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As a popular meme that was born four years ago, "the first cup of milk tea in autumn" has not only survived, but also returned on time every Beginning of Autumn. On the Beginning of Autumn this year, the turnover of some tea shops increased by more than 300%, and all stores of some brands earned nearly 48 million yuan in one day.

It seems that the popularity of tea drinks has not subsided, but four years have passed and the consumption environment has changed. After Mixue Ice City opened 10,000, 20,000 and 30,000 stores, scale and low prices were regarded as the iron law of development, and milk tea with a unit price of more than 20 yuan gradually disappeared.Tea 100 WaysAfter a successful listing, its performance and market value are declining, but there are still a bunch of companies queuing up to sprint forward.

Freshly cut fruits made popular by Heytea and Nayuki were directly abandoned by the up-and-coming King Tea, because in the current more transparent and fierce competition, efficiency is king. Even Luckin Coffee, which is on the next track, launched a new light milk tea on Chinese Valentine's Day, and its anxiety and ambition were put on the table.

According to incomplete statistics, there are now more than 430,000 tea shops across the country. As more and more milk tea shops open, what impact will this have on our lives? Who makes the most money in this competitive industry? And, do we really need so many milk tea shops? In this data column, let's take a look at the accounts behind milk tea.

Text | Chang Fangfei

Data｜Puff Chang Fangfei

Map｜Puff

Editor | Xin Ye

Operations | Puff

8 million young people in Shenzhen regard milk tea as the "god of social interaction"

In Shenzhen, there is nothing that can't be solved with a cup of milk tea.

On August 9, the beginning of autumn, Shenzhen ranked first in the country in terms of milk tea orders with 620,000 orders. Mixue Bingcheng, Shanghai Auntie, Nayuki, Yihetang, and Shuyi Shaoxiancao all have more than 100 stores in Shenzhen.

In Shenzhen, milk tea socializing has even replaced drinking culture. You can treat your colleagues to a cup of milk tea on your first day of work or your last day of leaving. In the afternoon, milk tea shops are the best place to go. If your colleagues clock in for you, a cup of milk tea worth more than ten yuan can just be a way to repay the favor. Getting the first cup of Internet celebrity milk tea is as worth taking photos and showing off as grabbing tickets for a celebrity concert. It can be said that milk tea is flowing in the veins of young people in Shenzhen.

In order to meet the young people's demand for "drinking tea", Shenzhen can find nearly 5 milk tea shops per square kilometer, and many of them are open 24 hours a day. Shenzhen's takeaway riders deliver an average of 7 to 8 orders of tea drinks every day, and sometimes more than 20 orders, no matter how late it is.

There is no doubt that Shenzhen is a young city. According to Nan Fang Daily, Shenzhen has a permanent population of 8.019 million people aged 14-35, with an average age of 32, which is 6 years younger than the national average. The main consumers of tea drinks are young people aged 16 to 25, who are the most important part of Shenzhen's population.

On the other hand, Shenzhen has also provided substantial start-up subsidies. If it is the first time to start a business or within three years of starting a business, you can apply for a subsidy of 10,000 yuan per person, with a maximum of 100,000 yuan for up to ten people. In addition, entrepreneurs who have obtained business qualifications can also receive social security subsidies, up to 300,000 yuan for one start-up project. This has also made more young people regard tea drinking as the best direction for entrepreneurship.

In general, Guangzhou and Shenzhen have always been the first echelon of milk tea consumption. Traditional eating habits are one of the driving factors. Guangdong has high temperatures and is hot and humid all year round. Cooling down and relieving the heat are urgent needs of local people. Under the new consumption wave, new tea drinks have replaced traditional herbal teas and become the top afternoon tea. For tea brands, opening a store in Guangdong is also "cheaper" than opening one in the north. Fruit tea is still the mainstream in the tea beverage category. The logistics costs of stores in the south, which are close to tropical fruit production areas, are obviously much lower than those in the north.

