Xicha stepped on the sudden brake to join, what signal did it send?

Wen| New Product Strategy Finance  Wu Wenwu

The fiercely competitive new tea drinking track has ushered in a big news: Xi Tea has stepped on the brake to join.

“New Products Lue Finance” noticed that Xicha released an internal letter on February 10 with the theme of “Not participating in digital games and scale content, returning to users and word-of-mouth”, which attracted attention from inside and outside the industry.

Xicha said that in 2025, Xicha Club will continue to insist on not making low-cost internal coupons, not playing digital games, rejecting store size internal coupons, and temporarily stop accepting applications from business partners.

In other words, Xi Tea officials announced that they would suspend joining in 2025, which is like stepping on a sharp brake. Currently, players in the entire new tea beverage industry are still expanding their scale and joining, and Xi Tea seems very unusual.

Although Xi Tea’s popularity among Internet celebrities is not as popular as that of Bawang Tea Ji, the development speed and achievements of Xi Tea are very stable in the industry. Then why did Xicha step on the sudden brake of joining? What signal did it send?

01 Xicha, who could not have stepped on the brake, stepped on the brake instead

When it comes to happy tea, people are no strangers to it. This leading brand in the new tea beverage industry is a representative of the first generation of new tea beverage vane companies.

Looking back at the brand history, as early as 2012, Huangcha, the predecessor of Xicha, was established in Jiangmen, Guangdong, and was at the forefront of the industry in terms of product power, brand power and customer reputation.

Because the trademark of Huangcha could not be registered, Huangcha was renamed Xicha in 2015. After the establishment of Xicha, it was an era when traditional milk tea was upgraded to new tea drinks. Xicha quickly emerged from the circle. At that time, together with Naixue’s tea, it was very popular, and the degree of Internet popularity is like the current Overlord Tea Lady.

In the first ten years of development, Xi Tea insisted on taking the direct sales route, and many consumers were loyal fans of Xi Tea. An industry veteran once told “New Products Lue Finance” that Xi Tea is a careful product and brand in the new tea drinking track, and is not radical.

It was not until November 2022 that Xicha released its franchises and started its business partner business. Relying on the investment promotion and franchising policy, Xicha stores have expanded rapidly in the past two years, and the total number of stores has currently exceeded 4000.

According to Xicha’s 2024 Xicha annual report released on January 2, the average performance of newly opened stores in the second half of 2024 was significantly higher than that in the first half of 2024, and the overall performance of stores showed a trend of continuing to significantly exceed the industry market.

The number of members of Xicha exceeded 150 million, a year-on-year increase of 50 million. The member repurchase rate continued to increase and hit a record high. At the same time, Xi Tea has opened more than 70 stores overseas.

In the past two years, Xicha’s franchise business has developed smoothly, and the number of stores has increased significantly. Both self-operated stores and franchised stores have good operating levels. It is reasonable to say that Xicha is fully capable of continuing to liberalize franchises, maintaining the growth of the number of stores, and the story can also be told bigger and bigger.

However, Kexcha did the opposite and took the initiative to step on the brake on joining. However, if we focus on the current reality of the entire new tea beverage industry, it is easy to understand why Xicha made such a decision.

There are many players in the new tea and beverage industry, and the homogenization is extremely serious. The products are very homogeneous. When nearly half of a small commercial street are new tea and beverage stores, the entire industry falls into vicious competition.

There are many new tea brands, and the industry updates and iterations are fast. Especially the Bawang Tea Lady, who later rose strongly, once again ushered in a high-profile moment, attracting many consumers and taking away a lot of business from other friends.

In addition to fierce competition, the new tea beverage industry has waged a price war in the past two or three years. The price of a cup of milk tea is getting lower and lower. In order to maintain sales, low-priced in-feed has become one of the few helpless options.

Xicha naturally saw the current situation and trends of the industry and made market insights and predictions early. This time, Xicha stepped on the brake to join, but in fact, there was a signal.

Xicha said in an internal letter in October last year that homogenization competition in the industry continues to consume consumers ‘enthusiasm for new tea drinks and brands. It does not make homogenization products, does not make simple low-cost in-product, and does not pursue short-term opening speed and quantity.

