“Abandoning” Lele Tea’s old love, why does Hey Tea focus on Seesaw, “Xinhuan”?

It was because of “abandoning” Lelecha that he was on the hot searched Heycha, and after a few days, he hooked up with “Xinhuan”.

Recently, the specialty coffee brand Seesaw announced that it has completed the A+ round of 100 million yuan financing. This round of financing is led by Hey Tea and co- invested by Hony Pak Fook. The funds from this financing will be used for the expansion of stores across the country, supply chain and digital construction. It is worth noting that this investment in Seesaw is the first foreign investment of HiTea.

"Abandoning" Lele Tea's old love, why does Hey Tea focus on Seesaw, "Xinhuan"?I can’t help but ask a question here, why did Heycha leave Lelecha and turn around and fell in love with Seesaw?

Abandon the “old love” Lele tea, why coffee becomes a “new love”?

As we all know, among the new domestic tea brands, Xinel is the top three high-end tea brands. Hi tea as a leader among the Big Three, brand awareness well ahead of second-ranked Chennai snow tea Lele third of tea drinking.

Although Heycha and Nai Xue have successively denied the acquisition of Lelecha, it also reflects that the current new tea-drinking track is revealing a potential signal-that the new tea-drinking track is not as hot as it once was.

Whether it is Nayuki’s tea, which is the first new tea drink that has been on the market, or Hey Tea, which is still working hard to go public, the hottest period of new tea drinks has passed.

"Abandoning" Lele Tea's old love, why does Hey Tea focus on Seesaw, "Xinhuan"?Fruit tea is the foundation for Xicha’s survival. The reason for this investment in the specialty coffee brand Seesaw is obvious-in order to break the circle.

As one of the representative brands of domestic specialty coffee, Seesaw is the first specialty coffee brand founded in China.

In 2012, after investigating overseas chain coffee brands, the start-up team believed that the localization of coffee would have great development potential, so they returned to Shanghai and founded the specialty coffee brand Seesaw, which translates as “seesaw”, which means “sweet, bitter, sweet and mellow. “Tasteless and balanced.

At that time, domestic consumers were more exposed to instant coffee such as Nestlé, and Starbucks represented the “petty bourgeoisie life.” In short, there is no coffee consumption environment in the domestic consumer market.

The emergence of Seesaw broke this situation. Unlike the development strategies of today’s new tea brands, Seesaw chose “slow”-after five years of establishment, Seesaw only opened 7 stores. Unlike tea, most domestic consumer groups do not have the habit of consuming coffee. At the same time, the positioning of specialty coffee also means that its customer base is smaller and the threshold is higher.

That being the case, why does HeyTea still invest in Seesaw? There is no other reason. The first thing that needs to be made clear is that the tea industry has been unable to dig out new business models.

From Hey Tea to COCO, and then from Michelle Ice City to Tea Yanyue Color , these four brands cover almost all the commercial forms of domestic tea brands. It seems that it is not easy for latecomers to break out of this commercial vicious circle.

The serious problem of homogenization also appears in the products. In the new tea drinks, the difference between fresh fruit tea is nothing more than the type of fruit and the combination of various ingredients. It is difficult to play new tricks. Brands will look at it again. Putting it on marketing, but pushing it around, apart from the joint name, it is nothing more than creating the so-called “explosive models.”

Under this trend, the more in the head of the brand, the more naturally it will feel the pressure of breaking the game. Hey tea ranks first among new-style tea drinks, and the pressure from competitors pushes it to find new outlets.

Coffee seems to be the life-saving straw.

New-style teas speed up the roll-in, while hi tea wants to break the circle

It cannot be denied that the new tea-drinking track is accelerating its involution.

The biggest difference from ordinary milk tea is that new-style tea drinks have added fresh fruit elements. However, the addition of fresh fruits means that it will bring high logistics and warehousing costs.

Take Naixue’s tea as an example. During the reporting period of the prospectus, its raw material costs were 384 million yuan, 915 million yuan, and 1.159 billion yuan, accounting for 35.3%, 36.6%, and 37.9% of the total revenue, respectively.

If the impact of other costs on gross profit margin is excluded, according to the above data, Naxue’s tea sales gross profit margin is 64.7%, 63.4%, and 62.1%, showing a downward trend year by year. If Nayuki is like this, the situation of Heycha is obviously the same.

"Abandoning" Lele Tea's old love, why does Hey Tea focus on Seesaw, "Xinhuan"?On the one hand, new tea brands need to speed up the opening of stores nationwide. Nayuki’s tea plans to complete the layout of 230 stores in 2021, and Heycha, which is at the head, will open 304 stores in 2020. The ever-expanding number of stores has continuously increased the cost of raw materials, which has dragged down the declining gross profit margin.

On the other hand, the new-style tea brands have not yet shaken off the profit dilemma. During the reporting period, Naixue’s tea recorded net losses of 69.729 million yuan, 39.68 million yuan, and 203 million yuan, of which the loss in 2020 increased significantly by 412.35% year-on-year.

In order to catch up and seize the market, new tea brands must continue to expand the number of stores, but the cost pressure brought by the rapid opening of stores has made capital losses more and more serious.

When new-style tea brands are increasingly difficult to dig out new growth value in high-end tea, their actions seem surprisingly unified. Xicha and Naixue launched sub-brands Xixiaocha and Taigai in 2020 and 2015, respectively, with a unit price of 13-16 yuan, which is in line with the price of COCO milk tea.

Naixue’s prospectus shows that as of February 5, 2020, Taigai stores have reached 63, and the data released by Xicha is that the number of Xixiaocha stores as of May this year is 22. Hey Tea and Naixue, the second largest in the industry, are accelerating the layout of sub-brands, which also confirms the fact that the high-end tea market is unlikely to undergo major changes in the short term.

What Heytea wants to do is to go global for a high-end tea brand. The second child, Naixue, is looking at him, forcing this new-style tea drinker to falsely recruit the business margin of the tea industry.

In July 2020, Hey Tea launched sparkling water. Let alone the many stronger competitors that Hey Tea will face in the bottled beverage market, but at least for the entire new tea brand, it means that the consumption scene will no longer be Confined to stores, but expanded to more places.

This investment in Seesaw is also true.

Seesaw’s own specialty coffee positioning is in line with Heytea’s high-end tea positioning; investing in the coffee brand will further expand the product category of Heytea, forming a product difference with competing products such as Naixue.

Although the cross-border coffee market for tea brands is no longer unique, Lelecha, Nai Xue, and Hey Tea have their own coffee brands, but the real significance of investing in Seesaw is to bring a new consumption scene for Hey Tea. .

Today Seesaw itself already has a certain customer base, and at the same time has a certain layout in the coffee industry chain. Especially in the supply chain, Seesaw has a relatively mature procurement team and has signed cooperation with the five major coffee bean farms. And this advantage will be able to provide help in the supply chain for the coffee business of HeyTea, allowing HeyTea to have more advantages in cost.

At present, the new-style tea-drinking track has repeatedly broken into the eyes of everyone. First, China Post sold milk tea, and then Michelle Ice City, which has been open for more than ten years. The new-style tea brands have experienced continuous involution and continued to burn money. The tragic development of expansion.

When Hey Tea kicks Lecha with one foot and embraces Seesaw Coffee, when will the next bloody storm in the new tea industry appear?

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