Xicha Nayuki collectively sinks, “Starbucks in the tea industry” is a false proposition after all

On September 19 last year, the first HEYTEA handmade shop in China officially opened in the ancient city of Nantou, Shenzhen.

On November 24 this year, this handmade shop quietly closed. The news came out from Xiaohongshu, and Dianping also showed that "the merchant is temporarily closed." According to reports, it was because the lease of the shop expired.

It took only more than a year before and after, and this seemingly small change was like a stone thrown into the water, making a visible trend more diffuse:

When the competition for new tea drinks reaches the second half, we might as well take the "ordinary road" of reducing costs and increasing efficiency. Standardization may be the destination.

The new tea drinker is no longer obsessed with being a Starbucks in the milk tea industry

HEYTEA’s first handmade store in the world is currently the largest and truly handmade store in the new tea beverage industry, and it is also the highest-level “super inspiration store” in the HEYTEA store system.

The store is the product, it is not only the display window of high-quality products, but also the concrete embodiment of the brand spirit.

As the name suggests, HEYTEA Handmade Store is characterized by "all handmade", or hand-peeled or hand-cut or hand-pounded or hand-cranked to make juice. It focuses on the fusion of traditional craftsman spirit and modern creativity, and exports the concepts of nature, health, quality, and innovation. , obviously opened for brand tonality, without repeating the assembly line of ordinary stores.

The store is divided into three floors, and each floor has different product forms, including hand-fried ice series on the first floor, hand-made tea series on the second floor, hand-made pure tea and hand-made creative tea on the third floor. social space.

What matches the high-end positioning is the selling price. The hand-fried ice series is between 30 and 39 yuan, the hand-made tea series is concentrated between 30 and 80 yuan, of which the "big Musang King durian" is as high as 138 yuan, and the hand-brewed tea series is concentrated between 40 and 70 yuan , a cup of Dancong · Dongfanghong 98 yuan, a cup of rock tea · Xiangtianmei 118 yuan.

Browsing Dianping and Xiaohongshu, we can find that the praise basically revolves around distinctive products and store designs: "There are many special products and formats"; They are all perfect"; "The Chaoshan series of handmade teas are available in season, and the environment in the store is also very elegant"…

But on the other side of the coin, many consumers complained about the cramped environment, slow production, and expensive prices: "There is actually no place to sit inside, and you can basically just punch in and go"; "The process is a bit cumbersome, and the materials are added several times"; "Fried ice is quite good, because it is fried on the spot, it takes about half an hour to wait" "It is smaller and more expensive than the drinks in ordinary tea shops"…

Although the concept and design are good, but the high cost, slow production, relying on travel check-in, on-site take-out rather than take-out, and the restrictions of the epidemic, various reasons may have caused it to fail.

This is not just a problem with one store, other big stores of HEYTEA have also adjusted.

In June, the Lab store in Changsha Huinong Building was closed; in July, the Lab store in Xi'an Bell Tower Commercial District was closed; in November, the Lab store in Xiamen MixC was closed. Lab means "experiment". Most of the Lab stores are located in high-end business districts, providing more innovative products, scenes, and gameplay.

Different from the closed handmade stores and Lab stores, the more standardized "Hey Tea GO Store" is occupying a larger share of the number of stores.

In June 2018, HEYTEA opened a takeaway service, launched the mini-program "HEYTEA GO", and launched "HEYTEA GO Store".

HEYTEA GO store only retains the basic tea-making functional space, and users can order by themselves through the mini program. Because the business model is lighter and the location is more flexible, it can be flexibly settled in the community, the B1 floor of the shopping center and other locations.

In 2021, HEYTEA will have more than 200 GO stores, accounting for at least 40% of the number of stores.

"The first stock of new tea drinks" Nayuki's tea is similar to that of competitor Xicha.

Nayuki once wanted to tell a story of "Starbucks in the tea industry", intending to create a "big and beautiful" third space, mainly large stores with an area of ​​200-350 square meters, most of which are located in large shopping malls, and the average The cost of opening a store is 1.85 million, and the area of ​​each store of Michelle Ice City and Chayanyuese does not exceed 30 square meters.

Not only is the store area large, but Nayuki also requires each directly-operated chain store to retain only "40% similarity". .

But starting from the second half of 2020, Naixue began to iterate to small store-type and digital stores. In November 2020, Naixue launched Pro stores, which are located in business office areas and high-density communities in first-tier cities. The store area is between 80-200 square meters.

