The dilemma of Chinese traditional tea companies, where is the way out for traditional tea companies

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The old brands of tea companies that have been in development for nearly a hundred years are neither the darling of the capital market nor can they have a place in the consumer market.

Traditional Chinese tea brands seem to be heading for a dilemma.
Ironically, new tea merchants such as Tin Can Tea, which rely on consumer product thinking to rapidly develop and seize the market, are breaking the circle.

Based on this, Xinmo will analyze the following aspects:

Based on this, Xinmo will analyze the following aspects:

1.

What kind of predicament is the current Chinese traditional tea enterprise caught in?

1.
What kind of predicament is the current Chinese traditional tea enterprise caught in?

2.

From another perspective, how did the new tea merchant break the circle?

2.
From another perspective, how did the new tea merchant break the circle?

3.

For traditional tea brands, where is the way out?

3.
For traditional tea brands, where is the way out?

1.

Above the cloud, ungrounded

1.
Above the cloud, ungrounded

The history of tea drinking in China can be traced back to the Han Dynasty.

At that time, as a specialty of Sichuan, tea was first passed to Chang'an, Kyoto through the channel of tribute, for royal tasting.

From then on, from princes and generals, literati and inkmen, down to the common people, drinking tea was a good choice.

However, as a popular drink, tea has always maintained a kind of literati nobility, and this nobility has continued to this day, but it has brought the popular drink of tea to the road of niche people.

"70,000 tea companies can't be worth a Lipton.

" This sentence seems exaggerated, but behind the ridicule, it reveals the dilemma that traditional tea companies are currently facing.
That is why it is difficult for Chinese tea to get out of the circle?

Browsing the official webpages of some traditional tea companies, you will find that traditional tea companies are always accustomed to emphasizing too much on the hills where the tea is produced and the origin address of the tea when they promote their tea.

West Lake Longjing, Xinyang Maojian, Anxi Oolong, and Wuyi Cinnamon are the best examples.
These teas are famous because of the well-known origin.

The origin of the raw materials is the golden sign of traditional tea companies.
In the eyes of these tea merchants, only the tea from a specific origin is a high-quality good tea that will be recognized and sought after by customers.

But the fact is that because the growth of tea is affected by multiple factors such as climate, soil, planting technology, human input, etc.
, the quality of tea produced at different times in the same producing area is not the same.
Consumers bought tea based on their trust in the place of origin, but when they got it, they found that the quality of the product and the word-of-mouth in marketing were quite different.
In this way, it actually consumed consumers' good impression of traditional old brands.

Moreover, as modern consumers, especially the younger generation of consumers, they are not overly demanding on the origin of tea, nor are they sensitive enough to information about the origin.
Excessive emphasis on the illusory concepts of mountain tops and production areas has caused tea consumption to float in the cloud for a long time.
Consumers’ awareness and identity of tea cannot be improved, and it is difficult to open up the sales of tea.

In addition, the target customer group of traditional tea distributors is mainly focused on the circle of acquaintances.
The sales of tea mostly rely on repurchase from regular customers to ensure sales and the recommendation of regular customers to expand sales.

Daily acquaintance sales maintain the basic operations of traditional tea dealers, and holidays are the main source of tea dealers’ income.
The company's annual meeting and friends visiting during the holidays will choose to purchase tea from tea dealers, and the purchase is extremely strong.
As a gift attribute tea, the price is too low to be sold, so generally the selected tea is the first-class tea, the price is thousands or even tens of thousands.

In other words, the revenue and profit of tea merchants during this period accounted for a large proportion of the annual revenue.

But the problem is that this kind of sales channel mainly relies on the personal connections of the distributors, which is extremely unstable.
Once regular customers no longer choose to repurchase their own tea, but choose another supplier, the tea dealer may face the loss of customers, the expenditure cannot make ends meet, the normal operation is difficult to maintain, and even the situation of bankruptcy.

In other words, if traditional tea companies and tea distributors do not choose to explore the market, understand the real needs of consumers, and expand their sales channels, but instead stick to their traditional ideas and circle business, they want to build a well-known tea brand.
It seems unrealistic to break the circle of traditional tea brands.

