Sino-Singapore Jingwei Client, June 14 (Yan Shuxin) Recently, "new style tea" has once again become the focus of market attention.

First, China Post sold milk tea across borders, attracting many consumers to line up to buy; then Naixue’s tea finally passed the listing hearing and became the quasi-"new-style tea drink first" and broke the previous rumors of "bleeding on the market". In 2020, the adjusted net profit was 16.643 million yuan, turning losses into profits.

  Post enters the office, Nayuki is listed, is the money for milk tea really good?

  New latitude and longitude in the data map

Capital crazy pursuit

  Recently, a milk tea shop called "Youxian Tea" in the China Post Pharmacy in Fuzhou City, Fujian Province became popular, attracting many consumers to check in and line up to buy.

  Public information shows that China Post Pharmacy is a pharmaceutical retail pharmacy under China Post Hengtai Pharmaceutical Co., Ltd.

The largest shareholder of China Post Hengtai Pharmaceutical Co., Ltd. is China Post Capital Management Co., Ltd., a wholly-owned subsidiary of China Post Group, and "Post Oxygen Tea" is a cooperative project introduced by China Post Hengtai Pharmaceutical Co., Ltd.

  It is reasonable for the postal service to enter the new-style tea.

In recent years, the popularity of new tea drinks has attracted a lot of capital to join.

  Taking the two leading tea brands of Hey Tea and Naixue as an example, Tianyan Check data shows that since 2016, Hey Tea has completed three rounds of financing. Investors include IDG Capital, Today Investment, Hillhouse Capital, etc., round A The total amount of round B financing exceeds 500 million yuan. Although the amount of round C financing has not been announced, there is news that the valuation of Xicha after this round of financing may exceed 16 billion yuan.

  Naixue’s Cha has completed five rounds of financing, with investors including Tiantu Investment and Honghui Capital.

The latest round of financing was at the beginning of this year. At that time, according to media reports, Naxue's Tea had completed a Series C financing of more than 100 million US dollars, led by the Pacific Alliance Investment Group (PAG).

After this round of financing, Naixue's tea valuation is close to 2 billion U.S. dollars (about 13 billion yuan).

  The financing history of Heycha and Nayuki's tea.

Data source: Drawing by Yan Shuxin, Zhongxin Jingwei, Tianyan Checking

  In addition, there are rumors that the milk tea industry "Pinduoduo" Michelle Ice City has also completed the first round of financing of 2 billion yuan. Dragon Ball Capital and Hillhouse Capital jointly led the investment. After the financing is completed, Michelle Ice City is valued at more than 20 billion yuan. yuan.

  According to the data from Tianyan Check, since 2021, nearly ten financing incidents have occurred in the new tea-drinking track, with a total of over 800 million yuan.

Make money and burn money

  With so much capital pouring into this track, can new tea drinks make money?

Perhaps we can find the answer in the prospectus of Nayuki's tea.

  According to Nayuki's tea prospectus, it takes two to three months to establish a standard tea shop for Nayuki, depending on the size and location of each tea shop.

As of March 31, 2021, the average investment cost for opening each standard tea shop and Naixue PRO tea shop is approximately RMB 1.8 million and RMB 1 million.

The tea and tea shops of Nayuki that opened in 2018 and 2019 have achieved a payback period of 15.5 months for tea shops as a whole.

The first break-even period of Naxue’s tea shop during the track record period was approximately less than 4 months.

  In other words, to open a tea shop in Nayuki, invest 1.8 million yuan, break even within 4 months, and pay back 15.5 months.

According to media reports, the investment payback period for KFC's new store is about 2 years, and Pizza Hut is 3-4 years.

  It's not difficult to understand why Nayuki's tea has been opening stores like crazy.

According to the prospectus, in November 2015, Naixue's Tea opened its first tea shop in Shenzhen.

From 2018 to 2020, the number of its stores has continued to surge, from 155 and 327 to 491 in 2020. As of May 31, 2021, the number of its stores has reached 556.

  Data source for the growth of the number of tea shops in Naixue: Drawing by Yan Shuxin in the new latitude and longitude of Naixue's tea prospectus

  In an interview with the media, Peng Xin, the founder of Naixue’s tea, said that the listing in Hong Kong was not due to lack of money. “We actually didn’t have much financing in the past. Before 2020, there was only one investor called Tiantu. We went from one store to 500 nationwide. Many stores, to 17,000 partners, where does the money come from? The stores make their own money."

  The prospectus shows that in 2018, 2019, and 2020, Naixue's tea will achieve revenue of 1.087 billion yuan, 2.502 billion yuan, and 3.057 billion yuan respectively.

However, due to higher raw material costs, rental costs, personnel costs, marketing costs, etc., Nayuki's tea had lost two years in a row.

In 2018 and 2019, the company's adjusted net profit lost 56.580 million yuan and 11.735 million yuan, respectively. It only turned losses into profits in 2020, with a profit of 16.643 million yuan.

  The latest data shows that for the three months ended March 31, 2021, Nayuki's tea realized revenue of 959 million yuan and recorded an adjusted net profit of 7.3 million yuan.

During the reporting period, Naixue's tea shop operating profit margin was 16.8%.

  "The reason Nayuki's tea made a loss before was mainly due to the company's greater cost pressure in terms of expansion and marketing, so the problem of profitability in the early stage appeared. However, most tea brands can still guarantee profitability. From a point of view, the profit level of the industry is relatively high." Jiang Han, a senior researcher at Pangu Think Tank, said to the Sino-Singapore Jingwei Client.

  Shen Wan Hongyuan once mentioned in a research report that the investment payback period of the tea industry is generally about 1-1.5 years, and there is still room for optimization of corporate profits.

