Nai Xue Runs IPO New Tea

On the new year's eve of February 11, just as everyone was preparing to leave the old and welcome the new, Nai Xue's tea submitted a prospectus to the Hong Kong stock exchange. Although previously denied the listing rumors, the new tea industry's "thousand year old second" finally won the listing process, ahead of the joy of tea.

2020 is a key year for capital to flood into the new tea track. In this year, Naixue received three rounds of financing of more than 100 million US dollars, and Xicha was also valued at more than 16 billion yuan after the C + round of financing. In addition, the waist brands such as Guming, qifentian, and shanghai auntie also successively burst out financing news. It seems that xinchayin has not been affected by Ruixing incident too much, and the capital is still willing to join this track one after another.

On the other hand, Niu Ge, who has been a new tea franchise store for two years, is trying to find an opportunity to jump out of this circle. At the end of the franchise system, he is facing the competitive pressure brought by the rapid expansion of the market and the increasingly meager profit, which is gradually away from the expectation at the beginning of the investment.

For him, "the market has gone from boom to bust.". The wind blowing in the bonus period of new tea leaves a rudimentary market pattern, and people on this train are heading in different directions.

As early as 2019, some people have disclosed that Naixue's tea is in close contact with investment banks and intends to go to the United States for listing. Visual China

Capital darling

Naixue is undoubtedly one of the first passengers to get on the bus. In recent two years, the wind of Naixue's listing has never stopped.

As early as 2019, it was revealed that Naixue's tea was in close contact with investment banks and intended to go to the United States for listing. At that time, Naixue official response, "no listing plan.". Until June last year, Naixue completed the B2 round of nearly 100 million US dollars of financing, with Shenzhen Venture Capital as the leading investor. According to a number of relevant people in the secondary market, the IPO of the company is still in progress. However, Naixue, as always, said that it had not received relevant information and would not comment on it.

However, seven months later, Naixue's impact on IPO has become a matter of fact, and killed her opponent, Xi Cha, by surprise. You know, the latter's listing rumors are not less than Naixue.

According to the prospectus, between 2017 and 2020, Naixue has completed five rounds of financing of nearly 1.3 billion yuan. Among them, in 2020 alone, Naixue completed three rounds of financing. Shenzhen Venture Capital, Honghui capital and Pacific Alliance Investment Group (PAG) invested 200 million yuan, 5 million US dollars and 100 million US dollars in April, June and December respectively. According to public information, the market value of Naixue's tea is nearly 13 billion yuan.

It is worth mentioning that Tiantu capital is the only institutional investor in Naixue's first three rounds of financing. In 2017, the total investment of round a and round a + was 92 million yuan. At that time, the market value of Naixue was about 6 billion yuan. In November 2018, Tiantu capital invested 300 million yuan again to help Naixue complete the round B financing.

"We saw another Zhou black duck in Naixue." Previously, when asked about the reasons for investing in Naixue, Wei Guoxing, managing director of Tiantu capital investment department, once said this.

If we say that the investment in Zhou black duck is out of recognition of China's Stewed flavor market, Tiantu's continuous investment in Naixue comes from its good prospects for the new tea industry.

According to the public data, from 2014 to 2018, the compound growth rate of China's new tea sales is close to 30%. In 2019, the market scale of new tea drinks will reach 97.8 billion yuan. It is estimated that the market size will exceed 100 billion yuan in 2020 and will exceed 110 billion yuan in 2021. In addition, according to the research of burning knowledge consulting, according to the retail consumption value, the total scale of China's present value tea market will be about 113.6 billion yuan in 2020, and it is expected to reach 340 billion yuan by 2025, with a compound annual growth rate of 24.5%.

In addition, the consumption of new tea is expanding with the upgrading of business forms, penetrating into more age groups, and has a broader user base. According to the latest "spring milk tea consumption report" released by Alipay digital life platform, in early March, the consumption of milk tea for middle-aged and elderly people rose by 10% in Alipay, realizing the "out of circle" from the young people born in the 1980s and 1990s to the middle-aged and elderly groups.

Compared with the relatively clear brand pattern of the coffee industry, "tea" still has a huge penetration in China, which has the opportunity to create a new head brand. " Pan pan, the managing partner of Tiantu capital, told the media why he liked Naixue's tea among many new tea brands. What he valued was Naixue's team, products and business model.

It is understood that the founders of Naixue are Zhao Lin and Peng Xin. The former has been engaged in the catering industry in Shenzhen for many years and once worked in Maxim group, while Peng Xin was the brand director of Kingdee software. The love and entrepreneurship stories about how the 70's men and young men met the IT talented women after 85 and co founded Naixue can be seen everywhere on the Internet.

