"Pu'er is getting harder and harder to sell!"
News about the overcapacity of Pu'er tea has been brought up repeatedly in recent years. Recently, some tea merchants complained to the author that there are more and more old teas every year. In the past, they did not dare to lower the price of old teas, let alone new teas. Now the problem of poor sales is serious. Due to excessive hype, Pu'er has gradually lost its main consumer groups. In Dongguan, the largest storage center for Pu'er tea, hundreds of thousands of tons of Pu'er tea are still stockpiled.
Pu'er in hoarding warehouses (Source: Internet)
In fact, terminal sales are not strong, and tea merchants have changed from actively stockpiling "Pu'er gets better and more fragrant" to starting a forced stockpiling mode, which is just a microcosm of the tea industry.
In recent years, the problem of unbalanced supply and demand structure exists in the whole industry. According to statistics from the China Tea Circulation Association and China Customs, the total output of dry raw tea in the country in 2022 will be 3.181 million tons, while the total domestic sales of tea in China will be 2.3975 million tons, and the total amount of Chinese tea exports will be 375,200 tons. The problem of production exceeding sales is still prominent.
Overcapacity of tea and excessive hype of some categories should sound the alarm for the tea industry. For a long time, the development of China's tea industry has faced two major problems: one is the low degree of industrial organization. my country's tea industry has been dominated by small farmers for a long time, and the entire raw leaf tea market lacks effective information exchange, making it difficult to form a reasonable price system. Second, the brand connotation is insufficient. From the perspective of promotion, my country's tea brands still remain at the physical level in terms of color, aroma, taste, and shape, and have not fully played the brand of value and innovation.
When it comes to Chinese tea, we can think of 3,000 years of culture and the accumulation of one of the world's three major beverages; Tieguanyin, Puer tea and other famous teas; even when it comes to tea drinks, we can list a lot of names of fresh tea drinks brands.
However, when it comes to consumer brands of raw leaf tea, how many can we think of?
Tea, standing side by side with coffee and cocoa, even has the broadest consumer base, but it still lacks a mature brand building mechanism like the coffee industry. Relevant data show that the top 100 tea companies share less than 10% of the industry, and the brand concentration is low.
In this environment, only a few brands such as Xiaoguancha, Zhuyeqing, and Bama Tea can take the lead in the new consumption era.
So, what is the difference between these modern tea companies and traditional tea companies? Is there a replicable and accessible brand development path in the tea industry?
1. A traditional big family
If the branding thinking is put into other consumer industries, it may be a bad topic. However, in the hundreds of billions of tea market, there are not many well-known consumer brands born.
There are categories but no products, and there are mostly famous brands of origin, but few famous consumer brands. This is one of the development difficulties faced by the raw leaf tea industry in recent years. Brands are scattered and lack of unified standards and norms, resulting in low consumer awareness and trust in brands.
There are well-known regional brands in various places, such as Xiangyi and Xiangfeng, well-known tea companies in Hunan Province. However, these well-known local companies have not been able to go out of the "local" and grow from regional brands to national famous brands.
In the Internet age, this is not only a question about products and channels, but also a question about thinking. In the traditional tea market, there are few tea companies that adapt to the marketing rules of the new retail era.
In the past, the main forms of raw leaf tea market sales were wholesale markets (tea cities) concentrated in major cities or tea producing areas, small tea specialty stores (retail stores) opened in streets, communities or shopping malls, and middle-to-high-end customers. Traditional consumption channels such as offline brand chain stores, the cost of channel construction is high.
Coupled with the fact that tea is an experiential commodity, it was really difficult for tea companies at that time to achieve cross-regional and cross-category development.
Therefore, traditional tea enterprises have gradually formed a path dependence of product marketing and traditional channel construction. Compared with coffee and ready-made tea brands, most tea companies have not made full use of the Internet and new media platforms, and have not established effective brand communication and interaction mechanisms, making it difficult to expand brand influence and coverage.
However, online trading of tea has become a strong supplement to the offline consumer market, and the tea industry, a "traditional family", is facing the impact of the new retail model. According to data from the China Tea Association, the total online transaction volume of tea in China has exceeded 33 billion yuan in 2022, and the compound annual growth rate in the past three years has remained above 10%.
At the same time, in the past ten years, a number of brands have been born that have achieved rapid growth by accelerating the deployment of online and offline channels. For example, during the "618" period this year, the omni-channel sales of Bama Tea increased by 42% year-on-year. In addition, small pot tea products can go to the national market, and e-commerce platforms such as JD.com and Tmall and their self-built online official malls have played a big role.
Faced with these changes, it is necessary for traditional tea companies to learn how to expand their branding, reshape their own business structure, and finally find a new direction for growth.
On the one hand, the essential difference between the marketing method in the new retail era and the traditional marketing method is that the former is centered on consumer demand, while the latter is centered on commodity supply, and consumer-centered thinking is brand thinking.
On the other hand, emphasizing consumer experience also means that tea companies should upgrade their brands, product planning, design and development, production and circulation, and online and offline omni-channel sales processes, reshape the supply chain system, and promote industrial organization. promote.
The question is, how do traditional tea companies do a good job in brand building and how to reshape the supply chain?
In the author's opinion, in these aspects, modern tea companies have set an example for traditional tea companies.
2. Go west with all your strength
It is difficult for traditional enterprises to change their thinking, especially when the old model still brings profits, and the new model is like "Chinese medicine" - slow to take effect, and the input-output ratio is not high in a short period of time.
