Can you win by Xiao War?
Editor’s note: This article is from WeChat public account “DT Finance” (ID: DTcaijing), Author | Huang Yuanzhang Edit | Lu Yi, Tang Yiqin Design | Zhang Haohao.
Beyond Starbucks is one of the most slogans that Rui Xing shouted. In this long-term leap forward, Rui Xing seems to want to go all the old roads that Starbucks has gone through.
This time, Ruisheng has to do it, and Starbucks planted the tea in 2017.
On September 3, Ruixun Coffee announced that its sub-brand “Xiaolu Tea” operated independently, launched its independent app, small program and offline stores, and also signed traffic artist Xiaozhan as the spokesperson of Xiaolu Tea brand. . In order to distinguish the market for coffee products,
Xiaolu Tea Shop will focus on the second, third and fourth tier cities, focusing on consumption sinking. 
(Source: Xiaolu Tea official website)
Brand Independence, Special Stores… At first glance, the deer’s road to independence is somewhat similar to the way Starbucks pushed Teavana in 2017.
In 2017, Starbucks acquired tea retailer Teavana and opened its first Teavana store in the wealthy district of New York. At the time, Starbucks CEO Howard Schultz set an ambition to deploy 1,000 Teavana tea bars globally within five years.
But with the phrase “underperforming” in the earnings report (
Unsatisfactory
),
Starbucks closed all of the 379 Teavana at the time due to performance issues, and the company’s tea strategy ended in failure.
Compared with Starbucks’ hot tea series launched in the US market, which is not familiar with tea culture, tea products made by Xiaolu Tea have already gained market recognition. But this is also the case. The existing products of Xiaolu Tea with the concept of “Dahongpao”, “Raspberry Raspberry” and “Cheese” have already existed in the market.Mature competing products.
It can be said that Starbucks is bent on opening up the blue ocean of tea in the US market, and the deer tea has plunged into the Red Sea of Chinese new-style tea – even the “blood sea”.
. The former has failed, can the latter tell a more complete story?
Why does Rui Xing need this cup of milk tea
As of June 30, 2019, Rui Xing, who is under 2 years old, has opened 2,963 stores – even if it has been in Starbucks for 40 years, the store has just exceeded 4,000 stores.
The rapid growth in the number of stores shows revenue: In the first half of 2018, Ruisheng sales exceeded 134 million, while sales in the first half of 2019 soared tenfold to 1.388 billion.
The high growth rate of burning money has also been recognized by the capital market – Ruixing introduced the strategic investment of “Starbucks major shareholder” BlackRock, Inc. before the listing.
With BlackRock’s east wind, Rui Xing, who lost a total of 1.6 billion in 2018, passed the IPO approval in only 24 days. He successfully landed in the US stock market and put a lot of beautiful knives into his pocket.
But Rui Xing is still not profitable yet. From the second quarter of 2019, although Ruisheng’s net revenue continued to rise to 909 million yuan, the net loss of 681 million yuan in a single quarter hit a record high, and the loss ran ahead of revenue.
The capital is very generous, and with a good story, it can send a huge boost; capital is also very ruthless, and once the bubble bursts, it will be the first to leave.
On the day of the release of the financial report, Ruisheng Coffee’s share price fell 16.74%.
At this time, Ruixing needs a new growth point to maintain the “speed increase”.
Choose to put the bet on the body of Xiaolu Tea.
Plunging into the tea circle, Little deer tea will face at least 410,000 opponents
But the current tea is definitely not a big blue ocean market.
The 2019 China Beverage Industry Development Trend Report released by the US Mission Review shows that by 2030, the number of domestic tea-making stores has reached 410,000.
According to the data disclosed by the director of Unilever Food Planning Tea Company: the second quarter of 2018 and the second quarter of 2017Compared with the first-tier city tea shop, the closing rate is twice as high as 55%, while in second-tier cities, the closing rate is slightly higher than the opening rate.
Meituan Comments announced another One data shows that the lower the city line level, the faster the current tea shop grows. The number of existing tea-storage stores in second-tier cities increased by 120% compared with the same period in 2016, and the number of stores in third-tier cities and below increased by as much as 138%.
That is,
The current tea market in the second, third and fourth tier cities of Xiaolu Tea is experiencing substantial growth. There may be a red sea and an opportunity to establish a brand leading position, but now it will face intense competition.
From the perspective of the product itself, it is difficult to see the unique point that Xiaolu Tea can win.
As we mentioned earlier, the product development of Xiaolu Tea is not so much new, mainly the keywords that everyone is used to.
(小鹿茶系列产品,图片来源:小鹿茶官网)
The price is close to the standard of low-grade cities.
Take the 11 drinks currently sold by Xiaolu Tea as an example. The average price is 25.6 yuan/cup, which is calculated as the “buy two get one free” subsidy activity. The average price is temporarily maintained at 17 yuan/cup.
But 1 point, CoCo can be tea and other existing chain brands, as well as similar local brands such as tea and color, are also at this price. The price is not the advantage of Xiaolu Tea.
Little Deer Tea uses Rui Xing’s gameplay
The more special place is still in the style of play. Rui Xing will transplant a set of processes for successful coffee breakout into tea.