It is not enough to sink to the county town, the township is the "land of milk and honey"

The fiercer milk tea war is happening outside first- and second-tier cities. In the past few years of fierce competition, expanding the scale and increasing the volume in the sinking market has become a consensus among all new tea drink players.

Moreover, sinking into the county town is not enough. Mixue Bingcheng firmly sits on the top spot in terms of store scale because it has opened nearly 8,000 stores in towns and villages. The second largest Gu Ming, its founder Wang Yunan started his business in Daxi Town, Wenling City, Zhejiang Province, which is a typical town and village market. Starting from here, nearly 80% of Gu Ming's stores are located in second-tier and lower-tier cities, of which town and village stores account for as high as 33%.

Gu Ming has rich experience in operating in lower-tier cities, but is not in a hurry to expand stores. They believe that 500 stores is the "critical scale", and only when such a density of stores is reached in a region will Gu Ming consider entering the next province. Until now, Gu Ming has no plans to open in first-tier cities, and young people in Beijing and Shanghai still cannot drink it.

Gu Ming's stores are concentrated in Zhejiang, Jiangxi, and Fujian, and have not expanded in the north. To some extent, this is also related to Gu Ming's business model. Gu Ming did not build its own production base, but focused on warehousing and logistics, providing a two-day cold chain delivery service to more than 97% of its stores. In other words, most stores need to be within 150 kilometers of the warehouse, which has become an obstacle for it to enter the northern market.

▲ Gu Ming store in Shaoxing, Zhejiang. Photo/ Visual China

The vast space in towns and villages also gave birth to an invisible giant, Tianlala. Founder Wang Wei started from the third-tier city of Bengbu, Anhui, and quietly opened 8,000 stores. According to statistics, more than 80% of Tianlala's stores are in third-tier cities and below, while the figure for another sinking giant, Mixue Bingcheng, is less than 60%. In order to serve core consumers, Tianlala's customer unit price is also controlled within 10 yuan. The initial entrepreneurial experience taught Wang Wei that "a cup of milk tea costs five or six yuan and many people buy it. If it costs twenty or thirty yuan, no one will buy it, and the store will not be able to open."

There are also brands that are determined to go big, and Bawang Chaji is one of them. Their store locations are almost all close toStarbucks, with more than 36% of its stores opened in the city's core business districts. Founder Zhang Junjie has mentioned his ambition more than once - to open a 100-square-meter flagship store in Chengdu's most prosperous Chunxi Road, "just to tell the market that we are a new Chinese tea brand that can compete with Starbucks."

Coco and Yidiandian were opened on the most conspicuous floor of the shopping mall a few years ago. Every time you took an order, you had to queue for 20 minutes. But now they are unpopular and have to gradually reduce the size of their stores.

Slow product updates are one of the most important reasons. In the past one or two years, most tea brands only need one week to launch new products, while the most popular products of CoCo and Yidiandian are still the three milk tea brothers and four seasons milk tea. Faced with the drastic changes in the market, they have been slow to give convincing new answers.

Waiting in lineIPOThere are many companies, but the two that have already gone public are not happy

The first cup of milk tea in autumn is popular again, but when the autumn wind blows, it first cools the hearts of tea investors in the capital market.

In just one week, two listed companies in the tea beverage industry—— Nayuki's Tea, Chabaidao successively issued warnings of declining performance. After achieving a short-term profit, Nayuki fell into a quagmire of losses of more than 400 million. Chabaidao is also not optimistic. Although it is expected to make a profit of about 200 million, the highest decline is more than 60% compared with the same period last year.

In the brutal competition with no end in sight, two brands with completely different models have fallen into the same predicament.

A month ago, Nayuki released its second quarter financial report this year, adding 48 directly-operated stores in the quarter and closing 48 stores. This means that the net growth of Nayuki's directly-operated stores in the quarter was 0.

