Those new consumer brands that were once popular but are now miserable

New consumer brands once quickly became popular thanks to their high-end positioning and innovative marketing strategies, but with the changes in market environment and consumer attitudes, some of the once popular brands are now facing severe challenges or even in trouble.

Some new consumer brands that were once begged by investors for market share and were unaffordable to consumers are now facing a miserable fate.

1. The collapse of the former top streamer

Rational consumption and consumption downgrade have become keywords active on social media throughout the year, and have even extended to concepts such as "old-fashioned consumption", "imaginary consumption", and "3-star restaurant check-in team".

On Douban, the number of members of the "Crazy Money Saving Group" has exceeded 620,000, and on this basis, the "Poor Version of the Crazy Money Saving Group" has developed. Everyone is thinking about how to save money.

At this time, new consumer brands that generally become popular by relying on high-end positioning and are priced much higher than traditional brands naturally become the objects abandoned by consumers.

In fact, the rise of “new consumption” has only been going on for more than four years.

Starting from the second half of 2020, new consumer sectors such as tea, baking, and pasta have once again become the "hot spots" favored by capital.

At that time, many well-known investment institutions poured in. New consumer brands such as Heytea, Mixue Ice City, Momo Dim Sum Bureau, and Hefu Lamian successively received large financings of over 100 million yuan and started to expand their stores. Nayuki's Tea even successfully landed in the capital market and became the "first stock of new tea drinks."

In the first half of 2021, there were more than 300 investment and financing events in the new consumption sector, with a financing amount of nearly 40 billion yuan, which has exceeded the full-year scale of 2020.

From the perspective of the track, since the second half of 2021, capital has cooled down, new consumer brands have been cold, and various problems have arisen.

Those new consumer brands that were once popular with capital collectively fell into difficulties in early 2022.

Until now, the test has intensified. Many new consumer brands favored by capital have begun to fall into difficulties such as layoffs, losses, and bankruptcy...

Zhong Xue Gao, which was once jokingly called the "LV" of the ice cream world by netizens, was "expensive" when it was first launched, with the highest price for a single ice cream reaching 66 yuan.

Despite its high price, Zhong Xue Gao has still captured a large number of fans thanks to some eye-catching gimmicks. Many people are willing to pay for it, and it is hard to get one.

However, in just a few years, Zhong Xuegao began to be abandoned by consumers and its ending was "miserable".

In the first half of this year, the news that the price of Zhong Xue Gao dropped from 60 yuan to 2.5 yuan became a hot search on major platforms, and many netizens also commented on it.

Once upon a time, the price of Zhong Xue Gao was out of reach for ordinary consumers, but unexpectedly, in just two years, their prices dropped so significantly.

In addition, since February this year, news of Zhong Xuegao being forced to execute has frequently appeared.

Tianyancha shows that the company currently has 5 information on persons subject to execution. The case filing dates are all between February 2024 and August 2024. The execution targets range from 810,000 yuan to 9 million yuan, and the total amount of execution exceeds 18.4 million yuan. In addition, there are also consumption restriction orders and multiple equity freezing information.

In recent years, the continuous negative public opinion has exhausted Zhong Xue Gao, and it is even more difficult to cope with the repeated executions. Lin Sheng, the founder of Zhong Xue Gao, even said that he was "selling sweet potatoes to pay off debts", but such a marketing gimmick did not gain the sympathy of netizens, and the sales in the live broadcast room were not satisfactory.

2. The first person to fall in the new Chinese baking race

As a representative brand of Chinese baking that was once sought after and invested heavily in by capital, Hutouju did not "exit" in a dignified manner.

On January 24 this year, a new bankruptcy review case was added to Shanghai Wanwu Youyang Catering Management Co., Ltd., an affiliated company of the new Chinese baking brand "Hutouju Chartered Bakery".

