Author: He Zhexin, editor: Zhong Rui, design: Chen Amman, Sun Wenyu, sparse Rui, title figure from the visual China

2020 is a year of growth and transformation for new tea drinks.

After a brief shutdown at the beginning of the year, tea shops ushered in “retaliatory consumption” with online ordering, and recovered rapidly. Capital’s enthusiasm for the tea-drinking track is also undiminished. In 2020, there were 18 financings for tea-drinking brands, and the total disclosed amount reached 1.743 billion yuan, accounting for 36% of the total financing of the food/health products track that year.

The sinking trend of the tea market is becoming more apparent. Michelle Bingcheng opened thousands of stores, and the local brand Cha Yan Yue Se began to deploy nationwide; 7 Fen Tian, ​​Gu Ming and other waist brands all received financing.

After three years of rapid development, the new tea market brand has begun to take shape. The following is the review and outlook of the new tea market made by CBNData consumer station based on the “2020 Consumer Field Investment and Financing Trend Report”.

The popularity of tea beverage financing has rebounded, with a record total amount

The “Report” shows that in 2020, there will be a total of 18 financings for tea brands, an increase of 8 from the previous year. The total amount disclosed reached 1.743 billion yuan, an increase of about 700% year-on-year.

Among them, new chain tea drinks received 13 financings, tea bag brands received 3 financings, tea wholesale brands received 1 financing, and unmanned tea shops received 1 financing.

From the perspective of the flow of capital, the top brands of each subdivision track are still the sweet pastry for capital competition. Naixue’s tea completed two rounds of financing in June and December, B and C, with a total amount of up to 200 million US dollars, which is the largest amount of tea brand financing this year. 7 Fen Tian, ​​a strong mango drink in cups, received 150 million yuan in financing in October; Chali, the leading brand of tea bags, also completed a round of B round of financing of 100 million yuan.

Picture source: “2020 Consumer Investment and Financing Trend Report”

Take a new-style tea shop as an example. In addition to the strength of the brand itself, the logic for capital to choose the top brand is “the probability of failure is not that high.” In addition, the direct marketing model adopted by top brands is also conducive to ensuring brand image and has a positive effect on brand valuation.

Some insiders also believe that capital is concerned about leading companies, mainly to promote these leading companies to go public quickly and complete cash out.

From the perspective of the actions after financing, whether it is the head or the waist, tea shops will take store expansion, supply chain upgrades and digital transformation as their future development directions. This means that while the current tea market is developing rapidly, it is also undergoing a transformation represented by digitalization and an upgrade in the direction of supply chain integration.

The investment trend in the tea market is quietly changing

According to the disclosed data, as of the end of 2020, about RMB 5 billion has entered the new tea drinking track. Behind the booming market, investment trends are also changing.

One of the trends is that while top brands are attracting huge amounts of capital, funds have begun to tilt towards waist brands. Waist brands such as Shanghai Auntie, 7 Fen Tian, ​​Gu Ming Tea Drink, etc. have all received financing in 2020. For this phenomenon, we summarize the following two reasons:

1. The tea drink market is segmented, and the waist brands that focus on “small categories” are popular.

In the tea-drinking track where competition is becoming increasingly fierce, the number of top brands is limited. For the capital side, investment is often to invest in the track and sub-categories. Compared with scale and development speed, it is more important for the brand to maintain a subdivision track.

As the pioneer of cup desserts, 7 Fen Tian chose mango as the cutting track and became the leader of cupped Yangzhi nectar; Xiaoman Chatian chose cherries as the cutting entrance. Aunt Hushang pioneered freshly made five-grain tea, while Aunt Shanghai started from”The category entered the tea market and formed its own core product characteristics.

2. The tea market is sinking, and the moderately priced waist brand ushered in the prospect.

In 2020, we have witnessed the rise of the “small town milk tea shop” represented by Michelle Ice City, the emergence of the local brand Cha Yan Yue Se, and the accelerated layout of Hey Tea’s mid-end brand Hey Xiaocha All these indicate that the tea market is sinking to lower-tier cities, and cost-effective routes are more popular in small towns.

