Thousands of sails sailing out to sea are busy! Nowadays, not only the "three new things" (new energy vehicles, lithium batteries, solar cells), but also domestic short dramas in the style of "The Boss Falls in Love with Me" are hot going overseas, as well as various new tea drinks. “Malaysia is full of Mixue Ice City, and basically every shopping mall has a store.” Lisa (pseudonym), a Chinese-Malaysian, often goes to the local Mixue Ice City to visit stores and share the taste of new products.
Xiao Yu (pseudonym), who is filming a short drama in Australia, is also a regular customer of local Chinese tea drinks and must consume them once a week. Keke (pseudonym), who lives in Indonesia, has bought tea brands such as Gongcha, Bengong’s tea and Mixue Bingcheng, consuming an average of twice a week.
The "2023 China's New Tea Drink Brands Going Overseas Report" (hereinafter referred to as the "Overseas Report") shows that from 2010 to 2017, pearl milk tea represented by brands such as CoCo and Chun Shuitang entered Southeast Asia, Japan, the United States and other markets, setting off a wave of pearl milk tea overseas. Since 2018, there has been a wave of new tea drinks going overseas. Brands such as Heytea, Naixue’s Tea, Mixue Bingcheng, and Bawang Tea Ji have embarked on a journey to “Nanyang”.
However, whether these new tea drinks can gain a foothold and expand in overseas markets has yet to be verified by the market. The challenges they face such as localization issues and supply chain construction are also worthy of attention.
Southeast Asia becomes the first choice
In January 2024, the hot spots in the tea beverage industry were Mixue Bingcheng and Gu Ming. Following Cha Baidao, they submitted listing applications to the Hong Kong Stock Exchange. In a highly competitive market, listing will undoubtedly inject new impetus into tea beverage companies.
For companies that do not currently have the conditions to go public, going overseas may be a new opportunity. Chen Di, an analyst at EqualOcean, said that the domestic new tea beverage market is severely involved, product iterations are accelerating, and serious homogenization problems have emerged. Facing the overseas tea market with a large generational gap, China's new tea drinks have certain advantages in going overseas.
The "Overseas Report" shows that Mixue Bingcheng will go to Vietnam in 2020 and currently has more than 2,000 overseas stores; Heytea entered Singapore in 2018 and currently has 5 stores there; Nayuki's tea went to Singapore in 2018; Bawang Tea Ji came to Malaysia in 2018 and currently has more than 65 overseas stores. For many brands choosing Southeast Asia as their overseas destination, Chen Di believes that there are three main considerations: first, geographical distance and psychological distance. The local culture, tastes and preferences in the region are similar to those of Chinese people, which is conducive to market expansion; second, the consumption habits of users; third, the capabilities of the supply chain.
In China, there are three ways for a cup of tea to reach consumers: placing an order directly at the on-site counter, scanning the QR code to place an order through the WeChat mini program, or taking out delivery. "The situation in the Australian market is similar to that in China." Xiao Yu told the IT Times reporter that all stores in Australia are Chinese, and consumers are both international students and locals. The main method of purchasing is to place orders on site. If you use takeout software such as UberEats and Deliveroo, the shipping fee will be 4-5 Australian dollars.He showed reporters the ordering page of the local Mixue Ice City. Taking "Bangda Fresh Orange" as an example, the marked price was 5.2 Australian dollars (approximately RMB 24). On domestic takeout software, this product is displayed as 7 yuan.
"The categories in Indonesia are basically the same as those in China, but the tastes are less." This is Keke's feeling. "The taste is quite good, the price is 10 to 15 ringgit (approximately 15 to 23 yuan), and consumers of different ethnic groups will buy it." Lisa said that takeout is more popular in Malaysia, and the delivery time is about 15 to 30 minutes.
Indonesia Mixue Ice City Price
European and American markets are more challenging
In December 2023, Heytea will appear on the big screen in Times Square, New York, and its New York Broadway store will also be officially put into operation. Since then, Heytea has officially entered the U.S. market after opening new markets in the United Kingdom, Australia, and Canada in the same year.
A staff member of Heytea told the "IT Times" reporter that in terms of supply chain, the raw materials for most of the products in overseas stores are currently provided by the Heytea brand. Due to timeliness requirements, Heytea relies on local supply chain resources for a small number of fresh fruit raw materials and dairy products. After preliminary inspection of origin, variety inspection, sample delivery test, flavor test and supply capacity assessment, business partners will then conduct on-site procurement to ensure the provision of raw materials of the same quality and standards as domestic ones.
Shi Mai, a brand marketing expert who has lived in the United States for 12 years, told the IT Times reporter that Chinese tea drinks in the United States are made by Chinese, and the prices range from US$5 to US$11. Shi Mai said,In the United States, there are large differences in the economy, wages, and rent levels of each state.For example, in New York, a store may sell six to seven hundred cups a day, but the rent is high, with some monthly rents reaching more than $10,000, which reduces profits.
In her opinion, the general audience in the United States has a vague concept of new tea drinks, and the new Chinese tea drinks seem to be a bit "acclimated" to the local environment. "In terms of marketing models, most tea drinks from China are more of a 'copy and paste' approach, using domestic teams and marketing strategies, such as using WeChat mini programs to place orders, etc., but these methods are not conducive to truly entering the U.S. market." Shi Mai said that most local consumers place orders on-site, or use credit cards and cash to pay.
How to expand the U.S. market, Shi Mai shared her experience: "If domestic tea drinks want to gain a foothold in the United States, they need to make a good layout from four aspects: differentiation, localization, systematization and long-term development." She said that it is necessary to have a deep understanding of the consumption characteristics of non-Chinese audiences, their taste preferences, acceptable prices, etc., which will help the brand develop rapidly.
03
Supply chain construction encounters challenges
The "Going Overseas Report" believes that the new tea beverage overseas industry chain is mainly divided into three links: first, the upstream of the industry chain is the supply of raw materials, and market participants include raw material suppliers such as tea, dairy products, fruits, sugar, and packaging materials; second, the midstream is the core of the brand industry chain. Through direct sales and franchises, raw materials are purchased from upstream suppliers to complete beverage preparation; third, the downstream obtains orders through takeout platforms, stores, and mini-programs to achieve sales.
"The supply chain of most new tea drinks is still in China. For example, Mixue Bingcheng has established a transshipment center in Chengdu to support development in Southeast Asia. In addition to relatively cheap raw materials such as fresh fruits and milk, which can be obtained locally, cups, tableware, decoration materials, and some raw materials that require industrial production rely more on domestic exports." Chen Di said that there are no suitable production factories in Southeast Asia, and the materials produced may not meet the requirements of the brand.
In the U.S. market, most raw materials are also imported from home. Shi Mai told reporters that the American audience has a low understanding of tea, so tea, jam and other raw materials need to be imported, while fresh milk and fruits are purchased locally.
Shipping raw materials from domestic to foreign countries involves high transportation and labor costs. How to deal with the challenges encountered in supply chain construction? Chen Di believes that on the one hand, overseas companies need to pay attention to the turnover rate of the supply chain, which poses a certain test to the company's cost and back-end supply capabilities, and must establish a sound supply chain plan; on the other hand, tea brands should coordinate with the brand's overseas strategy when building a supply chain, and can give priority to local procurement or rely on local supply chain companies for production. At the same time, with the help of third-party digital supply chain platforms, logistics, capital flow and information flow can be integrated and smooth, thereby reducing costs to a certain extent.
Author/IT Times reporter Sun Yonghui
Editor/Hao Junhui Sun Yan