Draw in 1.19 trillion yuan! Snow King is about to set a record, but new tea drinks are collectively anxious

Wen| Lu Ziyan of Hongfan Network

“Snow King landed on the Hong Kong stock market on March 3 and is currently attracting gold crazily!

Public reports show that as of 11 a.m. today, the financing subscription multiple of the public offering reached 3,449.8 times, and the subscription amount reached 1.19 trillion Hong Kong dollars. At present, Mixue Group’s subscription has not yet closed, and the amount is close to the fast-handed HK$1.2 trillion, which also means that Mixue Ice City is likely to set a new subscription record in the Hong Kong stock market.

On the other hand, it is the collective anxiety of new tea drinks: Guming (1364.HK), which had just rung the bell, fell by 6.44% and 1.51% respectively in the first two trading days after listing, failing to break the new tea drinks brand’s curse.

In addition, problems such as declining revenue, slowing expansion, and loss of franchisees are being exposed with the announcement of more and more prospectuses.

“Insufficient blood-making ability, pray for capital to transfuse blood”

Judging from the prospectus and financial report data disclosed by various companies, a number of tea brand companies have experienced a situation of increasing income but not increasing profits.

Looking at the timeline, Gu Ming and Aunt Shanghai have shown an upward trend in revenue in the past few years. From 2021 to 2023, Guming’s revenue will increase from 4.384 billion yuan to 7.676 billion yuan. In the first nine months of 2024, Guming’s revenue was 6.44 billion yuan, a year-on-year increase of 15.6%

The same is true for Aunt Shanghai. In 2021, revenue will increase to 2.2 billion yuan, in 2022, and hit a new high of 3.348 billion yuan in 2023. In the first half of 2024, the income will be 1.658 billion yuan, a year-on-year increase of 6%.

However, the profit curve of some tea brands is not as optimistic as the revenue curve. Take Aunt Shanghai as an example. In the first half of 2024, her net profit was 170 million yuan, a year-on-year decrease of 12.3%.

Naixue’s tea and tea hundreds are facing the same problem. According to its announced financial report, in the past seven years, Naixue’s Tea has achieved a profit of 21 million yuan in 2023 alone and recorded a loss of 438 million yuan in the first half of 2024; Chabaidao’s semi-annual report shows that its profit for the first half of 2024 has decreased from 710 million yuan in the same period last year to 310 million yuan, almost halving.

△ Photo source: Chabaidao official Weibo

In addition, the expansion rate of tea brands has also begun to slow down significantly. Prospectus data shows that Guming will add more than 2000 new stores in 2023, compared with only more than 700 new stores in the first three quarters of 2024; Aunt Shanghai will add a net increase of 2482 stores in 2023, and only a net increase of 678 stores in the first half of 2024. Chabaidao revealed in its semi-annual report that the number of stores will increase by more than 500 in the first half of 2024, which is only about one-third of the number added in 2023.

The growth rate of brands is declining and expansion is slowing down. New tea drinks are entering stock competition. To remain competitive in this market, they need to have more abundant financial resources, continue to invest in product research and development, strengthen supply chains, and subsidize franchisees. Therefore, many new tea and beverage companies regard listing as a key breakthrough path.

On the one hand, in the ongoing price war, new tea and beverage companies need to continue to provide subsidies to cover the situation. For example, brands such as Guming, Mixue Ice City, and Shangshang Aunt mainly make profits by selling raw materials and equipment to franchisees. Under this model, the franchisees ‘operating conditions directly affect the brand’s revenue.

The price war is intensifying, which also means that profit margins are further compressed. For franchisees, product prices have dropped, but the purchase prices of raw materials have not changed at all. Therefore, profit pressure has also increased. In order to attract and retain franchisees, companies have to provide more subsidies and support, such as reducing franchise fees, providing decoration subsidies, raw material discounts, etc., which all increase the company’s costs.

On the other hand, the construction of supply chains is also a link that burns money. In order to better control costs and ensure the quality of raw materials, new tea and beverage companies need to establish a complete supply chain system. From raw material procurement to cold chain logistics and distribution, every link requires a large amount of capital investment. For example, Mixue Ice City invested 2 billion yuan in its Hainan production base alone.