Guming, which received financing last year, is a tea brand rooted in third- and fourth-tier cities. As of April 2020, Guming has opened more than 3,000 stores across the country.

Of course, we must also see that these brands have done an excellent job in managing franchisees, supply chains, and operations. 7 Fen Tian strictly controls the number of franchisees, adopts a direct-sale store model in the central urban areas of first-tier cities to strengthen the brand image, the conversion rate of Gu Ming tea drink franchisees is less than 2.5%, and the standard is strict; Jinguo, an importer of cherries in China, cooperates with suppliers, while developing domestic production areas; Guming Tea has spent 40 million yuan to build its own cold chain to reduce transportation costs while ensuring fresh raw materials. Aunt Shanghai has set up a company responsible for supply chain, responsible for the distribution of raw materials for all franchisees.

The second trend is that new species radiated by new-style freshly made teas are beginning to attract capital attention. Among them, the upgraded tea bags are typical. In 2020, there will be 3 financing events related to the new-style tea bag brand. The leading brand Chali, Chali, has completed a billion-dollar round of financing, and has won the top spot with 6 financings in 10 years.

Picture Source: Enterprise Check

Data shows that Chali Chali, which focuses on herbal and fruit blended tea and is positioned as a professional tea provider, has sold a total of 600 million tea bags, and has a market share of about 24% in B-end channels such as hotels, offices, and catering. Its founder predicts that sales volume will surpass that of the established tea bag brand Lipton in the next 1-2 years.

The reasons why new-style tea bags are popular with consumers may be due to the following 3 reasons:

1. The important position of tea in Chinese food culture cannot be ignored;

The rise of new tea bags is based on the mature tea consumer market. The long-standing tradition of drinking tea allows brands to dispense with the market education stage, and the current phenomenon of “categorized without brands” in my country’s tea consumption provides companies with huge room for development.

2. The new tea bag brand abandoned the traditional origin + vintage route, focusing on health + deliciousness to attract young people;

The main reason for the lack of leading tea companies in my country is that the year + place of origin measurement is not transparent, which causes confusion in the market price system. Its marketing method is still taking the line of acquaintances business. The new teabags are mainly health brands, and they are targeting the younger generation of health-preserving consumption. Natural additives are used as selling points, supplemented by high-value packaging to attract consumers.

3. New-style tea drinks focus on raw leaf tea, and tea bags have become a brand new selling point

The “raw tea + fresh milk” model of new tea drinking is one of the opportunities for the rise of the tea bag brand. For brands, the quality of tea directly determines the quality of tea. Nie Yunchen, the founder of HiTea, once revealed that in HiTea’s cost structure, tea accounts for a large proportion, even exceeding shop rent and manpower. While some tea chain brands are expanding offline, they have also launched tea bag products, such as Hey Tea and Naixue’s tea. The monthly sales of tea bags in the e-commerce flagship store has exceeded 1,000.

Trend three, more new faces of investment institutions appear on the tea-drinking track.

The financing craze of the tea drink track started in 2016 and reached its peak in 2018.

Among them, Tiantu Capital, Hillhouse Capital, IDG, Sequoia Capital, and Dragon Ball Capital under Meituan are all “familiar faces” who have invested many times, and many new tea investment institutions have emerged. Faces-In 2020, Shunwei Capital, a subsidiary of Lei Jun, will launch a new tea brand 7 minutes sweet for the first time, and Country Garden Ventures will lead the investment in the tea bag brand Chali. Coatue, the US hedge fund that invested in Hi Tea, is the first to involve a new consumer brand. Prior to this, Coatue’s investment was mainly in the Internet industry. VIPKID, Meituan and Didi Chuxing were all Coatue’s funding targets.

Investment institutions that have not been involved in new consumption fields before turned to the tea market, which also confirmed the tea market’s popular position in the consumer goods investment track.

Where will the tea market go in 2021?