In everyone's eyes, Zhao Lin is a low-key person, and his rich catering experience provides a good reference and guidance for the supply chain management of Naixue. In fact, in the company, he is also in charge of this part. Peng Xin is good at marketing and promotion, but also responsible for product design and development.

When Naixue's tea opened its second store in 2015, Pan Pan contacted Zhao Lin, and the two sides kept meeting once every two weeks for half a year. Pan Pan later revealed in an interview with the media that the close contact in the past six months played a very important role in Naixue's final decision to accept Tiantu capital investment.

According to the prospectus, before the IPO, Zhao Lin and Peng Xin held 67.04% of the shares of Naixue through Lin Xin holding, 8.32% of the shares were held by forth wisdom limited, the employee equity incentive platform, and He Gang, chief technical officer of Naixue tea, and Ma Xiaoming, his spouse, held 0.35% of the shares.

In terms of institutions, Tiantu entity holds 13.04% shares, yonglegao international holds 0.87%, SCGC capital holds 1.33%, Hongtu Junsheng venture capital holds 0.83%, Hongtu venture capital holds 1.16%, HLC holds 0.85%; taimeng investment group holds 6.22% through pagac nebula.

Previously, most of the new tea products and prices were located in the mass consumer market. Coco, yidiandian and other brands started from the street, focusing on fast consumption and high cost performance, with a unit price of 10-15 yuan. But Pan Pan believes that opportunities in the new tea market require greater upgrading and innovation of existing brands. The appearance of high-end tea represented by Xi Cha and Nai Xue undoubtedly filled in the blank of the market at that time.

Xicha, which got the first round of financing earlier than Naixue, has completed four rounds of financing so far, with an accumulated investment of more than 500 million yuan publicly disclosed. The latest round of financing is the d-round financing led by hillhood capital and coatue in March 2020. The current market value of Xicha is 16 billion yuan. Some sources said that Xicha may formally submit its prospectus in March.

In 2020, Xicha opened 289 new stores, with a year-on-year increase of 31%. The number of new stores in Naixue was 200, an increase of 20% compared with the same period in 2019. According to the prospectus, the number of tea shops in Naixue has increased from 44 at the end of 2017 to 422 by September 30, 2020, and plans to open 350 new shops in 2022.

Capital into the Bureau for new tea into a shot in the arm, not only accelerate the expansion of new tea, but also effectively protect enterprises to withstand the impact of the epidemic. According to statistics, in 2020 alone, more than 4 billion yuan will enter the new tea race track. In addition to the head brand Xicha and Naixue tea, the waist brands such as Guming, qifentian and Hushang Auntie have gradually entered the scope of capital's attention. In the third and fourth tier cities, the middle and low-end markets with a huge population base and consumption growth potential have become the main battlefield for a new round of capital competition.

"It's a very fierce industry, and there's a lot of dividends left." Zhang yeqiu, vice president of Zhonghai investment, said in an interview with the media after investing in Lele tea with a large share.

Profit dilemma

On the afternoon of February 24, in a xiongji hand-made tea shop in the outskirts of Nanjing, the boss Niu Ge was cooking pearls patiently in the back kitchen. The boss's wife was sitting at the cashier's counter, waiting for customers to arrive. The open space beside the counter was filled with vegetables purchased by the community.

In this tea shop with an area of less than 30 square meters, there are three tables and six chairs. There was not much business on that day, and only a few people went in and out of the store. Most of them still came to buy vegetables in groups. Occasionally, one or two of the takeaway boys came to the store to pick up the packaged tea and then left in a hurry. From 1 p.m. to 4 p.m., there are five cups of tea served together with takeout.

Niu Ge told the 21st century economic report that he has been running Xiong Ji's hand-made tea franchise store for two years. In 2018, the new type of tea is in the early stage of rapid development. Several friends around him said that opening a tea shop was an opportunity with considerable profits. Therefore, Niu Ge decided to join the industry and joined jingchashan, a milk tea brand from Taiwan, in April 2019. At that time, the idea was very simple, "just want to catch this express train." He said.

However, after a while, the internal management of Niuge's original brand company was divided. Another shareholder decided to work alone and set up the xiongji brand. The contract signed before was transferred to the new brand. Considering the cost that has been invested in the early stage, Niu Ge thinks again and again, in order to reduce the loss, he has to accept the brand change finally.

New tea was originally born in the streets. The small size business model of a single store can flexibly adapt to most consumption scenarios, but in fact, the business in the middle and low-end markets is not easy to do. Contrary to the general impression of "low cost and fast return" for new tea drinks, due to the low industry threshold, a large number of investors are attracted to enter, leaving a limited space for new brands and franchise stores.