The growth rate of franchise stores was also lower than expected. It was not until February this year that Naixue lowered the investment amount of a single franchise store to 580,000 yuan, and the store area also dropped to 40 square meters. After lowering the threshold, Naixue gave an optimistic growth target, expecting to open 3,000 franchise stores in the next two to three years. But half a year later, Naixue still has only 297 franchise stores. At this rate, it is very difficult to achieve the goal on time.

In addition, the average value of each order in Nayuki's directly-operated stores has declined significantly. In 2023, the average sales price was 29.6 yuan, a decrease of nearly 14% compared with the same period in 2022. The price reduction did not increase the number of orders. Instead, Nayuki's average daily order volume dropped from 348 to 344, and the store efficiency of the same store was only 70% of the same period last year.

Chabaidao's model is almost completely the opposite of Nayuki. Nayuki's revenue comes from selling cups of milk tea, while Chabaidao is essentially a to B business.Supply ChainThe company's core source of income is selling raw materials and equipment to franchisees, and the profit mainly comes from the difference between the purchase price of raw materials, packaging materials, and equipment and the resale price to franchisees. It can be said that it is the 5,538 franchisees who support Chabaidao's dream of going public. This efficient operation model has made ChabaidaoNet ProfitIt has always been maintained at around 22%, and once exceeded Mixue Bingcheng. However, whether this model can continue to grow depends on whether the franchisees can make money in the long run.

Both Nayuki and Chabaidao have to face saturated competition in the era of low profits. The rise of the "original leaf milk tea" faction represented by Bawang Chaji in the new tea drinking world has eroded a considerable part of the market share of competitors. Franchisees were the first to feel the change in water temperature. "The good times when you can get your money back in one year are long gone." This cruel elimination is also revealed in the financial data. Before 2021, the average daily sales of franchisees of Chabaidao exceeded 7,000 yuan, but in 2023, this figure was less than 6,000 yuan.

The capital market also gave an overly "calm" expectation for the future of the two listed milk tea companies. Cha Baidao's market value has fallen by nearly 60% from its peak, and Nayuki's decline has exceeded 90%.

At the same time, almost all tea brands regard IPO as their last chance. Mixue Bingcheng, Guming, and Shanghai Auntie all submitted their prospectuses at the beginning of this year. Heytea, Bawangchaji, and Chayanyuese have also repeatedly announced plans to go public. If these brands can successfully join forces in the secondary market, the competition in the tea beverage industry will move to the next stage.

The road to 10,000 stores: Do we really need 430,000 milk tea shops?

The last battle for many brands before going public is to expand their scale large enough. In the past year, the tea beverage industry has started a brutal race with the goal of "10,000 stores".

The leader of the first echelon is still Mixue Ice City. According to the prospectus and the comprehensive statistics of Zhaimen Canyan, the number of "Snow King" stores worldwide has exceeded 30,000. In the past year, the net increase in the number of stores has maintained a high growth of 17%. Gu Minghe has just landedHong Kong stocksCha Baidao has more than 8,000 stores and seems to be only one step away from the milestone of 10,000 stores.

Following closely, Bawang Chaji and Heytea are also sprinting at full speed. In 2021, after Bawang Chaji received a total investment of 300 million yuan from XVC, Fosun Group, and Congbi Qiushi, its founder Zhang Junjie proposed the latest expansion plan - to sprint 1,000 stores in one year and 5,000 stores in two years. Heytea is also desperately catching up. After opening up for franchising, in order to quickly roll out stores, Heytea prioritizes looking for small regional partners, that is, it can franchise 5 to 10 stores, and then screen out large regional partners.

A key step in expansion is standardization. Bawang Chaji built a digital team from scratch and developed an internal control system that allows the headquarters to track the work efficiency of employees in different stores on an hourly basis. Even so, 5,000 stores is still not an easy goal to achieve. Until now, the number of Bawang Chaji stores has remained at 4,700.

In order to ensure the efficiency and taste of franchise stores, Heytea has developed more than 50 types of equipment in the past few years, including beverage preparation machines, fruit dicer machines, peeling machines, and pounding machines. These devices reduce the brand's dependence on store employees and make franchising possible. The first batch of franchise stores that have been put into operation can already serve cups within 30 seconds, which is the same as directly operated stores.

