Domatters do not know when drinking milk tea has become a trend, and many Internet celebrities have swept the streets and alleys and social platforms. According to the spring milk tea consumption report released by Alipay’s digital life platform, middle-aged and elderly people in China have also begun to drink milk tea, and the data of ordering milk tea online has risen by 25%, and the overall milk tea consumption has risen by 10%. In addition, southerners like to drink milk tea more than northerners. Among them, the consumption of milk tea in Guangdong province ranks first in China, followed by Zhejiang and Jiangsu provinces, while in the north, only Shandong, Shanxi and Henan are on the list. On average, Cantonese in China drink 2.5 cups of milk tea more than people in Northeast China each week.
In China, tea culture has always been loved and welcomed by Chinese people. The emergence of new-style tea drinks coincides with the consumption needs of young people in China, which in turn promotes the vigorous development of new-style tea drinks. At the same time, the increase in market consumption makes this industry a better development prospect, and it is a good choice to invest in new tea companies. Domatters Digital Marketing China shares with you in this article that what is the specific situation of the development of China’s new-style tea industry in 2021?
Definition and characteristics of the new-style tea industry
New-style tea is a beverage made from high-quality tea, supplemented with concentrated liquid extracted by different extraction methods, and added with fresh milk, cream or various fresh fruits. Compared with traditional beverages, new-style tea drinks have upgraded and innovated in raw material selection, production process, and brand operation. The quality and characteristics of product raw materials and beverage appearance are emphasized, and online and offline are combined with brand operators.
The development history of China’s tea industry
The development of China’s tea industry has gone through three stages in total: the powder age, the street age and the new tea age. The raw materials of the products have also evolved from artificial condiments at the beginning to the present natural high-quality raw materials. The food processing method has changed from manual-based to manual and machine cooperation to the current artificial + machine + new food processing technology. The market share of local brands has gradually expanded, and the usage scenarios have also evolved from physical stores at the beginning to today’s online and offline simultaneous operations. Foreign brands have gradually changed themselves and developed in fusion with Chinese culture. The way of food processing has changed from the previous manual-based to the cooperation of manual and machine to the current artificial + machine + new food processing technology.
The competitive landscape of China’s new-style tea industry and major tea brands
At present, there are a large number of new-style tea and beverage industry enterprises, and the number of national chain brands is relatively small. The main focus is on regional market competition, the industry concentration is low, and the market competition pattern is relatively scattered. At present, the industry’s first echelon companies mainly focus on national chain brands such as Hey Tea, Naixue’s Tea, and Lele Tea.
Distribution of major brands in China’s new-style tea industry
At present, the stores of leading brands in the new tea beverage industry are mainly concentrated in China’s first-tier and second-tier cities, and the number of stores in third-tier cities is still small. For example, Xicha and Naixue’s tea have more than 90% of the stores located in first- and second-tier cities, mainly in southern and eastern China. At present, the new-style tea market in first-tier cities is basically saturated, and brands need to turn to the sinking market to seek new growth points.
The Operation Model of China’s New-style Drinks
The operation mode of new-style tea drinks is divided into two types: direct operation and franchise operation. Direct operation refers to the direct investment and operation of the corporate headquarters, which is led by the brand, and implements standardized operation and management to ensure the stability of product and service quality and ensure the brand image. In order to deploy resources in a unified manner and achieve high economies of scale, the disadvantage of this operation model is that it requires a large amount of capital investment, high operating costs, and high risks. The headquarters of the franchise enterprise uses its own trademarks, patents, technology and business models to franchisees in the form of franchise chains. This operation mode has low operating costs and quick return of corporate funds, achieving accelerated brand expansion and enhancing brand influence. However, each franchise store is prone to stand alone, and it is not convenient for unified operation.
Analysis of consumption patterns of China’s new-style tea industry in the second quarter of 2020
According to data from iiMedia Research, the main way for Chinese consumers to purchase new-style tea in Q2 2020 is to consume in stores, accounting for 64%. Followed by third-party platform takeaways and online pre-orders, accounting for 36% and 33% respectively. 92% of consumers are willing to wait in line for less than 30 minutes. Domatters Digital Marketing China believes that for consumers who are more inclined to shop for consumption but are willing to wait for a shorter period of time, new tea brands should actively develop online pre-order channels and carry out corresponding online promotion. For strategic questions about APP and brand applet setting and promotion, you can contact Domatters Digital Marketing China to be your Chinese marketing consultant who can give you targeted advice.
2020Q2 China’s new-style tea industry consumer brand awareness
Among the new tea brands in Q2 in 2020, Hey Tea has the highest consumer awareness, accounting for 43%, followed by CoCo, accounting for 34%. According to the competitor analysis of Domatters Digital Marketing China, Heytea stands out among the new tea brands by virtue of its excellent social media marketing and various cross-industry joint names. As a representative brand of traditional tea drinks, CoCo has rapidly expanded across the country by virtue of its franchise model.
The development trend of China’s new-style tea industry in 2021
1. Development of subdivisions
In the fiercely competitive new tea beverage industry market, several leading brands have taken the lead in occupying a portion of the market share through differentiated strategies such as cross-industry joint development, social media marketing, and scene-based marketing, and consolidated their leading positions. In this case, in order to seek differentiated development, other brands will consider various factors and extend the segmentation track that is most suitable for their own development. This is the biggest opportunity for the development of new tea brands.
2, sinking market development
At present, there are densely distributed new-style tea shops in China’s first- and second-tier cities, while there are few new-style tea shops in third- and fourth-tier cities, small in scale, and low operating efficiency. Corresponding to the apparently insufficient supply side is the rising consumer demand after consumption upgrades in third- and fourth-tier cities. With the new tea drink market in first- and second-tier cities basically saturated, brands need to turn to the sinking market to seek new growth points.
3, product diversification development, product boundary expansion
In order to meet the individual needs and curiosity of consumers and improve profitability, in the future development of new tea brands, continuous product innovation is inevitably required, and products will show a diversified development trend. In addition, some brands are no longer limited to tea drinks, but expand product boundaries, and develop multi-category integration, such as “tea + European bag” of Naixue’s tea and Lele tea, and “tea + beer” of Heytea. Tea + snacks” etc.
4. Standardized supply chain management
At present, the development of the new-style tea industry is becoming mature and stable, and large-scale development will be the only way for the long-term development of various brands. In this case, brands that prioritize supply chain management and ensure the stable supply of raw materials will be able to attract consumers to repurchase with scarce and high-quality products, and the supply chain of the entire industry will develop in the direction of standardization and internationalization.
