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The Paper reporter Shao Bingyan and interns Gu Xuanjing and Wei Qixuan
The lowest discount price continues to drop, and freshly brewed tea drinks may enter the "ten yuan era".
Recently, a reporter from The Paper found that many new tea brands have launched promotional activities of 9.9 yuan or even lower in recent months. These include some limited-time discounts and long-term fixed packages. The overall activity pricing is aimed at the market within 10 yuan.
According to a research report released by Wanlian Securities at the end of June, affected by the weakness of high-end consumption, some new tea brands have a certain price reduction trend, reflecting that consumers are becoming more sensitive to prices. High-cost-effective products will gradually become the mainstream of the market, and low-price strategy may become a new trend in the marketing of ready-made tea drinks.

New tea chain brand

“Price war” started in disguise?

High-cost-effective beverages seem to be gradually becoming the mainstream of the new tea beverage market.
Pengpai News reporters found that in recent months, many mainstream freshly brewed tea brands have launched 9.9 yuan related promotional activities, and the average double-digit price of mid-to-high-end new tea drinks has begun to drop continuously.
For brands in the mid-range, for example, Chabaidao launched a 9.9 yuan medium cup 6-choose-1 discount through a third-party platform. After adding the community in the mini program, you can receive a 9.9 yuan coupon for a designated drink for one month, which is valid for some products; Shanghai Auntie joins the community and drinks designated products for 9.9 yuan every day; Shuyi Shaoxiancao launched a 9.9 yuan promotion for new products at the end of June. For brands in the high-range, Heytea opened several new stores in Shanghai, Hangzhou, Qingdao and other places across the country in mid-July, and collectively launched a 9 yuan Heytea and lucky draw event; Nayuki's Tea launched a 9.9 yuan value breakfast event for the coffee series through a third-party platform.
However, some new high-end tea brands did not participate in the "10 yuan price war". For example, the average price of a medium cup of Bawang Cha Ji is around 15 yuan to 16 yuan, and a large cup is around 20 yuan. The discounted prices on multiple platforms are generally around 10% off.
With the involution of the tea industry in recent years, high-end tea brands such as Heytea and Nayuki’s Tea, which were originally in the price range of more than 20 yuan, have continuously launched new products such as light fruit tea and light milk tea to seize lower price ranges. Today, the product prices of most high-end tea brands have dropped to around 16 yuan. This also means that there are more and more players in the price range of 10 to 18 yuan.

Previously, brands such as Heytea and Nayuki's Tea have made large-scale price adjustments and price cuts. In 2022, Heytea announced on its official account that it had completed the price adjustment, and the prices of Cheese Mango, Cheese Berry, and Cheese Succulent Grape were adjusted from 32 yuan to 29 yuan, so that there would no longer be drinks starting with 3 on the tea menu; and it was guaranteed that no drinks priced at 29 yuan or above would be launched in 2022. Nayuki's Tea said in 2022 that the milk cap products with an average price of more than 20 yuan would launch the Relaxed Series, lower the prices of some products, bid farewell to 30 yuan for all products, and promised to launch new products every month for tea drinks not exceeding 20 yuan.
Mixue Ice City, which focuses on cost-effectiveness, has been occupying the sinking market for many years with its low price range of 2 to 8 yuan. With the arrival of this summer, low-priced lemonade has also become the new favorite of the industry. Aiming at the low-price strategy, Mixue Ice City launched a new 1 yuan ice cup on July 3, starting a price war with convenience stores. Its classic product lemonade can be reduced to 4.6 yuan through group buying; Tianlala, a brand with the same low-price strategy, has a 4 yuan lemonade that competes with Mixue Ice City; Shuyi Shaoxiancao Kumquat Lemonade is priced at 4.9 yuan on the platform group buying, which is close to Mixue Ice City.
It seems that no matter which price range tea brands are in, they are reducing prices or promoting sales to varying degrees. According to a research report released by Huaan Securities at the end of May, in the past three years, the growth rate of affordable tea drinks has been faster than that of medium-priced and high-priced tea drinks. The proportion of tea drink brands priced below 10 yuan has increased from 7% to 30%, while the proportion of tea drink brands priced above 20 yuan has dropped from 33% to 4%.
"If it weren't for the ultra-low-priced freshly brewed tea drinks from Mixue Bingcheng, the price of freshly brewed drinks in recent years would probably have been around 20 or 30 yuan, or even higher. The current market competition for chain freshly brewed tea drinks is too fierce, and preferential packages and disguised price cuts have become a common promotional method." Recently, the manager of a well-known chain tea drink franchise store told a reporter from The Paper.
However, the store manager further introduced that many set meals on the market that are less than 10 yuan per cup are usually not available directly in offline stores or official mini-programs, and are generally offered on third-party platforms. "Discounts have been available one after another, but it can be said that it is the first time in recent years that the new tea beverage market has collectively launched large-scale discounts or price cuts. Especially in many newly opened stores, many high-priced brands are also using the gimmick of '9.9 yuan' to attract customers."
The reason behind the intensive promotions is closely related to the fierce competition in the current Chinese tea shop market. A research report released by Huaan Securities shows that high-priced milk tea brands have been forced to downgrade due to the bottom-up rise. For example, Nayuki's Tea and Heytea have cut prices to enter the mass market (minimum 10 yuan) and are open to franchising, and echelon competition is becoming increasingly fierce.
The aforementioned store manager also revealed to The Paper that according to his understanding, for franchisees, the gross profit margin of the freshly brewed tea industry is generally high, and some can reach more than 80%. In recent years, many new brands have entered this market, and market competition has intensified. "Take the commercial street in my area as an example, there are more than a dozen tea brands gathered."
The store manager further pointed out that due to factors such as fierce market competition, an increase in negative food safety incidents and some popular online events, the sales of many of its stores have been affected to a certain extent. "In the area where I am now, the average daily net turnover of the two stores on weekdays is about 2,000 yuan, and it can reach 3,000 to 4,000 yuan on weekends. Compared with the beginning of this year, sales have shown a downward trend."
In order to reduce the impact of negative food safety incidents on the brand, the store manager also said that the headquarters' inspection of stores has become stricter after March 15 this year. Taking its franchise brand as an example, there are three levels of inspection, including spot checks, flight inspections and external evaluations.
Can you make money at 9.9 yuan a cup?
"It won't lose money, but it will gain publicity. The 9.9 yuan promotion has a certain effect on increasing the store's turnover." The store manager said that the discount is to attract new customers and to get more old customers to repurchase. Usually, brands will also balance the sales and costs of beverages, and offer discounts on popular beverages with medium prices. "In the two stores I am responsible for, the redemption rate of 9.9 yuan coupons accounts for 20% to 30% of the total orders per day, and sometimes it can reach about 40%, which is still quite popular."
As market competition becomes more intense, the store manager also expects that the limited-time discounts of many tea brands may evolve into long-term promotional measures. The collective price reduction trend of tea brands may continue for a long time.

