Compared with cafes, will China's next Starbucks be born from tea brands?

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The new tea combines the two consumption scenes of traditional Chinese tea and milk tea, resulting in a wonderful chemical reaction, followed by the crazy entry of capital. Its purpose is simple and pure, hoping to break down the barriers to brand culture and consumer concepts, and then find "the next Starbucks" in it.

At present, people talk more about tea and pay more attention to capital.

Since Xi Tea became popular last year, every day, new tea brands have appeared either on the streets or next to luxury stores.

These tea brands are known as "new tea" or "boutique milk tea". Compared with Jiaokou milk tea shop, they have the characteristics of good raw materials, high price, space upgrading and so on. Among them, the brands that have received capital attention are: like tea, because of flavor tea, Naisuelu tea, boiled tea and other brands.

Tea receives the attention of the capital, the main reason is that it hopes to find the "next Starbucks".

So is China's next Starbucks more likely to be born from a tea brand than a cafe?

On the one hand, as an imported product, the market scale of coffee in China is not very large, the overall market is about 70 billion yuan. According to the beverage industry data report released by the Jiamen and Meituan Dianping Research Institute, the number of cafes in China exceeded 100000 in 2016, but the industry showed negative growth for the whole year and a new round of reshuffle occurred in the second half of the year.

Therefore, even though foreign brands such as Starbucks and COSTA have slowly cultivated Chinese interest in coffee in recent years, traditional cafes have many problems, such as overweight asset structure, large upfront investment, high operating costs, long profit cycle and so on. As far as coffee is concerned, the imagination of the new brand is limited, but the new mode of operation can attract more attention, such as automatic coffee vending machines, coffee cars and so on.

The category of tea used to be bluntly divided into traditional Chinese tea and milk tea. The emergence of new tea, the combination of the two consumption scenarios, resulting in a wonderful chemical reaction. For China, which has a long tea culture, tea has a greater imagination, and even has a huge opportunity to become a global brand.

Can the market scale accommodate another Starbucks?

As a global coffee chain, Starbucks has a market capitalization of $89.2 billion so far and has about 26000 stores in 75 countries around the world, including more than 2,300 in China. And Chinese mainland plans to open 12000 new stores worldwide by 2021, when the number of Starbucks stores will reach 5000.

In terms of market share, Starbucks is also by far the first place in the global chain coffee market. According to Euromonitor's 2016 statistics, Starbucks has more than 40% of the global chain coffee market, and its annual sales are more than the combined sales of its main competitors, such as COSTA and Donuts.

So, compared with Starbucks, is China's tea industry big enough? Can it support a listed company like Starbucks with a market capitalization of nearly $100 billion?

China is not only a traditional tea producing country, but also the only producer and exporter of oolong tea and Pu'er tea in the world, as well as the largest green tea producer and exporter in the world. At present, China's overall tea market is about 300 billion yuan, and the tea market is about 75.6 billion yuan. In terms of figures, China's tea and tea market has not yet reached the scale of hundreds of billions of US dollars.

What is its room for growth in the long run?

On the consumer side, there is still some room for growth in China's tea consumption market.

On the one hand, although China is a large tea consumer, according to the data of the International Food and Agriculture Organization, China's per capita tea consumption ranks only about 20 in the world, far lower than large tea consumption countries such as Turkey, Ireland and the United Kingdom. compared with China's Hong Kong, Taiwan and other regions with the same cultural background, there is also a big gap.

Interestingly, China's tea consumption is still growing rapidly. For example, in 2001-2003, the per capita tea consumption in China was 0.38kg / year, and from 2011-2013, this figure more than tripled to 1.04kg / year, with an average annual growth rate of 10.89%, maintaining a high growth rate.

In addition, from the micro-regional tea consumption habits, domestic coastal and other developed cities have higher tea consumption, Guangdong per capita annual consumption ranks first, more than 2 kg / year, has exceeded the British 1.94 kg / year.

On the other hand, the potential market for Chinese tea consumption is still very large. According to the survey data of the Economic Research Office of the National Tea Technology system, China has nearly 500 million tea consumers, accounting for 36% of the total population, including 254 million urban consumers and 214 million rural consumers, which is far from saturated compared with the total population. there are still many potential consumers (especially the younger generation of consumers).