On the contrary, Xiaoguancha, a company born in the Internet age, has been on the road of new retail from the very beginning. In the trend of consumption upgrading in recent years, this type of modern tea merchants has accelerated the pace of brand and modern supply chain construction.
First, lay out "multi-brand + multi-product lines", subdivide user needs and form standardization, and broaden the market.
Successfully planting flags in the minds of consumers is the key to the rise of small pots of tea. After being deeply involved in the tea industry for many years, Xiaoguancha understands that only branding can open up the development space of Chinese tea.
Therefore, on the 10th anniversary of Xiaoguan Tea last year, it launched three new sub-brands, "Nianji Tea", "Tea Table Taste New National Life Tea" and "C.TEA.O Smart Tea Maker". From the canned revolution of tea products to the present "one can, one bag, one cake, and one machine" in different forms covering different price points and different consumer groups, the brands complement each other.
Picture: "Nianji" one cake and one bubble tea cake
It is worth mentioning that creating a brand is only the first step, and brand building is inseparable from marketing. The biggest problem with traditional tea brand marketing is that it cannot jump out of the traditional marketing operation mode, emphasizing the "production place", and ultimately there are categories but no products.
Take a look at how the small pot of tea became a brand: starting from 2021, the small pot of tea will take over from coffee and become a live drink at the Boao Forum for Asia. This year, it will bring the "year track" to Boao. On the one hand, the small pot of tea uses the traditional Chinese "cup ceremony" to let guests from all over the world experience the "Chinese way of hospitality"; scene marketing.
2023 Boao Forum for Asia "Story of the Year Waiting for the Living Room"
This is actually a high-level "lifestyle marketing". "Treating guests with tea" itself is part of the Chinese way of life.
From the brand layout of Xiaoguan Tea, it is not difficult to see two key points: First, good products should be standardized and labeled. The second is to strengthen "lifestyle marketing".
Tea is palatable and precious, and it is difficult to decide whether to win or lose in terms of taste. Most consumers lack knowledge about the quality, variety, and efficacy of tea, and are easily misled and deceived by merchants. This is a major factor that restrains the demand for tea consumption.
The core elements of the success of small pot tea are: take consumer goods thinking as the core, unified packaging, unified price, unified specification, and unified grade.
Standardization is the prerequisite for consumer brands to get out of a replicable expansion model. As of March 2023, Xiaoguan Tea has nearly 2,000 offline sales terminals, which is a scale that is almost impossible for tea merchants selling non-standard products.
At the same time, replacing the traditional model of "place of origin + variety" with "lifestyle marketing" and highlighting the brand can give tea products more cultural, emotional, aesthetic and other added value, forming differentiated competitiveness.
Second, from agricultural products to consumer goods, create a scientific production system with unified standards.
The core of product standardization lies in the control over the entire supply chain. To ensure that the quality of each pot of tea is stable, and the taste of each batch is consistent, the upstream agricultural end and the midstream industrial end are the key.
While building ecological demonstration tea gardens for each core category, Xiaoguan Tea has built plantations such as Anxi Tieguanyin Ecological Tea Garden, Huangshan Xiuning Ecological Tea Garden and Fengqing Dianhong Base, while carrying out the "6+1" factory layout, forming a The layout of 6 primary factories in Fengqing, Anxi, Xiuning, Wuyishan, Hengxian, Menghai and 1 super factory in Huangshan.
Huangshan Super Factory Automatic 10-Can Cartoning Machine
Undoubtedly, the amount of capital involved in self-built factories and tea gardens will be relatively large, especially for factories with a high degree of intelligence, but self-built supply chain is the most direct sincerity of a consumer company, and has positive and lasting value for brand development.
From this, we can also see the reason why small pot tea has become the leading brand among modern tea enterprises: the industrial chain of Chinese tea is very long, and going through all links is like "learning from the West". Xuanzang, the eminent monk in history, made an oath for the truth: he would rather go west and die than return east to live. Xiaoguancha also has this spirit and vigor.
Today, in the face of structural changes in the consumer market, traditional tea companies that are in urgent need of transformation also need to go west with all their strength and never look back.
3. Be a wave in the wave of the times
The tea market is definitely a market with great potential.
Despite the scale of hundreds of billions, the tea market still maintains a high single-digit growth rate. According to the data from the China Tea Association, in 2022, the total output value of dry raw tea in the country will hit a record high again, reaching 318.068 billion yuan, a year-on-year increase of 8.62%.
In recent years, new consumption growth poles such as new tea drinks and tea derivatives have continued to expand, and tea cultural phenomena such as "making tea around the stove", "ordering tea in the Song Dynasty" and "making tea with each other" have emerged one after another, showing that tea drinks are entering young consumption Group, win a broad future.
In such a dynamic market, new players will inevitably be born, and old players who have successfully transformed will also rise. Those tea retailers who stick to the local market will face more competition from well-known national tea companies in the future, and the final competition in an industry is the brand.
Today, Xiaoguancha, Zhuyeqing, and Bama Tea are the waves in the wave of this era. We don’t know who will stand at the forefront in the end, but we know that changes have taken place in the still water, and all Tea companies must follow the waves.
For most traditional tea companies, the pain of transformation is inevitable, but we must firmly believe: "The waves are still rolling, we will go west, and there will be good times there."
Author: Manjusaka
Source: Songuo Finance