Compared with the previous main store type, the initial investment of the Pro store is lower, which meets the one-person and ready-to-eat consumption needs of the Z generation.

The main feature of the Pro store is that it focuses on in-store pick-up and take-out services. The bread kitchen for on-site baking and the European bag display counter have been canceled, and they have been changed to a central kitchen for unified delivery. A richer business category has been designed, and pre-sale Pack snacks, tea bags, souvenirs, soft drinks, and coffee to achieve higher operating profit margins.

After all, for Naixue after listing, profitability is more important. Naixue’s listing prospectus mentioned that from 2021 to 2022, about 300 and 350 stores will be opened in first-tier cities and new first-tier cities, of which about 70% are Pro stores.

Price cuts, franchising, off-line sub-brands, and more standardized HEYTEA

Since the beginning of this year, not only has it slowed down its expansion, HEYTEA has restrained its "sharpness" and moved slower and more steadily.

In January, Heytea lowered the price of some tea drinks, ranging from 1 to 10 yuan, and the price of pure green tea and American coffee was only 9 yuan; at the end of February, Heytea promised not to launch 29 yuan or more this year. For tea drinks, the prices of existing products will never increase this year.

For HEYTEA, attracting more users has become a must on the agenda, and it is good to squeeze the profit margins of mid-to-low-end competitors.

On the one hand, the growth of users in first- and second-tier cities has peaked, and the scale can no longer be expanded rapidly, and the average income and sales per square meter of HEYTEA stores have declined. According to data from Jiuqian Consulting Zhongtai, in October 2021, the average revenue and sales per square meter of HEYTEA stores fell by 35% and 32% compared with the same period of the previous year.

In other words, the tea that used to have to be queued to buy can now be purchased from three shops. Customers no longer need to queue up, and the number of tea cups sold in a single store is also reduced.

On the other hand, users' consumption habits have changed, they are more sensitive to prices, and they are more inclined to online consumption than before.

This summer, the "Ice Cream Assassin" caused public outrage. This is a collective venting in the name of an assassin—in the context of the epidemic of frugal consumption, consumption downgrades may be more mainstream.

When the price itself is highlighted, HEYTEA’s price reduction does not degrade its quality, which is also judging the situation. When announcing the price cut, Xicha himself pointed out: "Expensive has become the impression of Xicha in consumers' minds…"

In order to seize more non-first- and second-tier users, improve store efficiency and profitability, price reduction is not the only way.

From January to October this year, HEYTEA opened only 35 new stores, and the pace of store opening has slowed down significantly. From 2019 to 2021, the number of new HEYTEA stores will be 227, 320, and 202 respectively.

For the diversion of stores brought about by the rapid opening of stores, the solution can only be to improve the supply chain and operate stores more carefully, but this is a long-term project, and it is natural to stop or slow down expansion in the short term.

At the beginning of November, the store of “Xixiaocha” under Xicha was closed, and the mini program was taken off the shelves, completely withdrawing from the market.

The significance of Xixiaocha’s survival is to explore the possibility of sinking the market as the main brand, and to make it as affordable as possible in terms of qualified standards. When it opens in 2020, the product pricing range will be 6-16 yuan.

Xixiaocha no longer exists now. In addition to not selling well enough, the main reason is that Heycha itself has become cheaper. When positioning and resources conflict with each other instead of complementing each other, the market that originally needs to be undertaken by Xixiaocha can be taken over by Xicha. ".

In the same week that the last Hey Tea was closed, Hey Tea announced that it would launch a business partnership with a suitable store type in non-first-tier cities, that is, open the franchise.

HEYTEA has very strict requirements for franchisees. You need to become a qualified HEYTEA employee first, do an internship in a HEYTEA store for 3 months, and pass the assessment to obtain the ability to serve as a store manager. The franchise fee is less than 500,000, and the area is basically 50 Within square meters.

To achieve sufficient standardization, in order to achieve franchise and expansion. The limited store area also shows that in terms of franchising business, HEYTEA puts more emphasis on the product itself than scene service.

Investors interviewed by 36 Krypton believe that HEYTEA does not need money to join the franchise , the cash flow is positive, and the more important point is brand competition:

“Heytea has set up a brand name for new tea drinks, but on the contrary, brands such as Chabaidao and Guming have occupied more market share at half the price.”