In terms of tea products, according to the statistics of the market research company Euromonitor, the scale of China's tea beverage market has reached 75.626 billion yuan in 2010, with the impact of consumption upgrading and the pursuit of health and other factors, this figure will also be projected to the consumption of new tea drinks. In other words, in addition to the increment of the tea market, tea drinks are more easily accepted by young people because of the addition of a "drink" element, so the incremental opportunities are also considerable.

However, the existence of the market does not necessarily mean that there will be monopolistic oligarchs in the industry-there are also many industries with a huge market, such as the Chinese catering industry, it will be unable to produce giants in the industry because of its decentralization and other special attributes.

So, can the next Starbucks be born in the new tea industry? Is the market ultimately fragmented or concentrated? Can there eventually be a winner-takes-all monopoly similar to that of the Internet industry?

Supply chain is the core

In order to create a tea product as hot as Xi Cha, is the formula of the product important? It's very important. Continuous product research and development capability is the foundation of every catering brand, and the birth of signboards or explosions can also bring obvious repurchase for the brand. But compared with the formula, the supply chain is the real barrier to the stability of tea products.

There are three reasons:

1. For similar drinks with different formulations, consumers do not have a high degree of recognition (as can be seen from the blind test cases of Coca-Cola and Pepsi), 80% of consumers can tell the difference between good tea and inferior tea, but can not tell the difference between different teas.

two。 A good recipe can support a store with a good business, but it is easy to imitate. A strong supply chain can support large-scale brands, and the supply chain can not be easily imitated.

3. Similar to coffee beans, tea has changed from a tea garden to a tea drink in the hands of consumers, which is a process in which agricultural products become industrial products. Tea has gone through the process of stir-frying, roasting, kneading and drying, and the taste stability of tea bottom is completed in the process of industrial production.

In other words, only a stable back-end supply chain can achieve stable product quality and experience when facing consumers.

From this, it can be seen that the ability of large-scale collection, the ability of quality control at the source, the ability of blending tea proportion and the ability to obtain new consumption trends from the upstream are the core elements to judge whether a company has built a tea supply chain.

The creation of the third space

The concept of "the third space" originated from The Great Good Place, a monograph by American sociologist Ray Oldenburg. The so-called "third space" is a place where individuals can rely on and complete their way of life, which is different from the existence of the first space and the second space formed by the family and the workplace.

Ray pointed out that teahouses and even taverns are possible carriers of the third space, so the specific category of drinks is not the core factor in the construction of the third space, and the third space is not a patent of the cafe. As a commercial concept, the third space is likely to be transferred to tea consumption.

As a matter of fact, new-style tea drinks of "Standard Starbucks" have more room for consumers to sit down, and environmental experience has become a basic equipment, whether it is because of the taste of tea, the color of tea, or the taste of tea.

For example, after Xicha first adopted the big store model in Xiaolan store in Zhongshan and achieved success, "space" became the standard form of Xicha. Before that, Xicha had never been so successful. On the other hand, another tea shop brand used space as its selling point from the very beginning.

So why is the "third Space" so important in leading the new concept of tea consumption among young people today?

On the one hand, when people have aesthetic fatigue to the combination of coffee and the third space, "new tea + new space" can appear in people's field of vision as a fresh carrier and win a certain degree of attention. create a differentiated new brand from scratch.

On the other hand, the upgrading of traditional business formats and the consumption demand in the compound scene with social elements is also a new consumption trend for the younger generation.

This trend is also particularly obvious in today's offline format changes. Nowadays, many offline shopping malls have begun to change from the previous design ideas with goods as the core to scenes, in which the weakening of consumption elements makes the social attributes of specific business units more obvious, and consumption is no longer a simple purchase of goods.

Obviously, the "tea + the third space" created by the new tea drinks makes the new tea drinks have the opportunity and ability to move closer to scene consumption and social consumption, so as to obtain new increments.

