Original title: Nai Xue's tea makes venture capital!

New tea brands take the initiative to engage in investment, the industry challenges are still not small

  Author: Song Tenghu

  On March 28, Nai Xue's Tea officially established an investment company, intending to make efforts in the field of venture capital.

As the "first share of new tea drinks", Nai Xue's tea stock price has been weak since its listing last summer, and the company's annual performance is still at a loss.

  Due to the intensified competition in the industry and the repeated impact of the epidemic on sales, the tea industry is experiencing pains.

Since the beginning of this year, brands such as HEYTEA and Nai Xue’s tea have lowered the prices of some products, and the intention to seize the market through price decline is obvious.

  Nai Xue's tea set up an investment company, and many colleagues have already started

  On March 28, Shenzhen Beautiful Self-Power Investment Co., Ltd. was established with a registered capital of 10 million and its legal representative was Huang Jinhua.

It is reported that the business scope of the new company includes venture capital, investment activities with its own funds, and social and economic consulting services.

  As one of the hottest tracks in recent years, new-style tea drinks have attracted a lot of capital investment, and star companies have received high attention from consumers.

Just in February of this year, Shuyishaoxiancao announced that it had obtained indirect investment from companies such as Juewei Foods and Qiaqia Foods, with a scale of more than 600 million yuan.

After the financing was completed, Hunan Shudaicao and Chengdu Xinjin Siyiwu held 2% and 1.6% of the shares in Shuyishaoxiancao respectively.

According to this calculation, the valuation of Shuyi Catering reached 10.6 billion yuan (about 1.5 billion US dollars), and it was successfully promoted to a unicorn with a valuation of more than 1 billion US dollars.

  In addition to institutional financing, news that various tea brands are about to hit the IPO also appeared frequently.

In fact, HEYTEA was the first to be listed in Hong Kong, but every rumor was denied.

Michelle Ice City from the Central Plains focuses on the sinking market, moves faster on the way to the capital market, and targets A shares.

In 2021, as disclosed by the Henan Provincial Securities Regulatory Bureau, Michelle Ice City Co., Ltd. plans to IPO and list on the A-share market, and will receive guidance from GF Securities.

There is also news that Lele Tea will go public in Hong Kong as soon as 2022, and plans to raise 300 million to 500 million US dollars through IPO. Lele Tea responded to the media at the time that there was no clear listing plan; A $500 million Hong Kong IPO is also being considered, and the company has sought advice from banks on a Hong Kong IPO.

  However, some tea brands are not reconciled to just financing, but also take the initiative to try to find high-quality investment. Nai Xue's tea is not the first in this regard.

Since the second half of last year, HEYTEA has also increased the pace of its own investment, and successively invested in a number of brands, including coffee brand Seesaw, peach-flavored tea and Peach Peach, pre-mixed wine brand WAT, juice brand Ye Cui Shan, etc. .

Some analysts believe that HEYTEA’s move is to continuously consolidate its leading position in the industry, and to expand its categories is to attract more consumer groups and meet the potential needs of young people in the same purchase scenario.

  In December 2021, Gu Ming, an internet celebrity chain milk tea brand that started in third- and fourth-tier cities and focused on sinking markets, also became an investor.

As a new shareholder, Gu Ming participated in the B-round financing of the dairy brand "Adopt a Cow". At that time, participating institutions included Meituan Longzhu, Dehong Capital and KKR.

As early as October 2021, “Adopt a Cow”, which owns eight farms, has been rumored to be planning an IPO.

According to the official website of the China Securities Regulatory Commission, the company has accepted A-share listing guidance, which is expected to end in April 2022.

Michelle Bingcheng also previously invested in a tea brand called "Huicha", which is its first foreign investment since the establishment of the investment company.

  Industry challenges still exist, competition and other issues cannot be ignored

  With the escalating consumer demand, the high-frequency consumption of benchmark coffee overseas, China's new tea industry is rapidly expanding.

