11.9 yuan for three cups, can Juewei Duck Neck’s milk tea sell well?

As the growth of the marinated food market slows down and competition becomes increasingly fierce, Juewei Duck Neck has taken a cross-border step and entered the milk tea market. With a friendly price of 11.9 yuan for three cups, Juewei Duck Neck is trying to get a share of the milk tea market. Behind this strategy is the company's urgent need to seek new growth points to cope with the pressure of its main business. But this article will take you to a deeper understanding of Juewei Duck Neck's cross-border journey and explore the challenges and opportunities it faces.

What can you do with 11.9 yuan? You can take the Beijing subway two or three times, buy a pound of pork, and some gourmets can choose to buy two taels of duck neck at Juewei Duck Neck to go with their wine, and then find that 11.9 yuan can also buy three cups of milk tea at Juewei.

1. 11.9 for three cups, Juewei starts selling milk tea

Recently, some netizens posted pictures of Juewei Duck Neck’s storefronts on social media. The pictures showed that banners were hung at the doors of some Juewei Duck Neck restaurants with the words “11.9 yuan coupon for buying 3 cups of original leaf milk tea” on them.

Regarding the online news, a staff member of Juewei store said that several stores in Changsha have launched milk tea business. Its milk tea products are made of condensed milk and freshly brewed tea, and have been sold for more than a month. At present, there is indeed an event of 11.9 yuan for 3 cups, which requires scanning the code in the store to participate. Morketing checked the official ordering applet of Juewei Duck Neck (Changsha) and found that most stores have not yet put milk tea products on the shelves. In a store that has been put on the shelves, the "Juewei Milk Tea" project was placed in the second column, with two milk tea products, red bean pudding milk tea and coconut milk green, both priced at 7 yuan. At the same time, the "Juewei Small Cup" was also put on the shelves in the "Juewei Milk Tea" project, priced at 4 yuan, 6 yuan and 8 yuan respectively, with the advertising slogan "Milk tea with stewed flavor, double happiness". As of press time, the applet data showed that the monthly sales of the two milk teas were 53 and 45 respectively, which were the two products with the highest monthly sales in the store.

Morketing called a Juewei store in Changsha that sells milk tea. The store staff told the reporter that the milk tea was put on the shelves in July and is currently only available in a few local stores in Changsha, with good sales. Morketing also called the relevant department of Juewei Food to inquire whether the milk tea products will be launched in stores nationwide, what plans there are, and why the milk tea business was launched, but Juewei did not disclose. Behind Juewei Duck Neck's new attempt in the milk tea market is the company's attempt to find new growth points to cope with the pressure of its main business. So while the milk tea sales are good, we also need to be aware of the dark clouds facing Juewei.

2. The main business is under pressure, and the reputation has repeatedly exploded

On August 31, Juewei Food Co., Ltd. released its 2024 interim report. The company achieved a total operating income of 3.34 billion yuan, a year-on-year decrease of 9.73%, and a net profit attributable to the parent of 296 million yuan, a year-on-year increase of 22.20%. On September 6, the topic "Why is the stewed food not selling well" rushed to the second place in the hot search, attracting widespread attention. In the first half of this year, the three major listed companies of leisure stewed products closed stores, and their revenues all fell. Only Juewei Food's net profit increased. Compared with the beginning of the year, the total number of Juewei Food stores in the mainland has decreased by 981, Huang Shanghuang has a net decrease of 445 stores, and Zhou Hei Ya has a net decrease of 360 stores. As the only net profit increase among the three giants, Juewei Food related personnel responded that the decline in operating income in the first half of the year was mainly due to a decline in sales. In the first half of this year, the company's store opening strategy has changed from "horse racing" to "intensive farming" mode, and will ensure the survival of local retail franchisees as its main task. Therefore, it will make adjustments based on the actual market situation, such as reducing the opening of some stores with poor locations. When asked why the net profit increased, the source said it was mainly due to the decline in raw material prices and lower operating costs in the first half of this year. However, Juewei's net profit growth may not be so optimistic. According to the data from Zhaimen Catering, Juewei only added 529 stores in the first seven months of this year, while the number of closed stores was as high as 2,748. The huge cost reduction may be the reason for the increase in net profit. At the same time, Juewei's food revenue also declined, with a drop of nearly 10%.