Heytea, who is unwilling to make wedding dresses for others, is secretly building a moat, deepening the supply chain and controlling costs. In addition to self-built tea gardens in Fanjingshan, Guizhou, and betel nut and taro planting bases in Guilin, Guangxi, Heytea has also invested in building a back-end supply chain in recent years. For example, the wild plant YePlant invested is an oat milk supplier. The confidence to cut prices at the beginning of the year also comes from this.

When consumption habits are downgraded as a whole, and before the real scale effect is realized, HEYTEA’s sinking road will continue, not only to reach more consumers, but also to improve supply chain management and refine the operation of stores, so as to realize all aspects Standardization will ultimately reduce costs and increase efficiency.

More important than social interaction is daily life, and Starbucks is also sinking and expanding

Starbucks, which was the first to propose the third space and has been repeatedly targeted by new tea drinks, also has its own enemy- Rui Xing, who uses Internet thinking to make coffee .

Ruixing lived well after delisting, mainly because it used a whole process of refined operation, such as high SKU, continuous promotion of new products, and key detonation, to find hot products such as raw coconut latte and raw cheese latte.

Its success means that although Starbucks is "the first educator in China's coffee market" and has relatively stable quality freshly ground coffee and classic menus, the beverage-oriented and affordable milk tea-style coffee can still open up new flavors for growth. volume market.

More importantly, Ruixing is trying its best to standardize even such an uncertain proposition as the research and development of explosive models. R&D personnel will digitize indicators such as sweetness and aroma, turn subjective coffee into concrete algorithms, and combine a large number of order data at the store to evaluate the feasibility of new coffee flavor combinations. The result is that the speed of launching new products is beyond the reach of other brands .

In 2021, Ruixing's new launch rate is 2.2 models/week, and Starbucks is 0.7 models/week.

While "coffee adds everything", Luckin has not forgotten to speed up penetration into the sinking market. In the third-, fourth-, and fifth-tier cities, Starbucks has opened 772 stores, while Luckin has 1,628 stores, and the area of ​​directly-operated stores is only 1/6 of Starbucks. More stores also mean that more time and space can be seized. If you go out, it is Luckin, and the chances of drinking it will naturally increase.

Not to be outdone, Starbucks is also sinking. Jiemian News reported that in the past three months, Starbucks has opened 229 new stores, and the latest ones are in non-first- and second-tier cities such as Qingyuan in Guangdong, Xinyu in Jiangxi, and Kowloon in Weihai.

The reason is not difficult to understand. Starbucks China Chief Operating Officer Liu Wenjuan once said : "When we talk about the expansion of the coffee market, Starbucks values ​​not only the more than 300 prefecture-level markets across the country, but also nearly 3,000 county-level markets. "

The Starbucks survey found that at the current stage, consumers in emerging county markets consume more coffee because of social needs.

What they expect is that if the coffee consumption of these customers can be normalized, there will be huge market development opportunities.

From this point of view, it is ideal to go from social advancement to daily life. Therefore, when laying the sinking market, Starbucks' marketing methods are also different. The clerks often post coupons on platforms such as Douyin or Dianping before ordering, and mainly promote sweet drinks to match local consumption habits and enhance consumer stickiness. .

Not only in the sinking market, the recent Starbucks is quietly cutting prices online in a disguised form. Buy one get one free strategies are spread on social media such as Xiaohongshu. Repeatedly.

In the current Chinese beverage market, coffee and milk tea each have their current kings, one is Luckin with Internet thinking, and the other is Michelle Ice City, which is crazy to join. Other brands have more or less borrowed from their successful experience .

Xicha’s price reduction and focus on expanding the GO store of “order online and pick it up at the store” seem to follow Ruixing’s style of play; Make money by selling materials.

Of course, HEYTEA still has its uniqueness. The new tea drink tells the story of adding fresh fruit and fresh milk to the base of high-quality tea. The raw materials and production process are relatively more complicated. It is necessary to reduce costs and achieve The sinking makes "high quality and inexpensive" possible, and it is not advisable to make mistakes when using franchising to expand market share, otherwise it will damage the brand tonality that has been in business for many years.

Heytea, Naixue, and Starbucks are collectively sinking, and the model of Ruixing and Michelle Ice City has been confirmed. Various signs show that the consumption habit of tea drinks has been downgraded, and high-end positioning is no longer popular. The more popular route is the end point for brands to reach the same goal.

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