The objection period announcement shows that the applicant Sheng Moumou applied to the Shanghai No. 3 Intermediate People's Court for the company's bankruptcy liquidation on the grounds that the company could not repay its due debts and obviously lacked the ability to repay. The case has now been accepted. If there is any objection to the application, it should be submitted to the court in writing within 7 days after the announcement.

Since September 2023, Shanghai Wanwu Youyang Catering Management Co., Ltd., a company affiliated with Hutou Bureau, has added a number of new information on the person subject to execution, with a total amount of 5.3347 million yuan. The highest amount of execution was more than 1.71 million yuan, involving a sales contract dispute case, and the execution court was the Minhang District People's Court of Shanghai.

Public information shows that Shanghai Wanwu Youyang Catering Management Co., Ltd. was established in December 2020 with a registered capital of approximately 152,000 yuan. The legal representative is Hu Ting. It is jointly held by Hu Ting, Song Huanping, Shanghai Baoyou Enterprise Management Partnership (Limited Partnership) and others.

Risk information shows that the company has information on multiple persons subject to execution, with the total amount of execution exceeding 5.33 million yuan. In addition, there are also information on multiple persons subject to execution for dishonest conduct, consumption restriction orders and terminated cases.

Looking back, it took only two years for Hutouju to go from being a huge hit to being rumored to be closing down.

It started in Changsha, with a storefront in the style of national trends, selling wife cakes, peach cakes, sesame biscuits, etc., which later became the standard of "new Chinese baking".

In January 2021, Hutouju received angel round financing from Sequoia China and Challenger Ventures. Hutouju only has 5 stores, and 4 of them are in the base camp.

But this did not prevent Hutouju from making the entire new Chinese-style baking industry popular. Together with Momo Dim Sum Ju and Luxihe, it was regarded as a representative of an emerging category. At that time, many institutions were unable to invest in these three new Chinese-style baking chain brands.

Behind the sudden popularity are many doubts - the products are not well differentiated and the startup has not yet demonstrated its ability to manage more stores.

However, doubts still cannot stop the appeal of the emotional story to investors - the combination of Chinese and Western baking methods upgrades traditional pastries, the store is located in a popular business district, and the visually impactful national trend decoration and brand marketing, as well as the method of making and selling freshly made products, attracts long queues of young people.

At this time, the rationality and wisdom of investors were replaced by the madness of "must invest in it". Some investors who participated in this track even said, "All the well-known VCs are rushing to grab Chinese cakes."

Four months after the angel round was announced, Hutouju received a round A financing from GGV Capital, Tiger Global Management, Sequoia China, and IDG Capital, totaling nearly $50 million, with a valuation of around RMB 1.5 billion. At the time, Hutouju had only about 10 stores.

In the second half of 2021, the Hutou Bureau, with sufficient ammunition, significantly accelerated the expansion of its stores. In 2021 alone, it opened more than 30 stores and entered cities such as Guangzhou, Wuhan, Shanghai, and Beijing in a high-profile manner.

However, in 2022, Hutouju's development has stagnated. Not only has it failed to obtain new financing, but the pace of store expansion has also begun to slow down. Since the second half of 2021, Hutouju's single-store sales have declined, and even the Changsha headquarters is in a loss-making state. The stores that used to have long queues are no longer crowded.

The number of stores was halved, the financing process was stagnant, and there were news of layoffs, city withdrawal, and wage arrears, which caused a lot of doubts in the market.

The epidemic has caused expectations to change. Looking at the baking market, like Hutouju, both old and emerging baking brands have not had an easy time in the past one or two years in the face of the calmness of capital and the current downgrade of consumption.

Christine (01210.HK), the "first bakery stock", also suspended all store operations last year and supplemented cash flow through loans and asset sales...

3. The “Disney of China’s catering industry” withdrew from Guangzhou due to poor local conditions

Recently, news of the closure of Wenheyou stores in Guangzhou began to circulate on the Internet.

