuan. Why are a few top players so expensive?

According to "Geek Park", although the raw material is the bulk of the cost of milk tea, the cost difference between each company will not be too large. Some brands are priced high, and the additional cost lies in brand marketing and store investment.

Obviously, Nai Xue has invested a lot in stores, mainly large stores with an area of ​​200-350 square meters. Most of the locations are in large shopping malls, and the average store cost is 1.85 million. In November 2020, Naxue launched the Pro store. The area of ​​the store has been reduced, but it is still between 80-200 square meters. In contrast, the single store area of ​​Michelle Ice City and Tea Yanyue Se is not more than 30 square meters.

And Nayuki's direct competitor, Hey Cha, doesn't have much obsession with the scene. Since 2018, it has been expanding in the form of a combination of "large stores + minimalist GO stores". Large stores convey the brand concept. GO stores meet the daily demand for tea. At the same time, the profitability of single stores is stronger, and the expansion speed is accelerated. There can be more additional costs for brand marketing, the main promotion of online social platform operations and cross-industry joint names.

In addition, another reason for the high price of new tea drinks is that the production process of new tea drinks is more complicated than traditional chain tea drinks. Take Nayuki as an example, its products are mainly divided into two categories, one is freshly made tea, the other is freshly baked bread and cakes. Peng Xin, the founder of Naixue, once said, "In addition to seeing a group of people outside, there are also two groups in the back kitchen. One group of people makes noodles, beats flour, and bake, and another group washes fruits, cuts fruits, makes tea, and beats milk. cover".

The complexity of the production line means that for a chain brand, it will become more difficult to standardize operations. This is a challenge that new tea brands have to face.

Therefore, for a period of time in the future, the high cost of raw materials, venues, and personnel is likely to be a continuing phenomenon of Nay Xue and other high-end new tea brands. Naxue’s most expensive drink is "Domineering Musang King" for 88 yuan a cup. It was once on the shelves in August 2018. It is limited to 30 cups a day and will be sold at 12 o'clock for only 30 days. The pricing looks ridiculously high, but this is also in line with market laws. Brands also have pricing freedom. If someone is willing to buy, then new tea brands are willing to sell.

Is it possible to be the Starbucks of the milk tea class?

Before Nayuki's tea went on the market, she always wanted to tell the story of "Starbucks in the tea industry", with the intention of creating a "big and beautiful" "third space".

In addition to the store area is three or four times that of ordinary milk tea shops, Naixue's tea also requires each directly-operated chain store to retain only "40% similarity", and other parts are designed to be differentiated according to different cities. Starbucks is also this concept— —It’s the same everywhere, it’s different. Moreover, Nai Xue's location is mostly in urban center commercial districts or high-end office buildings with high rents.

But is "a cup of good tea and a soft European bag" enough to create a social scene? According to Sullivan's 2020 New Tea Industry Development White Paper, afternoon tea, shopping and encountering pleasant things are the three main scenarios for new tea consumption. Unlike coffee, the social attributes of milk tea are not so prominent, and there is no milk tea shop that is really suitable for office work. Milk tea is still a casual and accompanying personal drink. It is more common to drink while walking, at work, or at home.

At the same time, according to a consumer insight, the target group of new tea drinks is between 25 and 35 years old, with a high degree of acceptance of new things, strong social needs, and certain requirements for quality life, but also convenience And cost performance.

Naixue's own target group is young women aged 20-35, which is included in the target group of the entire new tea market. Just like two of my colleagues, one bought Nayuki once or twice a month, and the other went to Nayuki's store two years ago. They all have one or two favorite fruit teas and European bags, but they are not very accepting of Nayuki's prices. Moreover, although the area of ​​Nayuki's store is large, the environment is not friendly enough.

Not only is it impossible to be a Starbucks, but the big store model continues to drag Nayuki down. At present, Naixue has opened 422 stores, and the distribution numbers in first-tier cities, new first-tier cities, and second-tier cities are 155, 148, and 98, respectively. The revenue generated is 820 million yuan and 660 million yuan, respectively. And 420 million yuan. A division can be found that from the first line, the new first line to the second line, the revenue generated by a single store is gradually declining. The more stores opened in second- and third-tier cities in the past two years, the faster the profit margin will decline.

It is worth mentioning that Naxue also has a sub-brand "TaiGai". TaiGai is a sub-brand established by Nasue in 2015. It mainly provides milk tea and lemon tea beverages with an average price of 16 yuan. It is aimed at students who are more price-sensitive. And young office workers. However, the average daily sales per store of Taiga decreased from RMB 7,537 in 2018 to RMB 6,387 in 2019. Nayuki's management also made a strategic decision not to promote Taiga's growth in the short term.

