Involved in Vietnam, can Michelle Ice City continue its sweetness?

Involved in Vietnam, can Michelle Ice City continue its sweetness?

In the summer in Vietnam, young people may buy a coconut for 20,000 VND to escape the heat, or they may choose to buy a glass of Michelle Ice City lemonade filled with ice at the same price.

In Vietnam, the price of a cup of milk tea is usually between 25,000 and 60,000 VND. Even if it goes overseas, Michelle Ice City has maintained a low-price strategy, setting the price of bubble milk tea at 25,000 VND, which is 7 yuan, which is the same as the domestic price.

In recent years, the “Big Three Milk Tea” have unanimously chosen Southeast Asia as their first stop. On September 5, 2018, Michelle Ice City’s first store in Vietnam opened. A set of data shows that the store’s turnover on that day was as high as RMB 9681. In the same year, the “net celebrity” milk tea Xicha opened its first overseas store in Singapore, and Naixue’s tea also made Singapore its first overseas stop.

But obviously, Michelle Ice City is the leader among the Big Three. So far, Michelle Ice City has nearly 200 stores in Vietnam alone, and the chain brand is expanding to other countries in Southeast Asia. In addition to Michelle Ice City, Yihetang and Lujiaoxiang have penetrated into Vietnam.

In addition to the domestic market, the Asia-Pacific region is still the largest consumer market for tea. In the eyes of consumer goods practitioners who have lived in Vietnam, for consumer brands intending to go overseas, Vietnam is no different from the best springboard to enter the Southeast Asian market. However, many consumer brands have returned after going overseas, or have adopted a more conservative strategy, only entering in the form of trade.

In Vietnam, what problems have domestic consumer brands encountered?

Milk tea entrepreneurship wave

Although the Vietnamese are accustomed to the company of milk tea, in fact milk tea is also an imported product. Around 2000, bubble tea began to enter Vietnam. Adding milk to the tea, plus chewy pearls, soon the pearl milk tea has captured the love of the Vietnamese.

Located in the tropics and subtropics, Vietnam naturally has soil suitable for the development of tea drinking. The local young people’s preferences for milk tea and ice cream are as good as those in China.

“Vietnam is hot most of the time. Except for winter in the north, summer is all year round in the south. Even if Vietnamese living in the north eat ice cream and drink milk tea in winter, they are not affected by seasonality at all. Don’t drink ice cubes.” Li Fang (pseudonym) , a consumer industry resident who has lived in Vietnam, noticed that a part of daily life expenses is spent on consuming milk tea and coffee, which has long been a common phenomenon in Vietnam.

Market demand has spawned a boom in milk tea entrepreneurship in Vietnam. The boom came about between 2013 and 2014. In 2017, Vietnam ushered in the peak of entrepreneurship of milk tea shops, and the market was flooded with a large number of bubble milk tea brands. According to Li Fang’s recollection, during this period, milk tea shops were the best investment projects in the market. Milk tea brands did not even need to disclose their revenue ratio to attract investment from franchisees.

Statistics show that in the first half of 2017 alone, Hanoi opened an average of 8 milk tea shops per month. Some shops sold 200 to 300 cups a day, and some even sold thousands of cups of milk tea every day. According to the Vietnam Association of Small and Medium Enterprises, the number of milk tea shops in Vietnam reached 2,000 in 2018, and a new shop opens every four days.

Brand expert and chairman of the board of directors of Retail & Franchise Asia, Nguyen Phi Van, once analyzed that the price of each cup of milk tea is between 25,000 and 60,000 VND, and investors can obtain up to 40% of the profit in less than a year. The principal can be recovered , which is why milk tea is favored by local investors.

However, most of the earliest milk tea brands came from Taiwan, China. According to Li Fang’s recollection, around 2013, when he traveled all over Vietnam, the most common one was Ding Tea from Taiwan. However, around 2014 and 2015, other brands began to bloom in four first-tier cities in Vietnam.

In 2017, the market research company Q&Me found in a survey on the Vietnamese milk tea market that mainstream milk tea brands such as 薡茶, tribute tea, etc. are all from Taiwan, and Vietnam’s local Hot & Cold has gradually won a place. Since then, people from Japan, Thailand, Singapore, and South Korea have successively joined the competition in the Vietnamese market.