However, the track still faces many severe challenges. Risks such as intensified competition, repeated epidemics affecting sales, and food quality and safety issues are worthy of investors' attention.

  It is reported that as a well-known tea brand in China, Nai Xue's tea was founded in 2015.

Although Nai Xue's tea, which was listed last summer, has the aura of "the first share of new tea drinks", the performance of the secondary market is not satisfactory.

The company issued a total of about 257 million shares in the listing, and the IPO raised a total of 4.8424 billion Hong Kong dollars in net funds, but the stock price was broken on the first day of listing.

In February of this year, Nai Xue's tea released a performance forecast showing that it is expected that the revenue in 2021 will reach 4.28 billion to 4.32 billion yuan, and the adjusted loss will be 135 million to 165 million yuan.

  Since the beginning of this year, in the context of rising global raw material prices, tea brands such as Xiangpiaopiao and Chayanyuese have announced price increases.

New tea brands such as Heytea and Nai Xue's tea have bucked the trend and lowered the prices of related products, and the atmosphere of "price war" is quite strong.

  On March 17, Nai Xue's tea announced a substantial price reduction, launched the "easy series" of 9-19 yuan, and promised to launch at least one new product under 20 yuan every month.

In early March, Lele Tea said that Lele Tea will launch products below 20 yuan, of which the lowest price of pure tea freshly extracted jasmine green is only 8 yuan.

In late February, HEYTEA also issued a document stating that the prices of various beverages have been lowered, and there are no longer any beverages starting with 3 characters on the standard tea menu. No price hikes this year.

  Regarding the price reduction, a previous report released by Zheshang Securities researcher Ma Li pointed out that the low-end tea market has a low concentration, and new brands continue to emerge, which has not yet become an absolute leader.

The high-end market concentration of new tea drinks is relatively high, and the tea market share of the top two leading brands, HEYTEA and Naixue, is much higher than that of other brands.

With multi-dimensional advantages such as product quality and innovation, suitable retail locations, and strong brand potential, high-end brands are seizing the market through price declines.

  Last winter, Shenzhen Haolin Catering Co., Ltd., a subsidiary of HEYTEA, was investigated for false propaganda.

According to the Shenzhen Municipal Market Supervision and Administration Bureau, in response to the “1,000 yuan cup of olive juice” reported by the short video platform, from November 22 to November 24, 2021, the bureau will review the “Wild Cui Shan” operated by Haolin Catering. ·Molecular Juice” beverage store continued to carry out investigation and evidence collection.

After verification, the actual purchase price of the store's raw materials does not match the advertised price, and a case has been filed and investigated for the company's suspected false propaganda.

  In February of this year, HEYTEA was also caught in a "layoff" storm, which was once on Weibo's hot search.

The relevant person in charge of HEYTEA once told the Securities Times reporter that the rumors are all false information, and there is no so-called large-scale layoffs in the company. A small number of personnel adjustments before the year were based on normal personnel adjustments and optimizations based on the year-end assessment.

At the same time, year-end bonuses for employees have also been distributed to employees before the Spring Festival according to their performance.

  For the risks in the industry, Ma Li also reminded in many ways.

First, the existing tea beverages are in a stage of rapid development. The increase in the density of tea beverage stores, the increase in the number of competing brands, and the diversion of alternative beverages such as coffee and lemon tea have accelerated the development of the industry, resulting in brand iteration and changes in the competitive landscape.

Second, the repeated outbreak of epidemics across the country has impacted the offline passenger flow of existing tea brands and affected the normal operation and expansion of stores.

The third is that high-end tea drinks bucked the trend by lowering prices to widen the price band. While attracting consumers, it also raised the question of “whether the price is reduced and the quality reduced”, which may damage the brand value.

Secondly, the decline in profits caused by price cuts and the risk of whether user growth can be hedged cannot be ignored.

Fourth, the rise in raw material prices has led to an increase in the cost of freshly made tea.