Therefore, Nayuki's positioning is somewhat narrow in the new tea market. Most consumers are willing to spend in Nayuki, but the frequency of consumption will not be too high, and there is no special social demand for milk tea; Nayuki's sub-brand "TaiGai" is not large in scale and performs poorly.

However, Naxue’s Pro store has just begun to be laid out. The first store will be launched in November 2020. It is planned to deploy business office areas and high-density communities in first-tier cities. It will "converge" compared with the previous model of large stores, so follow-up remains to be seen .

Crazy new, creative joint names, bloody listing, how many solutions are there in the new tea market?

"A cup of good tea and a bite of soft European bag, meet two kinds of beauty in Nayuki" is Nayuki's brand culture.

Naxue claimed to have created an innovative "tea + soft European bag" form, but it is not very creative now. Hey Tea also has the brand "Hey Tea Hot Mai". In addition, Nayuki has Nayuki sparkling water, and Heycha also has Hey small bottles; also staring at the sinking market, Nayuki has a stand cover, and Heycha also has Hey Xiaocha.

The tea market has never lacked creativity, and has never lacked newcomers. While new tea brands are becoming more and more refined, they are also becoming more and more anxious about new products. How much imagination is there for tea drinking?

According to Naxue’s prospectus, as of September 2020, Naxue’s core tea menu has more than 25 classic teas and more than 25 classic bakery products. In order to maintain the freshness of the products, Naxue keeps innovating around the core menu. On average, it launches about one new drink every week. Since 2018, Naxue has launched about 60 seasonal products, including mulberry and longan. The fruit-flavored tea is developed.

In March of this year, Naxue launched the new "Domineering Jade Orange", claiming to squeeze a cup with 66 oil oranges, "3 seconds slightly astringent, 5 seconds sweet", and officially entered the very fine track of oil orange drinks. The sales volume of Domineering Yuyou Tang has increased rapidly after it was put on the shelves, and it has become a hot product. The sales volume of Naixue tea products has exceeded 20%, even exceeding the domineering cheese strawberry, which is the top of the year.

However, there are many latecomers. When the niche fruit of oil tangerine has been eyeed by various new tea brands, it is no longer uncommon. They intensively launched new products related to oil tangerine and tried to win by "quantity." The stronger the taste, the better, and the consumers who suffer from these marketing campaigns and sweetened tangerines are those who are anxious about their figure and body.

Similarly, in many industries, tea drinking is definitely a cross-border madman. It is not creative than anyone else, I am afraid that someone may not keep up. In 2019 alone, Hey Tea has 26 joint names. Although the number of Naxue’s joint names is not as good as Hey Tea, the joint activities are quite distinctive and can be roughly divided into three categories: joint names with literary IP, joint names with other FMCG brands, and Naxue’s tea’s self-built IP "CUP" Art Museum". And the most special one is the co-branded with "Hao Huan Luo" to launch a soft European bag of snail powder, which looks a little dark, but it is indeed very eye-catching.

On the road to financing, new tea drinks are also scrambling. 2018 is a critical time for the development of China's new tea beverage market, and many tea beverage brands have embarked on the path of financing expansion.

Nayuki, founded in 2015, has completed 7 rounds of financing so far. Milk tea brands such as Shanghai Auntie, 7 Fen Tian, ​​Lele Tea, Naixue's Tea, and Hey Tea have all received financing in 2020, and the valuation of Hey Tea may have reached 60 billion yuan.

By the end of 2020, the market size of China's new tea drinks has exceeded the 100 billion mark. By 2021, the number of Chinese milk tea stores will increase to 550,000. More than 100 brands in China's new tea drink track have generated more than 200 financing incidents, and more than a dozen financing incidents have occurred in just over half of 2021.

In addition to new brands such as Naixue's tea and Heytea, traditional catering companies such as Haidilao and Xiapu Xiapu have also started the milk tea business, and even China Post opened its first milk tea shop in Fuzhou across the border.

Therefore, in a market that tends to be homogeneous and saturated, continuous blood transfusion through IPO may be the goal of new tea brands that entered the game earlier. Nayuki, who has weak hematopoietic ability, is even more difficult to make exceptions. It's just that at present, Nayuki's massive expansion investment has not been exchanged for a reciprocal profit growth rate, nor has it been favored by capital.

Tea consumers have not yet formed a strong brand dependence, and tea drinks do not have a high technical threshold. As long as the product tastes are qualified, the frequency of new introductions is appropriate, and the corresponding marketing methods are matched, copying a Naxue’s tea is not impossible.

The new tea drink has its first share, but the market seems to have new judgments on this track in the future.

Grapes are not the only fruit.

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