Compared with a little bit, coco, chabaidao, these or classic or popular brands, Xiong Ji is intuitively opened on the flow of customer list. During the Spring Festival, there was a tea shop in the same business circle as Niuge's store. In only one afternoon, the order stickers were pulled out, almost three or four people high. However, according to Niu Ge, Xiong Ji now has an average of 50-60 orders a day, and the customer price fluctuates around 20 yuan.

Niu Ge does not evade the huge gap between reality and imagination. When asked about the reasons for the difficulty in making profits, he frankly pointed out three key reasons: the pressure of competition in the same industry, the upper limit of consumption capacity, and the lack of brand awareness.

It is understood that Niu GE's shop is the most prosperous business district in the local area. When it was first opened in 2019, the business district in which Niu Ge was founded included him, with a total of five brands and six new tea shops. In less than a year, the new tea suddenly ushered in a blowout, and 14 new tea franchise stores were opened within a radius of less than 500 meters. Under the pressure of competition from the same industry, the growth of local consumption is much slower, "the market has changed from prosperity to decline, and we can't change this reality." Niu elder brother helplessly said to the reporter.

In all the influencing factors, Niu Ge put brand awareness in the first place. Niu Ge told reporters that famous brands generally provide greater support to franchisees. When brands such as yidiandian, coco and qifentian are opened in a new franchise store, they usually offer material discounts to the new stores. For large discounts on takeout platforms and review platforms, the company will also provide cash subsidies. However, all the full and reduced sales of Niuge's franchised brands on the platform are borne by the store operators themselves.

Although brother Niu's shop is relative's and doesn't need to pay rent, and the couple's management also saves staff costs, Niu Ge can only rely on repeat customers to basically maintain balance of income and expenditure, and the return on investment is not optimistic. The store was originally two floors, in order to save cost and subsidy income, the second floor was hung with a sign for renting. Niu said that investing in new tea is "not as fast as people think.".

This word seems familiar, the speaker is not other people, it is Naixue's landlady Peng Xin. In an interview with the media at the end of 2019, Peng Xin frankly said that the new tea was not as profiteering as people thought, and the cost of food materials and human resources were very high. In addition, the adoption of the full direct marketing mode was an asset investment.

According to Peng Xin at that time, the cost of opening a new store is basically 3 million yuan, of which the cost of food materials accounts for 40%, and the cost of human resources is also very high, which is only a dozen points lower than that of food materials.

The reporter found that the material cost, employee cost and depreciation of the right to use assets are the main cost expenditures, of which the material cost ranked first, and rose from 35.3% in 2018 to 38.4% in 2020, due to "the rising cost of raw materials".

In addition, as a high-end brand of new tea, the consumer groups of Naixue are mainly concentrated in the first tier cities, the new first tier cities and the second tier cities. In the whole year of 2018, 2019 and the third quarter of 2020, the number of tea stores of Naixue in first tier cities were 87, 138 and 155, and 58, 119 and 148 in new first tier cities, respectively. The rapid expansion of the number of stores, brand positioning for high-quality locations and light luxury style requirements, also virtually increased the initial operating rental costs of stores.

According to the prospectus, in the first three quarters of 2018-2020, the main business income of Naixue tea was 1.087 billion yuan, 2.502 billion yuan and 2.115 billion yuan respectively, with a year-on-year growth rate of 130.2% in 2019, and a sharp decline to 20.8% in the first three quarters of 2020. In the first three quarters of 2018, 2019 and 2020, Naixue lost 69.729 million yuan, 39.68 million yuan and 27.513 million yuan respectively.

On the one hand, the decline in income growth was affected by the epidemic. According to Peng Xin previously revealed that during the epidemic, 90% of Naixue's stores were closed. Chen Jie, executive vice president of Shanghai beverage industry association and director of Dongfang FMCG center, also said that last year's epidemic had a great impact on the whole FMCG and beverage industry. Especially in the first quarter, it had a greater impact on offline experience formats, with a general decline of 70% or 80%.

On the other hand, like the middle and low-end markets, the high-end tea market also has to face the pressure of dense network layout and increased competition in the same industry. According to the prospectus, in 2019 and the first three quarters of 2020, the average daily sales volume and order volume of each tea shop in each line City show a decreasing trend.

The profit situation of rival Xi Cha is not optimistic. According to the company's 2019 annual report data, the champion stores sold 1137690 drinks annually, and Shenzhen sold more than 20 million drinks. However, after two consecutive years of public sales data, Xicha 2020 annual report also avoided the sales situation and only disclosed the store data.

The reporter noted that in April 2020, Xicha and Naixue had raised the price of single cup, and the core competitive category entered the era of "30 yuan / Cup". However, the increase of income brought by the increase of selling price can not effectively improve the profit after excluding the cost of materials, rent and staff. According to the data, in 2018 and 2019, the profit margin of Naixue's tea stores decreased from 18.9% to 16.3%, and in the third quarter of 2020, the profit margin was only 11.3%, a decrease of 7 percentage points year on year.