According to the announcement of the Guangzhou Municipal Planning and Natural Resources Bureau, Guangzhou Wenheyou has disappeared from the proposed adjustment effect diagram of No. 75 Tianhe East Road. Although Wenheyou’s official Weibo responded that there is no plan to close the store, Wenheyou’s decline in Guangzhou has become increasingly obvious in recent years.

From the bustling business in the early days of business, with more than 2,000 numbers being taken per day, to the current frequent withdrawal of merchants and a closure rate of 80%, everyone has to question how long Wenheyou can last in Guangzhou.

Wenheyou first came into people's attention as a super internet-famous restaurant in Changsha. With its 1980s streetscape and its collection of almost all Changsha specialty snack shops, Wenheyou is still a must-visit spot for tourists in Changsha. In sharp contrast to its cold reception in Guangzhou, Wenheyou in Changsha had an average daily passenger flow of 70,000 during the May Day holiday this year.

Wenheyou, founded in Changsha, is a phenomenal catering, cultural and service commercial complex in the local area. Its founder once vowed to make it the "Disney of China's catering industry."

It is like an old object that condenses space. Nostalgia, retro and special food are its labels, and it brings traffic wherever it goes.

However, after leaving Changsha, the internet celebrity halo surrounding this internet celebrity brand, which focuses on nostalgia and retro, seems to have slowly faded, and it has suffered from serious "acclimatization problems" in Guangzhou.

Regarding the news that Wenheyou may be closing down, staff from several restaurants said that they had not received any notice of closing down from Wenheyou in Guangzhou and were not aware of the specific situation.

According to the staff of Wenheyou stinky tofu shop, businesses have been leaving since last year, and only a few shops are left, and no new businesses have come in. The staff also said that their shop has been settled in Wenheyou since its opening, and except for the first opening when there were many people, the business is average at other times.

According to public information from Guangzhou Wenheyou, in the early days of its opening, more than 20 shops moved into Wenheyou, including Guangzhou’s time-honored brands Shawan Dairy Queen, A-Po Beef Offal, and Eight Treasures Fried Dumplings; the legendary Guangzhou late-night snack stall "Chao Luo Ming"; and the authentic Cantonese cuisine of Wynn Hotel... Today, most of these shops have moved away.

In July 2020, Wenheyou stepped out of Changsha for the first time and entered Guangzhou in a high-profile manner, building a 5,000-square-meter Wenheyou on the edge of Guangzhou Taikoo Hui business district. It was decorated in the style of Changsha Wenheyou by replicating the old scenes of Guangzhou's urban villages, and invited a number of distinctive local brands to settle in.

In July 2020, at the beginning of its opening, Wenheyou in Guangzhou caused a sensation in the market, with 3,000 tables lined up and an average waiting time of 3 hours; less than a year later, in April 2021, the second Wenheyou outside Changsha opened in Shenzhen. At that time, the event was unprecedented, with the number of people queuing for numbers reaching 40,000 at one point, and it even became a hot topic on Weibo.

But in less than a year, the situation took a sharp turn for the worse. The scene of Guangzhou Wenheyou being packed with people and hard to get a seat when it first opened is gone forever, and news of local businesses closing down has been reported one after another.

Shenzhen Wenheyou, which is also located in Guangdong, also could not escape the fate of not being able to adapt to the local environment. Like Guangzhou, after its initial popularity, it was gradually forgotten by people, and there were many reports on the Internet that it would withdraw.

At present, many new consumer brands, after becoming the "abandoned children" of capital, have to find ways to save themselves and have joined the trend of price cuts.

4. Besieged on all sides

In June this year, Hefu Lamian, which was once favored by capital, attracted market attention due to its official announcement of a substantial price cut.

This is the second time in six months that the company has officially announced a price cut. Public reports show that the current mainstream price of Hefu Lamian is between 16 and 29 yuan, which is almost halved compared to the 40 to 50 yuan price when the brand was first established.