The possibility of globalization

If the supply chain and the third space discussed above are the factors that determine the rapid rise of the new tea industry, then globalization is the key to the birth of tens of billions of dollars and hundreds of billions of dollars of market capitalization companies in the new tea industry.

In fact, when people discuss the new domestic tea industry, it is easy to forget to look at the whole world because of the inseparable close relationship between tea culture and China.

But the success of Coca-Cola, which has a market capitalization of about $180 billion, and Starbucks, which has a market capitalization of nearly $90 billion, is largely due to their global business models.

A group of very interesting survey data show that in the tea market in the United States, young people are very receptive to tea. People under the age of 30 drink tea in the same proportion as coffee, with 27% of young people saying that they only drink tea but not coffee. At the same time, 70% of people over 65 prefer coffee (which also proves that the tea market of foreign young people can be cultivated at a later stage, especially at home). In addition, according to the American Tea Association, the size of the US tea market has more than quadrupled in the past 20 years.

This trend is evident not only in the United States, but also in Canada. Canada's tea consumption is expected to increase by 40% in 2020 compared with today, and health awareness is a key driver of this growth, according to a report on food trends.

However, up to now, there is not a large-scale tea chain in the European and American market, which also leaves a window of opportunity for the start-ups in China's new tea industry.

The trend of Macro consumption habits

As the main consumers at the present stage, the post-80s, 90s and post-00s groups grow up in the period of rapid economic development in China. At this stage, after people's basic needs are met, the satisfaction of quantity is no longer the internal driving force of consumption, and "quality" has become a new growth point. Therefore, "from quantity to quality" is not only a trend of changes in consumer demand at the present stage, but also a "catalyst" for the development of new tea.

However, on the one hand, the main consumers, on the other hand, the income growth of young people can not reach the social average level. According to the data, in 2005, the monthly salary of college graduates was 104% of that of urban workers, and by 2015, the monthly salary of college graduates was only 83% of that of urban workers. Since disposable income has not yet reached the level of the urban middle class, "light extravagance" has become a good choice without reducing the quality. The new tea is well suited to the needs of this group in terms of product upgrading and demand matching:

In terms of product upgrading, the biggest feature of the new tea is to upgrade the quality of the tea, abandoning the "seasoning drink" that most milk tea shops will choose, and switching to the "flavor cooking" made from the original brewed tea or coffee-like coffee. the quality of traditional tea has been upgraded.

In terms of demand matching, the first is the improvement of taste, which weakens the bitter taste of traditional tea by adding low-fat milk and fresh fruits which are popular with the younger generation. In terms of pricing, the new tea brands are slightly lower than Starbucks'20-38 yuan price range, but slightly higher than milk tea drinks, taking into account the mentality of young consumers who want to get a better experience at a lower premium. Similar to Starbucks' popularity.

The enhancement of the concept of space also enhances the service experience of users. At this stage, people are more concerned about the consumption process than the consumer goods themselves, and the goods are transformed into a medium. A typical scene is that when buying "online celebrity milk tea", the happiest moment may be the moment of taking a photo and posting it on moments.

Another noteworthy figure is that service consumption accounted for less than 40% of the average annual consumption of Chinese households in 2014. Service consumption refers to services and experiential consumption, including cultural and entertainment, education, medical, tourism, life services and other services. For comparison, both American and Japanese households spend more than 60% of this sector.

The book "the fourth consumption era" states that when the consumer society enters the fourth consumption era from the third consumption era, people's consumption demand for products with local culture will become more and more exuberant. This is because after people have crossed the period of worship of western culture and materialism of "buying", people's consumption is no longer just to satisfy the desire to own things themselves. But more want to establish the relationship between people and people, people and things, people and society. At this time, people will pay more attention to and care about the local culture, thus consuming more brands with strong local cultural symbols, such as MUJI.

Tea is undoubtedly a commodity with Chinese culture, with a strong brand of local culture behind it. And with the improvement of Chinese cultural self-confidence, Chinese consumption of tea will be greatly enhanced in the future, which is also in line with the trend of the consumer society changing to the fourth consumption era. In the long run, tea is also in line with the trend of consumption in the next 5 or even 10 years.