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China News Service, August 20 (Yan Shuxin intern Li Yimeng) 4 yuan a cup of lemonade, 6 yuan a cup of jasmine milk tea, 9.9 yuan for a designated drink...

Recently, topics such as #milk tea prices collectively plunge##milk tea returns to below 10 yuan# have sparked heated discussions on social platforms.

On the 19th, China News Service Jingwei came to Beijing Ximen Golden Street, where they witnessed a microcosm of the price war in the milk tea industry.

A milk tea shop opened on Beijing Ximen Golden Street. Photo by China News Service

　　20 milk tea shops on one street

Ximen Golden Street is an outdoor pedestrian street located next to Wanda Plaza in Tongzhou District, Beijing. It is connected to Wanda Plaza and is about 520 meters long. It is divided into Area A and Area B. Coffee, milk tea and other beverage shops are mainly concentrated in Area B.

On the 19th, China News Service Jingwei saw here that in Area B of Ximen Golden Street, which is less than 400 meters away on foot, there are 24 beverage shops of various sizes, including 20 milk tea shops, including chain brands such as Mixue Bingcheng, Yidiandian, Shanghai Auntie, CoCo, Chabaidao, Yihetang, and Shuyi Grass Jelly. Some milk tea shops are closely adjacent to each other, and in some locations there are even 5 shops within 20 steps.

The price war in the milk tea industry is also taking place here.

On the 19th, China Business Network saw in many milk tea shops in Area B of Ximen Golden Street that "below 10 yuan" has become the key range of "battle" among various milk tea brands. For example, Cha Baidao and Shanghai Auntie launched a 9.9 yuan promotion for designated drinks, Yihetang designated drinks were 9 yuan a cup; Shuyi Shaoxiancao launched a pure tea series at 9 yuan a cup; Yidiandian's multiple products are as low as 9 yuan and 8.8 yuan.

The milk tea shop launched a 9.9 yuan purchase of designated drinks activity. Photo by Xinhua Jingwei

Mixue Bingcheng has also recently launched two new products, Jasmine Green Milk Tea and Cucumber Pineapple Tea, priced at 6 yuan per cup and 7 yuan per cup respectively.

However, judging from the store price lists, except for Mixue Bingcheng, the products of milk tea shops such as Yidiandian, Shanghai Auntie, CoCo, Chabaidao, Yihetang, and Shuyi Grass Jelly are still mostly priced above 10 yuan, and products priced at 9.9 yuan are usually designated products or limited-time promotional products.

Most of the milk tea products in Shanghai Auntie, Cha Baidao and other milk tea shops are still priced above 10 yuan. Photo by China News Service

"You cannot enjoy the 9.9 yuan discount if you place an order directly in the store. Consumers need to obtain coupons through mini programs or other platforms and purchase designated products." said a staff member at a Cha Baidao store.

Compared with offline store prices, online group purchase prices are much lower. On the 20th, China News Service saw on platforms such as Meituan and Douyin that by participating in group purchase activities, consumers can drink a cup of milk tea for only three or four yuan.

　Milk tea industry faces growth challenges

It is worth mentioning that in the domestic milk tea industry, the first to occupy the "less than 10 yuan" price range was Mixue Bingcheng.

According to a report by Frost & Sullivan, freshly made beverages can be divided into three price ranges: one is affordable, with the unit price of the product not exceeding 10 yuan; the second is mid-price, with the unit price of the product being lower than 20 yuan but higher than 10 yuan; the third is high-price, with the unit price of the product not lower than 20 yuan.

China News Service's visit found that in this round of price war, those targeting the price range of "below 10 yuan" are mainly traditional mid-priced milk tea brands such as Gu Ming, Cha Baidao, and Shanghai Auntie.

"The prices of our recent new products are basically set at around 10 yuan, and some are as low as 6 yuan or 7 yuan," said China Business Network, the brand direction of Shuyi Roasted Herbal Jelly.

Zhu Danpeng, a Chinese food industry analyst and vice president of the Guangdong Food Safety Promotion Association, told China Business Network that the price war in the milk tea industry caters to the current consumer behavior of pursuing cost-effectiveness. "The price cuts are basically from the leading companies, who have certain scale effects and fan effects, and their supply chains are already very complete, so they have room for price cuts and bargaining power. Some brands with single stores or weak bargaining power will find it difficult to survive in this round of price wars. Therefore, this round of price wars is also a process of reshuffle in the industry."

The "2024 China New Tea Drink Supply Chain White Paper" released by Meituan Group Buying and others shows that in recent years, due to changes in consumption trends and the continuous optimization of operational efficiency and supply chain by various brands, the new tea drink industry has set off a wave of price cuts. As the competition in the new tea drink industry becomes increasingly fierce, in the new round of consumer environment adjustments, adjusting pricing and launching products with prices acceptable to consumers have become an important issue for new tea drink brands.

According to statistics from Meituan Group Buying, the average per-customer spending on tea drinks nationwide was 10.5 yuan in 2023. Among them, the per-customer spending on tea drinks in Nanjing, Shanghai, Shenzhen, and Hangzhou, which ranked among the top ten cities in terms of per capita income of all residents in 2023, was slightly higher than the national level, but the highest did not exceed 14 yuan.

Changes in the average unit price of new tea beverages consumed by consumers in 2023 Source: Screenshot of the 2024 China New Tea Beverage Supply Chain White Paper

Behind the price cut is the increasingly fierce competition in the milk tea industry, and the brand is facing growth difficulties. The "2023 New Tea Drink Research Report" jointly released by the China Chain Store Association and Meituan shows that the growth rate of China's new tea drink market is expected to slow down from 44.3% in 2023 to 12.4% in 2025.

This can also be seen from the performance forecasts released by Chabaidao and Nayuki's Tea. According to data, Chabaidao expects to achieve a net profit of about 220 million to 250 million yuan in the first half of this year, a decrease of no more than 63.03% from 595 million yuan in the same period last year; Nayuki's Tea expects to achieve revenue of about 2.4 billion to 2.7 billion yuan, and an adjusted net loss of 420 million to 490 million yuan.

In Zhu Danpeng's view, after this round of price war,The overall price of the milk tea industry will be difficult to return to the past."In the future, consumers will consider both market price and cost performance when choosing milk tea products. Only products that have both will continue to be recognized by consumers."

(For more reporting clues, please contact the author of this article, Yan Shuxin: [email protected]) (China News Service APP)

　(The views in this article are for reference only and do not constitute investment advice. Investment is risky and you should be cautious when entering the market.)

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Editor-in-charge: Chang Tao and Luo Kun