▲ Heytea's kitchen equipment. Photo/ Visual China

In the fierce competition, Mixue Bingcheng, the industry leader, was once involved in rumors of large-scale store closures, and later a third-party data platform came out to clarify that the data was captured incorrectly. But what is certain is that the intensity of the close combat in the tea beverage industry has escalated again.

After the number of stores exceeded 30,000, Mixue Ice City also had to face a new challenge - it became increasingly difficult to snatch franchisees. In 2021, the number of "Snow King" franchisees increased by 54%. By 2023, the number dropped to 31%, which indicates that Mixue Ice City's current store density and franchisee scale may be approaching the ceiling at the same time.

Behind this, the road to becoming a tea drink franchisee is becoming increasingly difficult. First of all, the threshold is high. In Mixue Bingcheng's prospectus, less than 5% of franchise applications are approved. In the past three years, the number of stores operated by a franchisee has increased from 1.9 to 2.2, which means that the stores are gradually being collected by more experienced large franchisees.

Making money is also difficult. A franchisee said in an interview that to find a good franchise store now, the start-up capital is at least 600,000, and the payback period has been extended to one year. The "distance protection policy" is not enforced internally. If a new store is opened around an old store, the two stores will have to fight for survival after the customers are diverted.

Some traditional tea brands are gradually falling behind. According to statistics from Zhaimen Canyan, Shuyi Shaoxiancao had a store closure rate of over 18% in the past year. In order to curb the continued collapse of stores, Shuyi started to waive franchisee brand usage fees and service fees at the beginning of this year, but the effect was still minimal.

The entire industry has also experienced dramatic changes in the past year. According to statistics from Zhaimen Canyan, 160,000 new stores were opened in the tea industry, while 130,000 were closed. Today, there are more than 430,000 existing stores in the entire tea industry. All brands and their franchisees are still constantly looking for the best store locations to maximize operating profits.

But do we really need so many milk tea shops?

Young people who are anxious about calories cannot do without "less ice and more sugar"

Young people have never been as afraid of sugar as they are today. They need to open the calorie calculator after eating or drinking a little. But they have never been as addicted to relieving their stress through eating and drinking as they are today. This contradictory and complex mentality has become a new growth engine for tea drinks. Oriental Leaves, which once made the list of the "hardest to drink beverages", has now transformed into aNongfu SpringA major single product with sales of tens of billions in the financial report.

Young people want to drink tea at 3:00 every day, but also want to stay healthy. Faced with this dilemma, their choice is: they can’t not drink milk tea, but they can put less sugar. Dingxiang Doctor conducted a survey on 70,000 young people. The report showed that half of the young people drink a cup of milk tea per week on average, and more than 70% of them choose three-tenths of sugar or no sugar when ordering.

Pearls, red beans, and taro balls rarely appear on the best-selling list. These small ingredients usually do not contain sugar, but for storage and taste, they are usually pickled with sugar. Pickling a 30-gram portion of pearls requires 15 grams of sugar. If young people want to enjoy "watered-down rice dumplings" filled with small ingredients, they have to climb the stairs for at least an hour.

This generation is in an unprecedented contradiction, pursuing excitement while also paying attention to health. Whoever seizes this trend will have the upper hand in the competition.

In the past year, tea brands have revealed their own long ingredient lists. The Heytea Mini Program page allows you to view the ingredient information of more than 40 products, which discloses the main nutrients, including calories, protein, trans fatty acids, fat, etc. In addition, various quality guarantees are also attached. It emphasizes "no non-dairy creamer", and the milk is also "zero added" without creamer.

Bawang Chaji simply launched a "calorie calculator" so that young people can see the calories and nutritional content of 37 drinks when placing an order. It also displays the caffeine content. Shocked young people have summarized a list of refreshing drinks. If you take a cup of Wanli Mulan in the morning, you will be energetic enough to join the army for Mulan at 4 a.m. Freshly made yogurt brand Blueglass has also joined the battle for healthiness. Even the vitamins and probiotics are on the label. When young people pick up the cup, it seems like they can "drink a periodic table in one gulp."