Involved in Vietnam, can Michelle Ice City continue its sweetness?

According to reports from Vietnam News, by 2019, more than 100 brands have appeared in the local market, and more well-known brands are coming to Vietnam.

Among them, more and more domestic tea brands have emerged in Vietnam’s milk tea entrepreneurship wave. According to Li Fang’s calculations, there are about 10 to 15 mainstream brands on the coffee and tea circuit, and about 5 of them are domestic brands or have Chinese backgrounds.

Michelle Ice City is involved in Vietnam

In 2018, Michelle Ice City will also choose Hanoi, Vietnam as its first stop. A set of data shows that on September 5th, when the first store of Michelle Ice City opened in Vietnam, the turnover was as high as 9681 yuan.

Although compared with the domestic speed, the speed of Michelle Ice City in overseas markets has been much slower, but Michelle Ice City, which intends to expand globally, has nearly 200 stores in Vietnam. Obviously, this number is not enough for Michelle Ice City. On June 22 this year, its overseas brand MIXUE announced on its Vietnam Facebook account that in the third quarter of 2021 it will provide discounts for franchise, design and management fees to attract franchisees. Join. This news also attracted many Vietnamese people to leave messages for consultation.

In addition to Michelle Ice City, tea brands such as Yihetang, Lujiaoxiang, and Royal Tea have also quietly entered Vietnam in recent years. However, as early as 2019, analysts have warned that the market for milk tea shops in Vietnam is declining. Reports on the food and beverage (F&B) industry show that the market growth rate was not high that year, only 5.7%, which was only a quarter of the previous period of rapid development.

Under fierce market competition, milk tea brands have begun to roll in, many stores are losing money, and some brands are facing bankruptcy. The press spokesperson of Gongcha even stated that the competition in Vietnam would be a marathon.

Li Fang also noticed that many milk tea brands have also begun to transform, only retaining flagship stores to maintain their brand image, while the rest are being built as small street stores and increasing their investment in takeaway. “At this stage, compared to before, the cost of entering Vietnam is getting higher and higher. Unless the cost can be made very low, if there is no new model and idea, it will be difficult to market in the Vietnamese market if there is no new model and idea. Get a foothold.”

However, in the context of increasingly fierce competition in the domestic market, more and more brands will incorporate going overseas into their plans. Although the pace of going to sea is slow, both Hey Tea and Naixue’s tea have also set up their first overseas stops in Singapore, and there is still the possibility of further expansion in the future. Not only offline tea brands, but more and more consumer brands are interested in the Vietnamese market. Yuanqi Forest has also stated that it will focus on the Vietnamese market and work with local partners to improve products and meet market needs.

Li Fang also came into contact with many brands in the markets that he visited in Vietnam. “Except for Internet companies, most companies in the traditional trade industry will choose Vietnam as the first stop to enter Southeast Asia. The two countries border, land, sea and air logistics are very convenient, Vietnam has a supply chain foundation, and the overall economic shape is better than other Southeast Asian countries. , And there are related tax rebate policies for exports to ASEAN in China.”

However, as far as he knows, many brands have conducted research on the Vietnamese market, but in the end almost all chose to enter in the form of small-scale trade with lower thresholds, and some brands have encountered stumbling blocks in going abroad.

In the Vietnamese market, the first competitors for domestic brands to go overseas are industry giants that have already deployed globally. Taking Yuanqi Forest as an example, Li Fang analyzed that in the bubble water market, Yuanqi Forest will first encounter giants such as Coca-Cola and Pepsi. They have already carried out a diversified product layout. Secondly, they need a lot of marketing investment. Advertising benefits are formed in the Vietnamese market.

This is also a problem Li Fang once encountered. He once served a consumer brand from China, but when he was spreading advertising channels locally, the capital chain encountered problems, “there is no advertising fee.” Other brands have fallen on the way to localization. “Northeast Daban has also tried the Vietnamese market and sent a strong domestic consumer in charge, but has not done it for more than half a year. How to find a reliable partner in the local area, how to build a local team, and face these The problem is that the final time cost and labor cost led to the slow progress of the entire project, failing to meet domestic expectations.”

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