2.
Stick to traditions and hardly see business opportunities

2.
Stick to traditions and hardly see business opportunities

Another important reason why it is difficult for traditional tea brands to break the circle is that today, there are fewer and fewer young people drinking tea.
As the main consumer group in society, traditional tea brands cannot catch the hearts of young people, which means that more than half of the market is directly cut off.

So, what are the reasons that make traditional tea drinking less and less popular among young people?

First, traditional tea companies over-respect the concept of "tea tasting" rather than "drinking tea", and the traditional tea tasting process is extremely cumbersome.
Tools needed for tasting tea in traditional tea ceremony, including teapot, hand-made tea, tea tray, saucer, tea pool (tea sea), tea wash, tea cup (tea cup, Gongdao cup, smelling cup), tea needle, tea Spoon, tea clip.
And tea tasting includes the following complicated steps: warming the pot, blanching the cup, filling the tea, high flushing, covering the foam, topping, washing the tea, washing the cup, dividing the cup, low pouring, serving the tea, smelling the fragrance, tasting the tea .

For modern young people, busy with their studies and work every day, it is difficult to have enough time and elegant interest to calm down and enjoy tea.
Compared with traditional tea, young people obviously prefer fast-moving drinks.
It does not need to take up much leisure time, but also meets its own immediate needs.

Furthermore, the production and packaging of traditional tea companies do not meet young people's expectations for the simplicity and convenience of drinks.
The packaging of traditional tea is mostly oval and rectangular.
It is bulky and difficult to carry, which limits the extension of the consumption scene; it is difficult to store after opening, which also increases the worry and burden of young people when buying tea.

Of course, the most important point is that traditional tea companies tend to focus on the middle and upper reaches of the industrial chain, while ignoring the extension of the downstream industrial chain.

Cold brew tea, flower nectar tea, milk tea, etc.
, as new products extending downstream of tea drinks, have been continuously developed in recent years, leading the trend of new tea consumption.
According to relevant data, the size of the tea market has increased from 256.
9 billion yuan in 2015 to 410.
7 billion yuan in 2020, with a CAGR of 9.
8%.
Among them, the ready-made tea beverage market emerged in the 1980s.
The market size in 2020 will reach 113.
6 billion yuan.
It is expected to grow to 340 billion yuan at a compound growth rate of 24.
5% from 2020 to 2025.
The growth rate is significantly faster than that of the tea industry and others.
Tea products.

The tea consumer group in my country is close to 500 million people, and the younger generation is the main force of consumption.
According to the "White Paper on the Development of China's New Tea Industry", from the perspective of age, post-90s are the main force in consumption of new tea drinks.
Post-90s, post-80s and post-00s accounted for 52%, 28%, and 18% of consumption respectively; In terms of distribution, white-collar workers and students are the main groups of new tea consumption, accounting for 42.
4% and 29.
5% respectively, and more than 60% have a bachelor’s degree.
The target consumer group has a high level of education.
From the perspective of consumption power, more than 80 % Of consumers have an average monthly income of more than 5,000 yuan, and they have strong spending power.

Faced with a huge consumer market and a sharp increase in new consumer demand, smart businesses have begun to seek a new integration of tea and to explore new paths for tea development.
However, traditional tea brands have hardly moved and are still sticking to a single channel of tea sales.

Without seeking new sales channels, it will be difficult to open up the market and achieve expansion.
Presumably traditional tea companies have also realized this.
If traditional tea companies continue to stick to their traditions and do not "please" young people, they will only narrow the road.

3.
Change your thinking and come back against the wind

3.
Change your thinking and come back against the wind

The small pot of tea established in 2016 is undoubtedly a dark horse of the tea brand.

According to Euromonitor data, the revenue of small pot tea continued to soar from 230 million yuan in 2016 to 1.
46 billion yuan in 2019, and the CAGR reached 85% within 3 years, leading the industry in growth.

As a successful representative of the new-style tea merchants, what is the way of doing business in the small pot of tea? In the eyes of the author of Xinmo, it is mainly consumer product thinking and Internet thinking.

The business logic of traditional tea companies is from product to consumer, while the business logic of small pot of tea is from consumer to product.
In short, traditional tea companies regard tea as an agricultural product, while small pots of tea define tea as a consumer product.