First of all, there must be spokespersons, this is the guarantee of traffic.
Before Xiaolu Tea, no brand is willing to spend a lot of money to find a star for its endorsement. Xiaolu Tea is a new way for the tea industry.
Before Shaw, Liu Yuran was the platform for Xiaolu Tea. Liu Yanran’s fans purchased the drinks and also purchased the surrounding products of Xiaolu Tea for the purpose of hobbies and support for idols.
When Xiao war came to power, the traffic star who was smashed by “Chen Qing” may also bring a very considerable transformation to Xiaolu Tea. 
At least from the current data, Xiaolu Tea has earned a lot of money with it. Put the traffic. According to official data, Xiaolu Tea has attracted more than 1 billion exposures under the flow of spokespersons such as Liu Yuran and Xiao Zhan. Under the relevant reports on various platforms, there are indeed fans who say that they will place orders.
Second, there must be a master who can be used to advertise quality.
If you pay attention to Ruixing’s offline marketing activities, it is not difficult to find that this company is very keen to market its own coffee quality master – Italian André Latoura. His photos appeared in various patches and elevator advertisements. He also distributed “master hand-made” free coffee to all goose factory employees downstairs in the headquarters of Tencent Shenzhen.
Little Deer Tea is no exception, and two chief tea masters have been announced on the official website. Considering that the small pot of tea has already enabled many non-genetic inheritor tea masters, if other existing teas are followed up, the tea masters will soon be insufficient.
(Tea Master of Xiaolu Tea, photo source: Xiaolu Tea official website)
Finally, be sure to expand quickly. In addition to the aforementioned subsidies, there are also fast opening stores.
Compared with Ruixing’s own store, Xiaolu Tea chose a more secure way to launch a new retail operation partner model, with the concept of “0 franchise fee” and “not profit before profit”, to attract more franchisees. Help open the store.
It seems that it is also a win-win situation. Xiaolu Tea has transferred the cost of opening a store and eased the pressure on its own store. The franchisees also reduced the large franchise fee and shared the brand effect of Xiaolu Tea.
If you spend a lot of money, please spokesperson, high subsidy to do marketing fission, free of franchise fee to expand at a high speed… The squally and thriving Internet gameplay combined with the store opening and chain operation ability precipitated in the coffee field can really give people Think about space.
Hidden dangers behind marketing and expansion
But in this process of “bigger and stronger”, there are still some problems that are not so well solved.
First of all, huge marketing costs will always exist and become a heavy burden.
The high-speed communication was first established on the huge marketing expenses. Ruixing CFO Reinout SchAkel revealed in the conference call:
Ruixing had up to 245 million advertising expenditures in Q2 in 2019, of which 140 million gave Focus Media, about 7.5 million yuan to KOL and new media, and about 7 million yuan to WeChat LBS ads.
In the advertising investment, Ruixiang, who has always been rich in wealth, this time still burns out a red-hot image of net red at the expense of shareholders’ capital.
Second, if the deer tea wants To gain a foothold in the sinking market, it is necessary to maintain the current pricing. In other words, subsidies must not stop – this is also a big burden .
At the beginning of 2019, Ruixing’s customer cost once fell to 16.9 yuan/person, but in the 2019 Q2 financial report, this figure once again returned to the level of more than 40 yuan/person in the initial period of operation, reaching 48.1 yuan/person.
By analogy, whether Xiaolu Tea can maintain the image of “low-priced tea” to smoothly enter the sinking market, subsidy is the key.
Although we mentioned that the average price of Xiaolu Tea is now around 17 yuan/cup, if the subsidy is lost, consumers will face an obvious price increase – which will easily create a huge psychological gap for users.
What followed was the loss of price-sensitive users.
.
More importantly, low-tier cities may not be able to squeeze so many franchisees.
(chives)
.
As we mentioned earlier, in the past two years, the number of existing tea shops in low-tier cities has doubled, consuming a big wave of milk tea to enrich the dream.
Although Xiaolu Tea has launched “0 franchise fee” and “no profit before profit”, and promised to accept the “new guest first cup free” subsidy for franchisees, franchisees still need to bear the store rent, machine depreciation, raw materials. Loss and other large costs, this is not a small amount of money.
A few days ago, the “Semi-Feng Xianren” who had participated in the financing of many tea companies and supply chain companies had put forward their own views:
“A shop that must make money, no one will join, have you seen Starbucks join?”
(The words in the original sentence are fierce, we soften it)
This sentence also reminds potential investors who have ideas – do you really know about the food and beverage industry?
It seems that although Xiaolu Tea inherits Ruisheng’s winning point well, it is also like Ruixing, which does not completely solve the high cost problem of marketing, subsidy and fission in this process. And the new model of free of charge will not necessarily attract enoughMany low-level city investors pay for this, which brings some uncertainty to the rapid expansion.
In other words, the new growth story that Rui Xing wants to talk about is still not so complete.
And we noticed that Ruixing’s stock ban was 180 days, which means that the stocks of Ruisheng’s shareholders will be lifted in November.
Rui Xing
(shareholders)
What you want to do, you will know when you get there.
The header image is from pexels