New tea drinks

Look forNew growth point

Previously, a tea brand's prospectus disclosed that the top five players will account for more than 40% of the market share in 2023 based on retail sales. As industry competition intensifies, expanding store networks and accelerating store openings have become the main means for chain tea brands to expand their market share. The expansion trend of freshly brewed tea is also reflected in the competition for the sinking market.
Previously, Heytea, Nayuki's Tea, and Lelecha have successively opened up franchises, and many new tea brands have announced plans to open stores. According to a research report released by Wanlian Securities, the prosperity of high-end consumption has declined, the consumption of cost-effective tea drinks has grown rapidly, the trend of chain stores in various tracks has accelerated, and affordable market brands have expanded rapidly relying on the franchise model to accelerate the capture of the sinking market.
The manager of the aforementioned tea chain franchise store told the reporter from The Paper that in addition to direct or disguised price cuts, "volume" research and development, "volume" quality, "volume" technology, and "volume" co-branding are also very important. Among them, franchisees can enjoy the traffic brought by brand co-branding the fastest. How to find brand differentiation and strive for a larger market share requires the marketing and research and development of each brand to make efforts in many aspects.
"As a new type of productivity in the new tea beverage industry, the rapid development and widespread application of smart devices are expected to raise the store automation level of the new tea beverage industry to the same level as modern coffee chain brands." In terms of technology, Heytea once told the reporter of The Paper that thanks to the maturity of its independently developed intelligent and automated equipment, the consistency of products and the stability of food safety in Heytea's global stores are guaranteed, and the cost of product operation training is greatly reduced, which has strongly supported the growth of Heytea to more than 2,300 stores in 2023, and will also fully accelerate the development of its overseas business in the future.
"At present, tea-making machines in the industry have not been widely promoted. It is expected that they will be popularized in most stores within two years." The aforementioned store manager told the reporter of The Paper that the headquarters has been issuing documents to encourage franchisees to purchase relevant tea-making machines. "On the one hand, the main reasons for complaints about stores include errors in recipes or ingredients during production, which can be avoided to a large extent by using tea-making machines. On the other hand, tea-making machines can reduce the pressure of manual memorization of tea recipes and ensure that brand recipes are not leaked."
Returning to the tea products themselves, more and more tea brands are launching healthy tea standards to provide consumers with healthier tea products. For example, in the definition of new tea products, Heytea clearly states in the standard that it is "a freshly made beverage that is prepared and processed on site without adding flavors, creamer (non-dairy creamer), hydrogenated vegetable oil, instant tea powder, fructose syrup, and does not contain trans fatty acids." In the relevant standards issued by some institutions before, new tea products were defined as freshly made beverages that can be added with non-dairy creamer and fructose syrup, which has also led to confusion in the current market regarding the definition of healthy tea products.
"The core KPI indicators of new Chinese tea drinks are different at different stages. In the initial stage, more attention may be paid to brand effect and quality effect; in the second stage, more attention will be paid to scale effect and supply chain construction; in the third stage, intensive effect, risk resistance, and comprehensive strength will be pursued." Previously, Zhu Danpeng, a Chinese food industry analyst, told the reporter of The Paper that the competition in the new tea drink track has gradually entered the second half, and the top players have reached the point where they need to compete in basic supply chain skills. There is no shortcut to building supply chain capabilities. Brands need to pay enough attention from a strategic perspective and invest real money to lay a solid foundation bit by bit.
Editor of this issue: Zou Shan