How can tea brands expand in scale? Share the successful experience of Bawang Chaji in starting a business

Tea brands have a large share in the market. How did Bawang Chaji stand out among so many brands? Let's learn from its success experience.

In the past year, I have found that more and more people are drinking Ba Wang Cha Ji. Its taste is indeed very different from other milk teas.

I studied it and found it to be very valuable.

In fact, Bawang Cha Ji was not the first to make whole leaf fresh milk tea.

But the one who achieved great success in the end was Ba Wang Cha Ji, which aroused my strong curiosity. How did he get started?

01

After investigation, it was found that Ba Wang Cha Ji’s approach was very wild, and it was a typical differentiated strategy of a latecomer catching up.

Surround the cities from the countryside, use Yunnan as a base, and only after gaining a firm foothold will they expand across the country.

The first store was opened in Yunnan in 2017. There were only 1,000 stores before 2023, and more than 2,000 stores were opened in 2023. The expansion speed was quite fast.

I have extended some of the key fighting methods of Overlord Tea Princess.

1. Seize the blue ocean space of new product categories

When Bawang Tea Princess entered the market, fruit tea was very popular. If they were to compete head-on with Heytea, they would basically have no chance of winning.

The only way left for them was to break through from the flank. The founding team realized that there were few players in the original leaf milk tea market, so they focused on the 15-20 yuan price range.

This ecological niche is a blue ocean space for new categories, without being squeezed by national leading companies.

Why are they watering down the fruit teas?

The core raw material of fruit tea is fruit, which is a seasonal product. The supply, demand and price fluctuate greatly. It is difficult to efficiently cross regions and is highly dependent on manual labor.

The fruit also needs to be refrigerated, peeled and cut into pieces, which is a cumbersome process with a low level of automation and extremely high supply chain costs.

The essence of whole leaf milk tea is the tea base. The price of tea is much more stable than that of fruit, and the supply chain is easier to standardize like coffee.

Bawang Cha Ji’s starting strategy: cut into the original leaf fresh milk tea market and weaken the market share of fruit tea.

2. Unique and stable taste leads to long-term high repurchase

We can look back at history and look at Coke and Moutai. The reason why they have been so popular for so long is essentially because the products themselves have unique and stable tastes, and people never get tired of drinking them. This has captured a group of loyal users and brought long-term repurchases.

Judging from the logic of high repurchase, tea, pepper and coffee are all addictive, and Ba Wang Cha Ji's tea has a stronger flavor.

Moreover, the tea base of Bawang Cha Ji is made from well-known teas such as Pu'er, Jasmine, Dahongpao, etc., which can meet the needs of 80% of the people. The product is universal and provides space for replication and expansion.

3. High degree of standardization supports scale expansion

There is another point that is often overlooked by the public: how to keep the taste unique and stable?

A cup of Ba Wang Cha Ji tea only consists of tea leaves, milk and packaging materials. It is very simple to make and can be made at a very fast speed. This high level of automation means that the taste of each cup is slightly different.

The more stable the taste, the longer the product life cycle and the higher the store inventory turnover rate, which provides a basis for large-scale replication and expansion.

From the perspective of selling goods, making money from tea drinks depends on selling one cup after another to users and collecting profits. Continuous profit depends on users' continued repurchase, and continuous repurchase supports the profitability of a single store.

ROI, cost structure, payback period, gross profit margin, and net profit margin in the single-store model are all core indicators.

02

If the milk tea industry wants to become bigger and stronger and get on the table, it has to rely on economies of scale.

Without the high level of replicability brought by extreme efficiency and high-standard automation, it will be swallowed up by the anti-scale gravity effect.

Let's extend this a little further. What is anti-scale gravity?

The larger the scale, the less efficient the organization's management, the higher the costs, and ultimately the lower the profits.

So how can tea beverage brands break through the anti-scale gravity?

1. Improve reproducibility through automation and standardization

A high level of standardization is to fight against the anti-scale gravity. Standardized automated equipment and standardized production SOPs are equivalent to standardizing the replication of human capabilities.

The more standardized, the easier it is to expand across regions. Otherwise, the cost will continue to rise due to the expansion of scale, and eventually the expansion will fail.

2. Research and Development

Develop scarce, unique and stable flavors, cultivate a group of loyal user circles, and bring long-term repurchase value.

3. Segmentation of tracks

The key premise for profitability is to gain insight into a segment where competition is relatively less fierce, avoid the suppression from category leaders, and provide a good environment for single-store profitability.

03

Bawang Chaji will also face some problems:

1. Can the marketing of copycat products continue to gain popularity?

When a product category is highly homogenized, the next most important thing is volume product innovation and volume marketing.

Bawang Cha Ji became popular with its luxury-style packaging design, which is a form of innovation. In the short term, it will occupy the minds of users and is a trend, but trends are unstable.

Old trends will always be covered by new trends. Many brands disappear from the Internet celebrity brands because they cannot continue to innovate after catching up with the trends.

2. Whether the efficiency of the mid- and back-end teams can keep up with the pace of expansion.

Today's business logic is different. In the past, traffic basically came from stores and the areas where the stores were located. Now the source of traffic has extended to online platforms such as Douyin, Kuaishou, Weibo, Xiaohongshu, Dianping, and Meituan.

What is tested at this time is the ability of the middle and back-end. The store manager alone cannot do it. The company needs to plan the platform traffic and channel strategy.

04

Finally, let’s summarize the core points:

• In a market with a relatively clear competitive landscape and a strong internal competition, the best strategy for latecomers to carve out a niche is to differentiate themselves.
• If a restaurant brand wants to get on the table and achieve large-scale expansion, the key is to learn to resist the gravity of scale.
• The essence of consumer goods is whether the product can be purchased repeatedly, and the key point lies in the product value.

Author: Han Xu WeChat public account: Han Xu HanXu