Can juice tea be the savior of fragrance?

Juice tea can be ironed plain and there are seasonal fluctuations in milk tea products.

In 2005, the first generation of milk tea shops represented by COCO and a little bit began to be popular in the streets and alleys.

Fragrant Piaopiao (603711.
SH) went from zero to one.
The average price of brewing milk tea in a cup with a unit price of 3.

In the era when the Internet dividend is far from widespread offline, "2 billion" is a hurdle in front of multiple levels such as organizational structure, marketing strategy, and product matrix.

Until 2017, when it landed on A shares, Xiang Piao Piao’s prospectus showed that its revenue from cups of milk tea still accounted for 98.

84%, and it was listed rashly with an over-concentrated single category structure; the prospectus also showed that the company’s persistently high sales expense ratio (25%) Compared with a gross profit margin of about 30%, it all reflects the weak competition in the fierce marketing war.

However, according to the observation of Yuanqi Capital, Xiangpiaopiao under the background of the 2020 epidemic has shown an "inflection point" momentum in the annual performance bulletin.

In the performance bulletin, in the fourth quarter of 2020, the company achieved revenue of 1.
879 billion yuan, an increase of 17.
58% year-on-year, and realized net profit of 311 million yuan, an increase of 44.

If it exceeds expectations, it means that some of the changes that once "circled the earth" have not been perceived by the market.

With new tea brands such as Heytea and Naixue's tea leading the new era, can Xiangpiaopiao once again achieve a "second cut" in the new tea market? Based on field research and financial analysis, Yuanqi Capital obtained some new insights and judgments after combing the information.

What changes have taken place in Xiang Piao Piao?

What changes have taken place in Xiang Piao Piao?

If there is a capability that is the core competitiveness of a soft drink company, product iteration and innovation capabilities must be listed among them, because only in this way can the company achieve sustained growth in revenue.

From the above figure, it is obvious that the fundamental changes of Xiang Piao Piao have occurred after its launch.

Although the major categories are still mainly brewed milk tea, the product has actually been iterated.

Whether there is room for sustainable growth in this market, Xiang Piao Piao's performance report for the fourth quarter of 2020 gave a partial answer.

Combining the feedback from the survey and the inventory data of channel distributors, we believe that Xiangpiaopiao will continue to achieve high double-digit growth in performance in 2021.

Judging from the sales performance in the four quarters of this fiscal year, the shortcomings of brewing products are also very significant, that is, they have obvious seasonal characteristics.

Usually, the first two months of the Lunar New Year are the outbreak period, and sales in only two months can reach about 40% of the annual sales (the sales in a single season in 2017 can even reach about 70% of the annual sales).

In this context, the logic of Xiang Piao Piao's brewing sector to achieve growth is relatively simple, using horizontal expansion of categories to achieve "both volume and price rise.

" In terms of product strategy, the classic milk tea series continue to focus on "volume increase", while the mid-to-high-end good material series achieve more "price" increases through the introduction of new products.

Looking further at the volume and price growth of these two series, we will find that the price increase of the classic series is small, and the price increase cycle is basically driven by cost.
This is because the positioning of the classic series is aimed at low-tier cities and county-level markets.
Consumers are highly price-sensitive, so the range of price changes in recent years has been extremely limited.

The good material series has a faster update rhythm and structural upgrades that bring more room for price increase.
Consumers of mid-to-high-end beverages have obvious characteristics, and they have a high demand for taste iteration.
From 2012 to 2013, Xiangpiaopiao's growth was extremely slow due to its single product structure (only red bean flavor SKU).
It was not until 2014 that the company Aware of the problem, they began to continue to introduce upgraded flavors, either in disguise or directly raising prices.

It is worth noting that due to the high proportion of the ingredient cost of the good material series (condensed milk packages were added in 2015), the unit purchase cost of direct materials has also been raised.
Since 2016, the gross profit margin of the good material series and the classic series has gradually converged (about 42%).
The mid-to-high-end products have not upgraded the income structure, which is a failure in a sense.
The result is that with the increase in raw material costs in 2017, Xiang Piao Piao has been under tremendous pressure on the profit side, which has also caused the company's gross profit margin to drop to about 25%.

The superposition of various factors has caused the market to hold pessimistic expectations for the fragrant brewing sector.
It is generally believed that the slowdown in the market trend of brewing is a model that has been eliminated.
It is true that under the background of a large number of offline milk tea stores in first- and second-tier cities, the original portability advantages of brewing products have been wiped out, but it cannot be ignored that the huge space of the sinking market is still not fully covered.
According to 2019 In terms of regional income in the annual report, more than 50% of counties and towns across the country are not covered, which means that brewing stories are still likely to grow.

If you want to win this market, one possible focus is the channel model, and the completion of the channel model is inseparable from another driver-ready-to-drink business.

When Yuanqi Capital conducted research on channels, it had learned about the "seasonal characteristics" mentioned above from Xiangpiaopiao's dealers.
The conclusion is in line with our judgment.
Seasonal characteristics undermine the enthusiasm of distributors for Xiangpiaopiao products, which also makes Xiangpiaopiao's products often frustrated when entering new regional markets.

Looking at it from the perspective of sinking goods, you will find that the ready-to-drink business has greater strategic value for Xiang Piao Piao.

