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Heytea is attacking the sinking market again. Recently, Heytea opened a milk tea specialty store "Heytea Bobo Station" (hereinafter referred to as "Bobo Station") in Yunxi County, Shiyan City, Hubei Province, with a minimum price of 12 yuan per cup, and there is a buy one get one free promotion during the trial operation. Whether it is from the store model, product positioning, or site selection, it is not difficult to see that Heytea is accelerating its exploration of the traffic code of the sinking market. As we all know, the current competition in the tea beverage market is becoming increasingly fierce, and seizing the sinking market is a tacit move of tea beverage brands. Industry insiders pointed out that brands are sinking to seek more business opportunities, but optimizing the profit model is the ultimate problem facing brands.

Only 8 products

Heytea has started a new round of exploration in the sinking market. Recently, Heytea opened a tea shop called "Bobo Station" in a county town. According to the check-in pictures posted by consumers on social platforms, the store is mainly black and white, and the slogan "Real milk, real Bobo, drink with sincerity and confidence" can be seen everywhere in the store, which is in line with the healthy tea image that Heytea has always emphasized.

In terms of products, the store does not have many drinks, only 8 milk tea products, including brown sugar bobo real milk tea, brown sugar bobo real milk, brown sugar bobo milk bottle, etc., and focuses more on the single product of pearl milk tea.

In terms of price, the store's tea drinks are priced between 12 and 18 yuan, and during the trial operation period, it also offered a 12% discount or buy one get one free discount.

According to the store staff, the above discounts cannot be enjoyed together, and you can choose 12% off for a single cup or buy one get one free. The store is the first Bobo Station in China, directly operated by Heytea, and is not open to the public for franchising. It supports dine-in and self-pickup, but the area is small and there are only two seats.

Regarding the future development plan of Heytea Bobo Station, Beijing Business Daily contacted Heytea, but no response was received as of press time. It is understood that Heytea opened its first store in Guangdong in 2012, and roasted brown sugar Bobo milk is one of its signature products.

Competing for non-first-tier market share

Tea brands have opened a variety of theme stores one after another, and Heytea has put a lot of effort into store scenes. However, unlike the previous move of opening new store types in first-tier cities, this time Heytea has set its sights on non-first-tier cities, which is also the focus of the brand since the beginning of opening franchises.

It is not the first time that Heytea has told a story in a setting. The Paris Olympics held not long ago was the focus of the world. At that time, Heytea opened a pop-up store "Heytea Paris Watching Tea Room" in Paris, France, and launched packaging materials and peripherals with the theme of Olympic joy. In addition to pop-up stores, Heytea has also opened teahouses that provide freshly brewed products and handmade stores that focus on on-site production.

Whether it is the first HEYTEA Tea House store in Guangzhou, the first HEYTEA Tea House Black Gold store in Sanlitun, Chaoyang District, Beijing, or the first handmade store in Nantou Ancient Town, Shenzhen, it is not difficult to see that the background of HEYTEA's scenes and stories are all set in first-tier cities. In November 2022, HEYTEA announced the launch of its business partnership business, launching business partnership stores in non-first-tier cities with suitable store formats, sending a signal of focusing on non-first-tier cities and starting to compete for this potential market.

In fact, Heytea had already explored the non-first-tier markets before opening up for franchising. On April 3, 2020, the first store of Heytea's sub-brand Heyxiaocha officially opened, selling milk tea, fruit tea, coffee, ice cream, etc. At that time, Heytea was priced at around 30 yuan, while Heyxiaocha's pricing range was 6-16 yuan. On the one hand, the pricing is affordable, and the store space and site selection are more flexible, which is regarded by the industry as an important foreshadowing of Heytea's layout in the sinking market and complements Heytea. However, in November 2022, the Heyxiaocha applet suspended its services and all stores have been closed. Looking at the protagonist of the story today, Bobo Station, the pricing is not much different, but the SKU is more streamlined, which seems to be Heytea's further exploration of non-first-tier markets.

Wen Zhihong, a senior restaurant chain expert, believes that there are many successful cases of high-cost-performance brands in non-first-tier cities. More and more brands are beginning to covet this market, and so is Heytea. In fact, the cost-effective small store model is more suitable for penetrating some sinking markets. The positioning and product structure of Heytea's regular stores may not be suitable, so Heytea will redesign and explore in terms of positioning, product structure and store type.

Continue to improve the profit model

Busy with joint ventures, trying theme stores, and competing for health labels, from attacking first-tier cities to busy sinking, the competition in the tea beverage market is far more intense than it seems on the surface. Take Heytea as an example. It has repeatedly proved its healthiness and tried different store types. Now it is trying something new again and opened Bobo Station. However, there are many failed cases in the layout of differentiated scenes in the tea beverage track. Heytea's handmade store has also been reported to have been closed, and the affordable sub-brand "Hey Xiaocha" has taken the initiative to shut down. Can the new store type Bobo Station be recognized by the market?

In the past, first-tier cities were the main battlefields that many tea brands wanted to capture, but as the tea market landscape changes, non-first-tier markets have gradually become a battleground. According to the "2023 New Tea Research Report", from the performance of takeaway orders for new tea drinks in different city lines in the first half of 2023, the proportion of takeaway orders in new first-tier cities is the highest; the growth rate of takeaway orders for new tea drinks in first-tier cities is the highest among all city lines (38%). In addition, the growth rate of takeaway orders for new tea drinks in fourth-tier (30%) and fifth-tier cities (36%) is higher than that in the new first-tier to third-tier main markets (28%), and the space for new tea drinks in the sinking market is gradually opening up.

However, the opportunities and challenges of tea beverages going to lower-tier cities coexist. The potential of non-first-tier cities is obvious to all tea beverage players. National chain brands such as Mixue Bingcheng and Guming have already seized the opportunity, and local tea beverage brands have inherent advantages. Although Heytea has been in the tea beverage industry for many years, its experience in going lower-tier cities is indeed limited, and the anxiety behind its frequent actions is obvious.

Zhan Junhao, founder of Fujian Huace Brand Positioning Consulting, said that the reason why tea brands are competing to sink is that they hope to get close to local consumers with customized products and services, so as to deeply penetrate the market with huge consumption potential. Heytea's opening of Bobo Station can effectively utilize resources, reduce costs and increase flexibility by streamlining SKUs and reducing store sizes. However, how to maintain the brand image and positioning in a price-sensitive market and ensure that product quality and service levels do not decline due to cost control is a challenge it needs to face. If it wants to operate Bobo Station well, Heytea needs to have a deep understanding of the consumption habits of the sinking market and launch products that meet local tastes and price expectations. As for the entire brand, it should focus on both short-term performance growth and long-term brand value accumulation.

Wen Zhihong pointed out that the competition in non-first-tier cities is also fierce because brands are sinking. At present, the model of Bobo Station is more suitable for expansion through franchising. However, whether it is from the perspective of improving the model of Bobo Station or from sinking expansion, improving the single-store profit model is the key to profitability for brands and franchisees, and it is also an important measure for Heytea to continuously enhance its competitiveness.

Beijing Business Daily reporter Zhang Tianyuan

Image source: Screenshot of Dianping.com