Juewei Duck Neck's crisis lies not only in its declining performance, but also in its declining reputation. In August, Juewei Duck Neck was suddenly investigated by the China Securities Regulatory Commission. Juewei Food received a "Notice of Filing" issued by the China Securities Regulatory Commission because the company was suspected of violating laws and regulations in information disclosure. Coincidentally, the Shanghai Stock Exchange's official website shows that Juewei Food has been subject to regulatory measures three times before, including regulatory warnings and regulatory work letters, involving information disclosure, regulatory violations, etc.

In addition to management, Juewei Duck Neck has also repeatedly fallen into food safety crises. It is reported that in the past 10 years, among the three giants, Juewei Food has been exposed the most times for food safety issues. On the Black Cat Complaint Platform, searching for "Juewei Duck Neck" as a keyword, there are more than 1,100 complaints, most of which are concentrated on product deterioration, substandard hygiene conditions, and physical problems after eating. At the same time, the number of complaints about Zhou Hei Ya and Huang Shang Huang is more than 900 and more than 600 respectively.

The food safety risks of Juewei Duck Neck are not something that have only occurred in the past two years. Data shows that in the past decade, Juewei Food has been exposed the most times for food safety issues among the three giants. In such a situation, can Juewei's launch of milk tea really turn the tide?

3. In the involutionary market, Juewei has both advantages and disadvantages

Today, the growth of the braised food industry has slowed down and competition is fierce, but the same is true for the milk tea industry. According to data from "Zhaimen Canyan", as of August 5, the total number of milk tea stores in China was about 430,000, and 167,347 new stores were opened in the past year, but the net increase was only 35,518. This means that nearly 130,000 milk tea shops disappeared in the past year, and an average of more than 350 operators left the market every day. Competition in the tea industry is fierce, and the reshuffle is accelerating.

Analysts pointed out that competition in the milk tea industry is already very fierce. New brands entering the market need to face not only direct competition from the same industry, but also consumer acceptance of new brands and brand market positioning. At the same time, Juewei Duck Neck needs to consider how to transform its brand advantage in the stewed food market into competitiveness in the milk tea market, which requires careful planning and market testing.

Juewei Duck Neck faces more challenges than involution when entering the milk tea market. Juewei Duck Neck's product structure and brand mentality are not compatible with tea drinks, and forcibly entering the market will inevitably cost more. At the same time, the addition of new categories may also lead to Juewei Duck Neck's unclear brand positioning, causing consumers to have brand confusion. At the same time, Juewei Duck Neck's management and food safety issues have never been properly handled, which will also affect Juewei Duck Neck's reputation. More specifically, although Juewei Foods has many stores, not all stores can add water bars, and the transformation is not easy to implement. With so many internal problems, success is not easy.

At the same time, Juewei Duck Neck is not the only industry giant that has entered the fiercely competitive milk tea beverage industry. There are also Starbucks, Luckin Coffee, Wahaha, Wanglaoji, etc. On September 10, Starbucks launched the new Tea Blossoming series; in August, Luckin Coffee launched the "Bawang Tea Ji Substitute" Qingqing Jasmine Light Milk Tea; Wahaha and Wanglaoji have been testing the waters of freshly brewed tea drinks a few years ago.

However, compared to these industry giants, Juewei does have advantages in entering the new tea beverage industry. First of all, the fact that Juewei Duck Neck started selling milk tea is very different, which can easily arouse consumers' "first-hand" mentality; if the product quality is guaranteed, customers can be quickly converted. Secondly, Juewei Duck Neck has more than 10,000 stores nationwide, almost second only to Mixue Ice City; and Juewei Duck Neck is well-known. If it enters the new tea beverage industry across the board, it will undoubtedly be able to quickly penetrate the target market and rapidly increase the exposure of new products. At the same time, Juewei Duck Neck's consumer group overlaps with the milk tea consumer group, and only needs to be put on the shelves for conversion.

It is reported that according to the official disclosure of Juewei Food, this crossover into the milk tea industry is an important decision made by the company after a deep insight into consumer demand and market trends. In order to ensure the smooth progress of the milk tea business, Juewei Food has made careful preparations in product research and development, supply chain management, store operations and other aspects. Regarding this crossover into the milk tea market, Juewei Food’s senior management said: "We believe that through continuous innovation and cross-border cooperation, we can bring consumers more diversified and high-quality product and service experiences. At the same time, this will also bring new growth momentum and profit space to the company."

This cross-border venture presents both risks and opportunities. For Juewei, it is a considerable challenge to maintain the quality of core products and restore its reputation while ensuring the success of new product lines and avoiding conflicts between new and old businesses.

Text | CD
This article is written by the author [Morketing] of Operation Party, WeChat public account: [Morketing]. It is originally created/authorized to be published on Operation Party. Reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.