Based on the thinking of consumer goods, the small pot of tea pays more attention to the standardization of quality and category in the product.
In this way, the uneven product quality mentioned above is resolved.
In addition, the packaging is divided into bags into cans, which preserves the tradition of canned tea while making it more convenient, conforming to the consumption habits of modern consumers, and extending the consumption scene.

However, under the thinking of the Internet, Tin Tea pays more attention to online marketing.
The small pot of tea invited eight tea masters to the platform to create an advertising gimmick as a "master master".
From product packaging, store decoration, to content marketing, Xiao Guan Tea strives to build itself into a stylish and high-grade tea brand.
When the brand's popularity comes out, the sales will naturally go up.

It can be said that consumer product thinking and Internet thinking constitute the core moat of the small pot tea enterprise.

The success of the small pot of tea is of course meaningful for reference, but at the same time it must be clear that the commercial logic of small pot of tea is not entirely applicable to traditional tea companies.

In the case of China's first state-owned tea company, China Tea, the small pot of tea model is not suitable.
First of all, the small pot of tea focuses on 8 SKUs in order to standardize the construction.
However, China Tea, as a full-category comprehensive management company, has dozens or hundreds of tea varieties under its umbrella.
Obviously, it is impossible to focus on only a few or a dozen product categories.

In addition, China Tea's current sales channels are mainly concentrated in traditional channels and store channels, and the proportion of modern channels is still low.
When the online channel construction was not mature enough, they rushed to advertise on the Internet, but failed to achieve the expected benefits.

4.
Breaking the predicament is easier said than done

4.
Breaking the predicament is easier said than done

According to the "China Tea Enterprise Development Report", the total number of Chinese tea companies in 2017 was about 60,000, of which there were more than 1,600 large-scale companies, only 87 companies with total assets of more than 100 million, and companies with total assets of more than 1 billion.
Only 6 stores.
Combining Euromonitor and the Tea Circulation Association data, my country's tea industry has a CR5 of only 3.
7% and a CR10 of 5.
1% in 2019, which is much lower than the level of Japan/Hong Kong/Taiwan during the same period.

The data reflects the current basic situation of China's tea industry.
The competitive landscape tends to be fragmented, and the leading companies are too light.
In addition, due to the wide range of tea production areas and the many types of product segments, the concentration of the industry varies, but from the overall trend, the overall concentration of the industry is low, and the number of large-scale enterprises is small.

Enterprises are numerous and complex, large and scattered, and the entire industry is showing a situation of scattered sand.
China's tea industry has reached the point it is now, which has a lot to do with the fact that Chinese tea sticks to the traditional economic model and stays at the top of the cloud.

As mentioned above, the current business logic of traditional Chinese tea brands is still the traditional model of "product-consumer".
Under this model, the relationship between the enterprise and the consumer is misplaced, the information is not equal, the market does not respond to consumers' opinions and demands in a timely manner, and the enterprise cannot obtain first-hand market information, and subsequent production and sales are like "blind people crossing the river.
" , All by feeling.

Not only on the sales side, but also on the production side, traditional tea companies also adopt an extensive small-scale production model.
Manual planting and picking are labor-intensive and time-consuming, and it is difficult to ensure the uniformity of the quality of the original leaves.
Standardized and large-scale production and processing are difficult to achieve, supply often cannot meet demand, and products cannot flow into modern channels.
The occupation of consumers' minds and the establishment of corporate brands are like talking on paper.

Although it is clear where the disease is, how easy is it for traditional tea companies to get down to the cloud?

For traditional tea companies, even the head company’s assets are only a few billion or so, and even for a small brand, there are dozens or even hundreds of tea categories under its umbrella.
They want to achieve mechanized and standardized production across the board.
Obviously Some embarrassment.

In terms of marketing, the business model of Xiaocancha has been referred to as "marketing is greater than product.
" Companies may have to think twice if they want to follow the model of small pots of tea.
Is it for fame or word of mouth? Is there enough confidence to achieve both fame and fortune? With small pots of tea already widely criticized, will consumers still pay if they follow suit?

Traditional tea companies trapped in the cloud, if they want to break the situation, they have to go down the cloud.
But the cloud is easy to go up and down, and if traditional tea companies want to go down and walk elegantly, I am afraid it will take some more work.

Source: WeChat Official Account: Xinmo

Note: All pictures in the article are reprinted on the Internet, and infringement will be deleted!

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