In addition, the rapid expansion under the heavy asset model has brought a lot of pressure to the capital chain of Naixue. As of the first three quarters of 2020, the total assets and liabilities of Naixue tea are 2.606 billion yuan and 2.778 billion yuan respectively. The asset liability ratio is as high as 106.6%, including 1.790 billion yuan of current liabilities and 370 million yuan of cash on account. Some analysts believe that the lack of current assets at the same time bear greater debt repayment pressure, which may be one of the reasons why Naixue is eager to go public.

Change in the world

An epidemic situation has brought a lot of changes to many industries. For new tea drinks, the epidemic has further accelerated the industry reshuffle. According to qixinbao data, as of November 30, 2020, the total number of tea enterprises in China has exceeded 300000; among them, more than 130000 enterprises have been closed down, liquidated, revoked or cancelled, accounting for 43%. Affected by the epidemic situation, the growth rate of tea industry registration slowed down last year, but more than 20000 new enterprises were still added, and nearly 3000 enterprises with abnormal business operation.

Nowadays, the new tea industry has basically formed a brand matrix led by Xicha, Naixue tea, tea Yan Yuese and LeLe tea. The waist, such as Guming, qifentian, and shanghai auntie, have successively won capital financing, and they all want to be the first to run out. In addition, a little bit of brands, such as coco, which entered the market earlier, occupy all line cities.

With the impact of Naixue IPO, the new tea market is surging again, and the river and lake are changing.

AI media consulting data shows that at present, the stores of the top brands in the new tea industry are mainly concentrated in the first and second tier cities, while the number of stores in the third tier cities is still small. More than 90% of the stores of Xicha and Naixue are distributed in the first and second tier cities. Analysts believe that the new tea market in the first tier cities has been basically saturated, and all brands need to turn to the sinking market to seek new growth points.

In April 2020, the first store of xixiaocha, a sub brand of Xicha, was established in Shenzhen, which has a strong relationship with Xicha from the brand name to the brand logo. With the name of "affordable tea", Xixiao tea priced at 8-20 yuan has gained a lot of attention in the low-end market. According to Xicha 2020 annual report, as of December 31, 2020, xixiaocha has opened 18 stores and sold more than 1 million drinks.

In terms of sinking market and brand diversification, Naixue went much earlier than Xi cha. In 2015, Naixue tea was established in the same year, another brand taigai also opened its first store, with an average price of 16 yuan. According to the prospectus, as of September 30, 2020, taigai has opened 83 stores with a total sales volume of 111 million yuan. However, Lishan, another subsidiary brand of fruit tea, has not been able to do so. The only two stores in Guangshen have stopped operating.

In addition to using sub brands to develop low-end markets and accelerate the coverage of the remaining space in the first and second tier markets, enterprises also try to reduce costs by developing new stores. It is reported that in 2020, most of the 289 new tea shops will be heytea go stores. This new intelligent store will reduce the shop rent and staff costs through the operation mode of small procedures and self pick-up cabinets, thus completing a new exploration of the new tea business model

Naixue also said in the prospectus that the bakery would be removed from the newly launched Pro tea shop, and the central kitchen would be used to produce prefabricated baking products, so as to reduce the store area and reduce the operating costs. In terms of products, pro stores also set foot in the field of coffee, launching seven types of high-quality coffee, trying to increase user stickiness through the extension of product categories. According to the latest disclosure of the brand, 70% of the 350 stores planned by Naixue in 2022 will be planned as pro stores.

At the same time, both Xi Cha and Nai Xue choose to open their new stores in high-density communities, office buildings and other places where they can have close contact with consumers, hoping to extend the brand's tentacles to more subtle places. The reporter also noted that at present, including Xicha, Naixue's tea, Lele tea, tea Yan Yuese, etc., have been launched into tmall flagship store, trying to sell bubble water, snacks, tea, water cup and other tea products, accelerating the layout of new retail.

According to relevant data, after Naixue and Xicha settled in tmall in 2020, the online sales of new tea drinks have increased nearly twice, and the number of visitors to the flagship stores of new tea brands has exceeded 10 million, three times higher than that in 2019.

Change has become the daily routine of the new tea giants. On the other hand, Niu GE has also created a space in the shop to do the sideline of community group buying. He hopes that the flow of people coming and going from the community group buying can drive the tea sales slightly. However, for the future, he is a bit pessimistic, "the industry has begun to slow down the road.".

Niu is waiting for a suitable business opportunity to jump out of the new tea track.

(at the request of the interviewee, brother Niu is a pseudonym)

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