The spokesperson who represents the brand image must be healthy. This year, the well-known fitness blogger Pamela became the spokesperson for Heytea, and Bawang Tea signed Olympic women's tennis champion Zheng Qinwen.

In fact, this strategy really works. Everyone knows that three-point sugar is not as healthy as imagined, and a cup of milk tea a week will not make you a non-stop athlete. But none of this matters. Through milk tea, young people get a sweet moment of escape from daily pressure, which is enough.

Everyone says fruit is good, tea can also become a treasure

In the current melee of new tea drinks, "milk tea" has become a general term for tea drinks. In fact, before Bawang Chaji's "original leaf fresh milk tea" concept became popular, the protagonists of almost all new tea drinks were fruits.

The core products of Mixue Ice City are priced between 2 yuan and 8 yuan, and the best-selling product is the "Iced Lemonade" at 4 yuan. The prospectus proudly states that more than 8 out of every 10 cups of freshly made lemonade in China come from Mixue Ice City.

Before the "Snow King" dominated the market, the leading players in the new tea market in first- and second-tier cities were still Heytea and Nayuki. When Succulent Grapes came out, at its peak, "one out of every two cups of Heytea sold was Succulent Grapes." Nayuki soon launched its "Baqi Cheese Grapes."

▲ Heytea's fruit tea products. Photo/ Visual China

Fresh fruit and real tea have ended the original "brewing era" of tea drinks, making real ingredients the foundation of tea brands. But behind this is a severe test for the supply chain.

Mixue Ice City, which has sold 900 million cups of lemonade, took six years to adjust its supply chain. Even if it cooperated with major suppliers in the market, it still couldn't keep up with its expansion pace. Today, Mixue Ice City consumes about 50,000 tons of lemons every year. As early as 2020, they established a storage base in the country's largest lemon producing area. Even so, they still have to import lemons from South Africa at double the price for two months every year.

The popularity of "succulent grapes" also caused considerable difficulties for Heytea's supply chain. In order to sell this product stably in the long term, Heytea chose Kyoho and Summer Black grapes as raw materials, and switched to purchasing different varieties as their production seasons changed.

Just when many people thought that new tea drinks could no longer create new stories, Bawang Cha Ji came out. Zhang Junjie once faced the choice between fruit tea and milk tea. In 2021, Hu Boyu, the founder of XVC, who invested in Bawang Cha Ji, asked what the data would be like if fruit tea was abandoned and milk tea was promoted.

At that time, Bawang Cha Ji was still an obscure brand, with a menu that was not much different from its competitors, and the number of fresh fruit tea products far exceeded that of milk tea, while the logo and store style were very similar to Cha Yan Yue Se. Founder Zhang Junjie finally made a decision to avoid fruit and focus on milk tea. In the end, "Bo Ya Jue Xian", which is based on jasmine green tea, became a hot product, selling 230 million cups in one year, breaking the sales record of a single product in the new tea beverage industry.

The core reason for abandoning fruit tea is still that fruit tea has many raw materials, a complicated production process, and it is difficult for brands to control the supply chain. However, the ingredients of Boya Juexian only include tea soup, milk, and syrup. This formula greatly reduces the difficulty of brand management of the supply chain.

Zhang Junjie said in an interview: "Everyone knows that the fruit tea market is good, but I am a person who knows the times very well. In this market, I cannot win and I cannot afford to waste time."

Who can bet on the next hit product?

In order to compete for the short-lived attention of young people, constantly looking for more niche fruits and more unique flavors was once the goal of all brands.