The original brewed milk tea has its hot drink properties due to its instant-to-drink characteristics.
Generally speaking, the second and third quarters are almost "desert periods.
" The ready-to-drink liquid milk tea Lanfangyuan, milk tea, and MECO juice tea launched in July 2018 can smooth this seasonal fluctuation well.
According to our research, in the first half of 2020, the proportion of distributors who only engage in ready-to-drink products is about 1/4, ready-to-drink products cover about 500,000-600,000 terminals, and brewing products cover about 700-800,000 terminals.
From this point of view, the increase in the scale of distribution of ready-to-drink products provides an underlying guarantee for a smoother sales cycle.

In terms of price bands, according to survey statistics, the terminal price of Xiang Piao Piao Juice Tea has a price band of 5-6 yuan, which fits the mainstream price band of the beverage market.
At the same time, compared with similar products on the market, its juice content is higher and the taste level is richer.
In conjunction with the technical aspect, the fruit juice teacup body is innovatively used for aseptic filling, and it can be stored at room temperature for 12 months without adding preservatives.
The transportation is not restricted by the cold chain, the track is wider, and it has expansion and sinking genes.

However, this mainstream price band provides volume growth, but also brings a certain burden on profits.

According to the data in the 2020 performance report, the current gross profit margin of Xiangpiaopiao juice tea is lower than that of the brewing sector (less than 30%, and the company's annual report in 2019 shows that the gross profit margin of juice tea is also lower than 30%, which is 29.
73%).
From the perspective of the cost structure of the main business, the direct material cost accounts for about 85% of the operating cost.
According to the survey feedback, the ratio of the product cost to the packaging material cost is about 4:5, in other words, it accounts for about 50% of the operating cost.
The cost of packaging materials has reduced the gross profit margin of juice tea (far higher than the average packaging material cost ratio of soft drinks).
To improve this, we need to wait for the scale effect to become prominent.

However, this does not prevent us from being optimistic about the prospects for the growth of this large single product of juice tea, not only at the income level, but also at other levels to inject vitality into Xiang Piao Piao.
The reduction in revenue volatility in the off-peak season is of value to the current company: dealers have become more active and management efficiency has been improved.
At the same time, the enthusiasm of the sales team will also increase as a result; the synergy effect of brand establishment under complementary products.
In this way, the company's original strong market can rely on the original channels to export ready-to-drink products to achieve rapid volume, and weak areas can open the market through ready-to-drink to feed back the brewing business.

As the stronghold of Xiangpiaopiao in East China, in the grassroots research of Yuanqi Capital, the advantages of Xiangpiaopiao distributors in this area can be clearly felt.
According to the survey, the turnover rate of distributors in this region can reach twice a month during peak seasons.
, The average annual sales are also significantly higher than other regions, followed by distributors in Southwest and Central China.

Interestingly, in the past, due to the hot beverage properties of traditional milk tea brewing, in the northeast and other regions with sufficient heating supply in winter and high indoor temperatures, ready-to-drink juice teas have been popular.
This also confirms our judgment.

What’s more interesting is that ready-to-drink juice tea is another pioneering attempt to "from zero to one" for Fragrant Piaopiao.
The traditional ready-to-drink tea brands only have older products such as Master Kong Ice Tea, regardless of the ingredients or concepts between the two.
There are huge differences.
So will juice tea usher in the scene of fierce imitating competition from all parties after the advent of brewing tea? We think this is more difficult.

The most significant barrier to Fragrant Piaopiao comes from the aseptic filling production line used for juice tea.
The company has signed a five-year exclusivity agreement with Bosch of Germany (the current exclusivity period is less than one year).
However, Bosch's production line has limited production capacity and does not have large-scale mass production capabilities.
The information provided by Yuanqi Capital's research and feedback shows that Xiangpiaopiao has basically occupied all the production capacity of Bosch's production line.

In addition, since the production line of juice tea cannot be transformed through the old production line and new bases are needed, this has led to long approval costs and increased management costs.
“Do you want to go to the project” is already available for bottled products such as Nongfu Spring and Uni-President.
As far as tea beverage companies are concerned, it is a "scratching head" decision.

The New Tea Era: Where are the opportunities for fragrance?

The New Tea Era: Where are the opportunities for fragrance?

In fact, when we studied Xiangpiaopiao, we had a hypothesis—the question of whether the new tea market could be cut by Xiangpiaopiao.

At present, the soft drink industry has entered a mature stage, with a scale of over 600 billion (data source: Euromonitor).
Among them, bottled water has the largest scale (over 180 billion), and the scale of juice, ready-to-drink coffee and tea is 106.
9 billion and 143.
8 billion respectively.
Industry competition is fierce, and the proportion of CR5 has dropped from 47% in 2012 to 39% in 2019.

、、，、。，4000，1000。、，，；，70%。、。

，？《2019》，10，、，88%、74%71%，，。，、。

，，，。

，，15-24，64%；2530%；6%14。，2018，30.
7，113.
5。6-7.
5，，。

，，，。，，，，。，10%，（），。

20140.
0220191.
25，5CAGR128.
65%，20140.
1%20193.
14%。，，。

、、，，。

：

：，！

xianjichina.
com">，