Shen Wan Hongyuan said that by dismantling the single store model, Naixue’s mature tea store operating profit margin is expected to be around 25%; for relatively mature mid-end franchise brands, such as a little bit, the operating profit margin of its franchisee owners can be Between 25-30%; Michelle Ice City is about 15%.

  As for subsequent improvement, Shenwan Hongyuan believes that large-scale stores still assume the role of brand marketing. Assuming that small-scale stores will be the main stores in the future, it is expected that the same-store profit margin will also increase structurally; at the same time, the scale effect brought by scale expansion will be further Reduce costs and headquarter expense ratios, thereby increasing profit margins.

The money for new-style tea is not easy to make

  According to Naxue’s tea prospectus, as of December 31, 2020, there are approximately 348,000 freshly-made tea shops in China. The average price of freshly-made tea is 13 yuan, of which about 3,400 are high-end freshly-made tea. Drinking shops, the average selling price of their freshly made tea is not less than 20 yuan.

At the same time, about 10,000 freshly made tea chain stores (defined as a brand with more than one store in the country) operate about 210,000 stores across the country, of which there are about 100 high-end freshly made tea chain stores, and about 2,500 in the country. Tea shop.

  An increasingly serious problem facing these more than 300,000 stores is product homogeneity.

As long as a product becomes popular among consumers, other brands will rush to launch similar products.

Therefore, the ability to regularly launch innovative and high-quality products and increase consumer loyalty is particularly important for new tea brands.

  Nayuki's tea mentioned in the prospectus that it launches about one new drink a week on average, and the company has launched 60 seasonal products since 2018.

At the same time, Nai Xue's Tea said that to further build brand awareness among the Chinese public to attract new customers and retain existing customers, it also requires continuous and substantial investment in sales and marketing.

  Data show that in 2018, 2019, and 2020, Naixue’s tea incurred 39.384 million yuan, 67.484 million yuan, and 82.172 million yuan in advertising and promotion expenses, respectively.

However, not all market participants have this strength.

  New latitude and longitude in the data map

  In addition to the issue of product homogeneity, how to maintain the food safety red line is also a major challenge for the industry.

Some time ago, a store under Michelle Ice City was exposed to tampering with the validity period of ingredients and illegal use of overnight milk milk, which caused heated discussions.

  China’s food industry analyst Zhu Danpeng believes that Michelle’s food safety issues are mainly due to its low-profit expansion and accelerated store openings.

“Michelle Ice City’s low pricing has further compressed its profit margins, resulting in loopholes in its management of employees and stores.”

  The Sino-Singapore Jingwei Client noticed that after the incident was exposed, a Michelle Ice City franchisee once said, “As long as you make a profit, you will not do this kind of thing. The unit price of Michelle is too low, but now the rent is expensive. The labor is expensive and the take-out charge rate is high, so I can only save a little bit from here."

  Zhu Danpeng said that food safety issues are a major hidden danger for new-style tea shops in China, among which franchise-based brands are more prone to problems.

  "New-style tea drinks are a good track, but the industry has actually entered a state of red sea competition. Under such a situation, brands can only rely on quality to determine the victory. Who can better attract consumers? , Allowing consumers to buy repeatedly, who can continuously introduce new ones, and give consumers more fresh attempts, these are the core issues that currently plague the development of new-style tea brands." Jiang Han believes.

Development prospects are still promising

  According to the Insight Consulting report, in terms of retail consumption value, the total market size of China's ready-made tea drinks in 2020 is about 113.6 billion yuan, and is expected to reach 340 billion yuan by 2025, with a compound annual growth rate of 24.5%.

  CITIC Construction Investment mentioned in the research report that innovative methods such as brand upgrades, strong IP promotion, supply chain integration, digital upgrades, and Internet celebrity marketing have made new tea drinks avoid the red sea battle of traditional tea drinks.

  "New-style tea has inherited and developed China’s tea-drinking culture, conforms to the tastes of Chinese consumers, and has more closely grasped the needs of generation Z consumers. New-style tea drinks accounted for 55% of consumers born in the 1990s, which is much higher than the traditional ones. Original leaf tea and teabags.” said China Securities.

  In addition, the agency pointed out that from the perspective of consumer portraits, more than 50% of new tea consumers have a monthly disposable income of more than 8,000 yuan, and 82% of consumers have a higher education background.

This part of the consumer group has higher brand loyalty, pays more attention to health and nutrition and other elements, and is less sensitive to product prices.

  On the other hand, the epidemic and digitalization have accelerated the proportion of takeaways in tea consumption. With the help of takeaway services, brands have reduced their dependence on business premises, saving rental costs while maintaining high operating efficiency.

Statistics show that in 2020, the proportion of takeaway orders for Naixue's tea has increased from 7.5% in 2018 to 31.9%.

  Shenwan Hongyuan Research Report pointed out that China's ready-made tea industry is in a period of accelerating growth and cashing dividends.

The agency believes that the tea industry is similar to the catering industry, and the diversity of consumer taste preferences and the high frequency of consumption determine its extremely long tail characteristics.

"Hicha, Naixue's tea and Haidilao have a high degree of overlap in store location. According to the analogy of Haidilao's store space, we believe that the number of stores for a single mid-to-high-end tea brand across the country can potentially expand to 3,000 in the future. the above."

  China Securities Investment also mentioned that the domestic tea industry has great potential for development, and it is still in a period of high investment and differentiated competition in recent years.

  "As more and more players join, the new tea drink market has gradually entered a node of rapid development and rapid growth. Under this node, the entire industry still has room and possibility to continue to expand. In other words, the competition in the future is more about brand effect and scale barriers, and this is also the embodiment of the core competitiveness of enterprises." Zhu Danpeng said.

(Zhongxin Jingwei APP)

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