1. The next “Hi Tea” will be born in third- and fourth-tier cities

No matter from the perspective of capital or market, the tea market in first- and second-tier cities is almost reaching the ceiling. The top tea brands that focus on first- and second-tier cities are already difficult to “get on the bus”. In the Series B financing of Heytea in April 2018, many institutions held a lot of money and failed to get a half share.

Chinese food industry analyst Zhu Danpeng said that after the rapid development of the past three years, the race track players have actually reached the mid-to-late stage, and the growth of new tea shops in first- and second-tier cities is slowing down. According to iiMedia Consulting’s data, from 2016 to 2019, the growth of the tea market in third-tier and lower cities reached 138%, surpassing the growth rate of 120% in Beijing, Shanghai, Guangzhou and the new first-tier cities; at the same time, the closing rate of tea drinks in third-tier and lower cities 15%, which is far lower than the 55% closing rate of tea shops in first-tier cities.

“The sinking of tea drinks” has become a hot topic in the past two years. Since the beginning of this year, waist brands have repeatedly received financing. Under the relatively loose competition environment in third- and fourth-tier cities, many super-scale brands are emerging-Michelle Ice City has broken through 10,000, and IPO news has been reported many times; books also burn immortal grass, Yihetang, ancient tea, and sweet La La and others are opening large-scale stores; local brand power Cha Yan Yue Se has begun a national layout.

Xiacha launched its sub-brand Xixiaocha with a price range of RMB 6-16 in April 2020. At present, a new store has opened in Shenzhen, and its ambition to penetrate third- and fourth-tier cities is self-evident.

2. Multiple SKUs are a trend, and the future of tea brands is a “lifestyle” brand

Whether it is Nayuki who is taking “tea+baking”, heycha who is robbing the coffee market, or selling the surrounding tea colors, multiple SKUs have become the trend of tea shops.

Multiple SKUs are conducive to the sales growth of a single store(such as soft bags can open up the breakfast market), and also extend the life cycle of the brand—— If you focus on the SKU product of a single popular product to make a hit, the life cycle of the brand will decline with the life cycle of the single SKU.

Zhonghai Capital, which invested in Lele Tea, said that capital now pays more attention to whether the investment object has the potential to become a “lifestyle” brand, and the ability to successfully manage multiple SKUs can prove this.

The transformation of tea brands to lifestyle brands is also reflected in marketing.

Take Nayuki as an example. Between 2019 and 2020, Nayuki has co-branded 51 times, involving curatorial, food, and 3C categories. The two sides have combined the common characteristics of both sides to launch joint teas, European bags, peripherals and offline Pop-up stores and theme stores. Behind the frequent co-branding, Nayuki’s tea is also constantly telling stories, strengthening its own IP, and conveying the brand’s tonality. With a view to establishing the ultimate goal of a brand that represents a “beautiful and pure” lifestyle.

3. Digitalization will determine the speed of brand expansion

The “2020 White Paper on New Tea Drinks” shows that digital transformation has become a trend for new tea companies. Digital construction in terms of location selection, supply chain, channels, new product iteration and marketing will help brands to do more quickly and accurately. Make a decision. Deep cultivation of its own membership system, online digital marketing and digital supply chain construction have become the top priorities of the brand.

Picture source: “2020 New Style Tea White Paper”

In this regard, the head brand started early and the results are more obvious. In 2018, HiTea launched the Planet Membership Program, which gained 6 million users in half a year. Nayuki started to build a membership system at the end of 2019. As of November 2019, the number of members of the new tea drink representatives, Nayuki and Heycha, both exceeded 30 million. At the end of November, Naxue’s POR stores have been digitally upgraded in terms of ordering and kitchen management, while Xixiaocha’s stores have returned to the small-store model with digital empowerment to reduce their own operating costs.

In addition, segmentation trends such as healthy small materials, diversified tea bases, and environmentally friendly packaging are also taking place. In the future, we will continue to pay attention to the changes in the demand of new tea users, how the track will expand, and what kind of waves will be caused by the market.