In addition, it is learned from the official website of Hefu Lamian that as of now, it has more than 500 stores across the country. In December 2023, Hefu Lamian will have more than 600 directly-operated stores and more than 25 million brand members. This shows that compared with the official data at the end of last year, some stores may have been closed in the first half of this year.

Behind the price cuts and store closures, Hefu Lamian's performance was under pressure. From 2020 to 2022, the cumulative loss was about 716 million yuan. The official said that it turned losses into profits in 2023, but did not disclose the specific profit figures.

Coupled with the changes in the catering industry, Hefu Lamian, the originally "out-of-touch" "healthy noodles in the study", had to try to step down from the altar.

However, after the price cut, many consumers complained about Hefu Lamian on social media platforms. Some netizens felt that although the price of Hefu Lamian was high, the portion was not large enough and the quality was not up to standard.

"It's only twenty or thirty yuan, and there's just this little bit of food", "The soup sounds like it was made from a seasoning packet", "The meat seems like it was wholesaled from somewhere", "Workers say they can't afford it", "The black cabbage is a pure gimmick", "There's only a little bit of tangerine peel and lemon tea"... Such questioning voices are not difficult to hear.

In addition to price cuts, Hefu Lamian is opening up franchises and focusing on the layout of the sinking market. According to the official website, in 2022, the company launched a multi-brand development strategy. In addition to Hefu Lamian, its current brands include Pick ME Coffee & Hot Food, One Cup Ramen, Alanjia Lanzhou Beef Noodles, and Caishen Meat Skewers. However, these brands have not caused much response in the market so far.

Among the many controversies against new consumer brands, emphasis on marketing, neglect of R&D, product homogeneity, low cost-performance, and excessive marketing are the most common comments. New consumer brands want to save themselves, and they also choose to start with these issues - price reduction is the simplest and crudest way to win back people's hearts.

In addition, Nayuki’s Tea (hereinafter referred to as “Nayuki”), the first stock in the new tea beverage industry, also fell into losses again.

In the first half of this year, Nayuki's Tea expects to lose 420 million to 490 million yuan, which is close to the full-year loss level in 2022. And 2022 is the year with the largest loss for Nayuki's Tea since 2018, except for 2021 when it went public.

Not only that, Nayuki's store opening speed has slowed down. In the first half of the year, Nayuki's direct stores increased by 23 in total, and in the second quarter, the number of stores closed and opened was equal. Although the number of franchise stores is increasing, it has not ushered in the expected explosion...

Looking at the entire new consumption track, the new consumption trend has been surging since 2019.

Zhong Xue Gao, Sandunban, Jiang Xiaobai, Genki Forest, Perfect Diary, Hefu Lamian, Pop Mart... These brands emerged in 2019 and are enthusiastically sought after by young people.

At that time, every consumer product seemed to have been remade by capital. The epidemic in 2020 and 2021 did not stop investors' enthusiasm. As the Internet dividend gradually peaked, investment institutions were eager to get a share of the hot new consumer sector.

New tea drinks, new baking, script-killing, new pubs, as well as new consumer products such as e-cigarettes, electric toothbrushes, and trendy toys have all been sought after by capital.

However, as the public and consumption return to rationality, the inflated bubbles continue to burst, more and more new consumer brands are in trouble, and the test is further intensified.

As Jack Ma said at the Zhejiang Entrepreneurs Association Annual Meeting on December 1, 2018, "It used to be said that 'when the wind comes, even pigs can fly.' I said at that time that when the wind passes, all those who fall to death are pigs. We should expect that day to come."

After the capital carnival, many new consumer brands that were favored by capital began to fall into difficulties such as losses, and many brands are currently surrounded by enemies.

Author/Qingshan ID/lingshouke
This article is written by the author of Operation Party [Lingshou Media], WeChat public account: [Lingshou]. 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.