△ Picture source: Mixue Ice City

“In fact, the current competition in the new tea beverage market is fierce and is not an ideal time to go public. The capital market is more concerned about the future development potential of enterprises. However, the current growth space of the entire industry is limited, and the improvement of stock value is facing greater pressure. But for new tea and beverage companies, listing is a necessary choice. rdquo; said Zhai Bin, columnist at Hongmeal. com.

“The third share of new tea drinks is launched, but the second place in the market has not yet been decided

Despite this, listing does not mean that new tea drinks can be worry-free.

Although three listed companies have emerged, the competitive landscape of the new tea and beverage market is still full of suspense. In addition to Mixue Ice City, which occupies an absolute advantage in the price band below 10 yuan, there has been no player in the new tea beverage industry who is recognized as being stable in second place.

From the perspective of price bands, in addition to the 10-yuan price band where Snow King is located, the mainstream view divides tea drinks into three major price bands: 10-20 yuan and more than 20 yuan. Among them, the most competitive price band is the 10-20 yuan price band. Brands such as Gu Ming, Shanghai Aunt, and Chabaidao are all players in this segment, but it is hard to say who can safely sit second in the new tea drink. Position.

Specifically, Gu Ming is the king of sinking in this subdivision of the track.“” Its prospectus shows that according to the 2023 GMV, Guming is the largest mass-produced tea brand in China, with a market share of 17.7%. Such results are inseparable from Guming’s layout in the sinking market. As of 2023, 79% of Guming’s stores are located in second-tier cities and below, which is higher than 70.1% of Aunt Shanghai and 62.5% of Chabaidao in the same period. In addition, 38.3% of Guming’s stores are located in rural areas.

△ Picture source: Photo by Hongcan.com

Aunt Shanghai is the king of the northern market. According to the latest prospectus, the number of stores in northern China is 4374, ranking first among mid-priced freshly made tea shop brands in northern China. In contrast, the waist brands Tea Baidao and Guming, both of which started in southern cities, have not a high number of stores in the entire northern market.

In this mid-range price band, many chain tea brands such as Chabaidao, Diandian, CoCo Duke, and Chayan Yuese are also gathered.

Not only is product homogenization serious among these brands, but the price war is also intensifying. The group purchase price of some brand drinks has reached below 10 yuan, further intensifying competition in the mid-end price band. At the same time, these brands are highly dependent on the franchise model for their revenue and expansion, but now they are facing the problem of losing franchisees.

The prospectus shows that Guming’s franchisee turnover rate reached 11.7% in the first three quarters of 2024, nearly doubling from 6.2% in 2021.

Aunties in Shanghai are also facing the challenge of losing franchisees. According to the prospectus, in the first half of 2024, the number of its franchisee stores closed reached 531, and the closure rate reached 7.7%, setting a new high during the reporting period; Chabaidao’s financial report also showed that its franchisee turnover rate has also increased from 2021. 0.17% has soared to 8.19% in the first half of 2024.

In addition, emerging brands such as Bawang Tea Ji and Grandpa Bucha Tea have emerged rapidly and have also become disruptors in the mid-end tea market.

Starting from 2022, the process of Bawang Tea Ji Extension Store will be like a double-speed model. Official data from Bawang Tea Lady shows that in just over two years, the number of its stores has surged from more than 500 to more than 6000 by the end of 2024.

Grandpa’s expansion without making tea was no less rapid. In February 2023, there were only more than 30 stores for Grandpa’s No Tea Tea, but by the end of last year, the number of stores had exceeded more than 1400. In more than a year, the number of Grandpa’s No Tea stores has doubled nearly 5 times.

△ Photo source: Official Weibo of Bawang Tea Ji

In general, in the mid-end market of new tea drinks, problems such as the loss of franchisees have not yet been resolved; emerging brands continue to expand, impacting the existing market structure. In such an environment, it still takes time to verify who can safely sit on the second throne. Whether or not to go public does not directly determine success or failure.