In 2024, the wind vane of the entire new tea beverage industry will begin to change, and many new tea beverage brands such as Naixue’s tea, Chahuanong, and Tianlala will slow down.

Xicha also stated in an internal letter this time that in the past few years, price wars for capital purposes, revenue and profit considerations, and blind store size expansion have led to the industry falling into homogeneous competition and a surplus of stores. In this process, users ‘needs are selectively ignored. The extensive homogeneous product brand experience and excessive scale expansion have seriously consumed users’ love and seriously damaged the foundation of the entire industry.

02 What signal did it send?

As the leading brand of new tea drinks, Xicha suddenly announced the suspension of its membership, which has certain significance for the entire new tea drinks industry.

So, what is the meaning of Xi Tea stepping on the sudden brake to join this time? Or what signal did it send?

According to “New Products Lue Finance”, Xi Tea’s sudden suspension of joining sent three signals from different dimensions such as industry perspective and development foresight.

The first signal is that most brands of new tea drinks have temporarily entered the city defense stage. The essence of anti-corruption is to cultivate intensively and operate sustainably.

After so many years of rapid development, the new tea beverage industry has staged a big drama of franchising, a carnival feast for new tea beverage brands, franchisees, capital and participants in the entire new tea beverage industry chain.

Many new tea brands join in Internet celebrities and traffic businesses. They leave the circle quickly, and their voices disappear or even disappear quickly. For many new tea brands, including Xi Tea, the current stage has temporarily entered the city defense stage.

The anti-corruption of new tea drinks requires new tea drinks players to regain their original aspirations. After developing at a reasonable speed, intensive cultivation is needed. Scale is important, but sustainable management is also important. When franchisees can make money, new tea drinks brands can only make money.

There are many new tea and beverage stores, especially those franchisees who entered the market late, and many of them left the market after losing blood. New tea drinks are now almost everywhere in all business districts, especially in various new tea drink brand stores in first-tier and second-tier cities.

Xicha takes the lead in suspending franchises and doing a good job in operating existing stores. This is to defend the city and benefit the existing franchisees. For the entire industry, franchisees from other friends can breathe a sigh of relief.

At present, the domestic competition for new tea drinks is already an existing competition, and the intensity is as fierce as a hot war. Therefore, many new tea drinks brands are now looking for a second growth curve, which is to accelerate their expansion to the sea, especially to strive to stabilize the Southeast Asian market, Xi Tea, Mixue Ice City, Naixue Tea, Bawang Tea, etc. are all working hard to go out to sea.

New tea brands have begun to explore the third growth curve. Recently, Naixue’s Tea opened its first Naixue green in Shenzhen, crossing the border and entering the light food track. Although the prospects are unpredictable, Naixue’s Tea, whose new tea beverage business is stagnant and actively shrinking at this stage, has no choice but to explore new business.

In the future, we will see more and more new tea brands beginning to cross borders and enter new related tracks or new business areas, and the business boundaries of new tea brands will continue to widen.

The third signal is that anti-curling has become a label on the new tea drinking track in 2025. It is expected that other brands will follow suit after the tea celebration, which may not be a bad thing.

When Xicha steps on the brake to join, it will definitely play a certain demonstration effect inside and outside the industry. After all, Xicha is the leading brand in the industry, and naturally it also sees the current competitive status and challenges in the new tea beverage industry.

Therefore, to a certain extent, the suspension of Xicha’s joining is a good start, and it is expected that other brands will follow suit.

Of course, there will also be brands that will not follow suit. For example, the popular Overlord Tea Girl will continue to run wild, and the new tea brand that is impacting the IPO will not want to slow down.

Anti-corruption will become a label for new tea drinks in 2025. It remains to be seen how its future development will develop. The key depends on changes in various market factors such as changes in the economic environment, improvement in consumption power, and consumer acceptance.

Overall, Xi Tea has fired the first shot of anti-corruption in new tea drinks. After a long period of running, slowing down may not be a bad thing.