Naixue's founder Peng Xin personally made the fruit, which was previously only popular in Chaoshan, popular - the orange. In 2021, within less than three months of its launch, the "Baqi Yu Orange" accounted for more than 20% of the sales of all Naixue's products. Other tea brands also quickly put oranges on their menus. Heytea launched the "King Squeeze Orange", Guming chose to use other fruits to neutralize the sourness of oranges, and the "Green Grape Orange" was also a big hit.

When a new flavor becomes popular, all major brands rush to enter the market. This fruit competition directly raises the value of oil oranges by dozens of times. When it was most popular, the purchase price of oil oranges increased three times a day, and the most expensive time was 40 yuan per kilogram.

Every brand hopes to replicate the success of the orange, and the next fruit with high hopes is the red heart guava. Like the orange, guava is only popular in Chaoshan; it is also very beautiful. The light pink color of the red heart guava after juicing directly increases people's "slice rate" after purchase.

In 2022, Heytea was the first to launch new products such as "Full Bottle of Guava Grape" and "Full Bottle of Guava Yakult"; Lelecha also launched a variety of guava drinks such as "Big Mouth Guava Lemon" and "Guava Peach Yogurt"; "Baqi Crispy Mango Guava" joined Nayuki's menu. The popular fruits are constantly changing. Chabaidao, CoCo, and Mixue Ice City once bet on mulberries. Among them, Chabaidao's "Black Piece" quickly became a hit.

This year, the characteristics of the popular fruit have quietly changed - no longer niche, just for cheap. After Mixue Ice City popularized lemonade a few years ago, Tianlala and Shuyi Shaoxiancao have all targeted lemon, a low-priced fruit. And this year, it has completely set off a war.

The high cost-effectiveness of lemons not only attracts young people, but also makes tea brands profitable. Domestic lemons are cheap and very sour, so when added to tea, the amount should be reduced and diluted. In this way, the cost of a cup of lemonade can be controlled at around 1 yuan.

Brands are well aware that finding and launching new hit products not only tests the product and supply chain, but also requires a lot of marketing expenses on social platforms. After the tastes have become highly homogenized, more and more brands are involved in the joint-branding race in order to compete for consumers. From launching a new fruit every five days, to announcing a new CP every five days.

Everything can be co-branded. The most common co-branded objects are brands, games, TV dramas and celebrities. Nothing is impossible. Mixue Ice City, which has always focused on its own IP, also quietly "turned green" last year. After co-branding with China Post, Snow King built a post office theme store based on the green color of China Post. Mixue Ice City "passed the exam", and many netizens spontaneously made a joke: Dear Xi, Dao, Co, Auntie, when you read this letter, Xuexue has already landed.

Cha Baidao has collaborated with the mobile love game "Undetermined Incident Book". In order to satisfy fans, the game scene is reproduced one-to-one, and every customer who picks up food will be called "Miss Lawyer". The four male protagonists in the game have a strict order of arrangement, and Cha Baidao simply asked employees to study overnight and engrave the male protagonist's surname "Xia Zuo Molu" into their DNA.

The war to find the next hit will not stop. After Boya Juexian helped Bawang Chaji break through the siege, the battle ushered in a new opponent - Luckin Coffee. Just two weeks ago, the coffee industry's king of volume launched Qingqing Jasmine. Luckin Coffee once again offered the sharp weapon of 9.9 yuan, and many consumers positioned it as "a cheaper Boya Juexian". Coffee brands have entered the hinterland of tea drinks, and a new battle has quietly begun.

References:

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2. Dialogue with Peng Xin, founder of Naixue: It is not the decisive moment yet, we will talk laterLatePost

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6. Lemon creates "new riches", Mixue Ice City, Lemon Season, and Lemon Republic "squeeze" more than 5 billion yuan, FBIF food and beverage innovation

7. Mixue Ice City is included, Luckin Coffee marries into a wealthy family, how many volumes are there in this tea beverage joint venture?NetEaseNumber reading

8. Bawang Tea Princess Zhang Junjie: Create a minimalist supply chain for hot-selling products, and have more opportunities to upgrade new tea drinks, Mingliang Company

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The article is original by Daily People. Any infringement will be investigated.