Comparing the overseas expansion of 4 new tea giants, it turns out that these are the winning strategies

New tea brands are accelerating their overseas expansion, showing their desire for overseas markets. Will this wave of growth "add color" to the brand story, or "increase" the competitive pressure on the brand? Let's read this article together to explore the overseas expansion of new tea brands and the business secrets behind it.

The overseas expansion of new tea drinks is nothing new, but it is worth noting that in recent months, the overseas expansion of new tea drinks has been accelerating tacitly.

On October 25, according to the Nikkei, Mixue Ice City will expand the number of its stores in Japan and plans to increase the number of stores in Japan to 1,000 around 2028;

Chabado's first overseas store opened in Seoul, South Korea on October 23;

Tianlala, the old rival of Snow King, opened its first six new stores in Indonesia on October 1;

The leading brand HEYTEA has also officially opened for business in London, Melbourne, Burnaby and other places;

Brands such as Nayuki’s Tea, Bawang Chaji, and Yidiandian have already entered overseas markets. Even the new brand “Cha Li Yi Shi” that just stepped out of Guangzhou is going to open its first store in Spain…

If we could describe the overseas expansion of new tea brands in the past two years as "testing the waters" and "not missing out on exploration", then since this year, new tea brands have tacitly chosen to go abroad and even accelerated their overseas expansion, which shows that they want to "not fall behind".

It is a fact that new tea drinks are in a state of internal competition in China. After going abroad, does it “add color” or “boost” the brand story?

1. New tea drinks have different strategies for going global

Since the beginning of the year, new tea brands have been active in overseas expansion. With the arrival of the "first cup of milk tea in autumn" season, various brands have tacitly accelerated their pace.

The data is incomplete and is compiled from the Internet.

As can be seen from the above figure, September and October are the peak months for brands to go overseas. Some brands are going overseas for the first time this year, while some are already veterans overseas.

Since 2018, Nayuki, Heytea, and Mixue Ice City have entered the Southeast Asian market, and Bawang Chaji also started its overseas expansion in Malaysia. Until this year, new and old brands have accelerated their overseas expansion and ushered in a wave of "explosive" overseas expansion.

However, although they are all going overseas, their specific strategies are different. This article attempts to review the strategies of four new tea brands that have been going overseas for many years: Heytea, Bawangchaji, Mixue Bingcheng, and Nayuki’s Tea, from the four aspects of products, prices, channels, and marketing.

1. HEYTEA

In terms of products, HEYTEA continues the high-quality fresh fruit tea style in China and innovates products with local Internet celebrity elements. After entering Singapore for the first time, HEYTEA not only retains classic drinks, but also launches Singapore-specific products such as durian ice cream and salted egg yolk ice cream based on the locals' love for durian and Internet celebrity snacks such as "salted egg yolk-flavored fried fish skin." In this way, it creates "Internet celebrity" hot products that are loved by locals.

In terms of price, HEYTEA's overseas prices are higher than those in China. For example, a standard cup of succulent grape jelly costs 18 yuan in China, while the prices in Singapore, London, and Melbourne are about 31 yuan, 57 yuan, and 45 yuan respectively. Obviously, HEYTEA's pricing matches its stores in core business districts, and its target groups are mostly mainstream consumer groups such as white-collar workers.

In terms of channels, Heytea's stores were all directly operated in the early stage, and it was not until March this year that the partnership model was adopted to develop overseas markets. Overseas, direct operation has too much cost pressure and faces the risk of not understanding the local market. The partnership model can obtain financial and local resource support from partners, dispersing the company's own risks. This also confirms Heytea's plan to accelerate the opening of overseas stores.

In terms of marketing, Heytea uses "city characteristics" as a brand communication point, makes city-limited refrigerator magnets around the characteristic attractions of the store cities, sets up tourist check-in points, etc., to attract locals and tourists to consume and share on social platforms.

2. Overlord Tea Princess

In terms of products, Bawang Chaji's overseas products are almost the same as those in China. They enter the market with the category differentiation of "original leaf tea + fresh milk" and retain the light taste. From time to time, they launch local limited products in conjunction with marketing activities, such as the limited drink Meilong Honeydew Melon. The same product system as in China makes it easier for them to control the overall supply chain and achieve unified and standardized production.

In terms of price, Farewell My Concubine maintains a medium-low price positioning similar to that in China, which shows that the target consumers are also similar to those in China. For example, the medium cup of Boya Juexian is sold at 16 yuan in domestic stores, while the prices in Malaysia and Thailand are about 18 yuan and 19 yuan respectively.

In terms of channels, the franchise model has become the main way for Farewell My Concubine to expand its stores. Compared with the direct sales and partnership models, the franchise model has a lower threshold and can expand stores faster and seize the market. Farewell My Concubine opened nearly 100 stores in four years, and the franchise model played an important role.

In terms of marketing, Farewell My Concubine uses the "national style + local trend" approach, setting up national style + local specialty stores, inviting local celebrities as spokespersons, and carrying out trendy joint activities. In Malaysia, it invited Lee Chong Wei as a spokesperson, and in Singapore, it co-branded the Star Dome Railway to send peripheral activities, all of which are to approach local young consumers from a trendy perspective, increase the number of check-ins on social platforms, and increase the brand's popularity in the local area.

3. Mixue Ice City

In terms of products, Mixue Ice City has been constantly launching new flavors based on the preferences of local young people while maintaining its domestic beverages. For example, Singapore's strawberry nectar and Vietnam's raspberry milk cap are new products not available in China. The biggest difference from the other three brands is that Mixue Ice City has increased the overall sweetness of its drinks based on the taste habits of local people.

In terms of price, Mixue Ice City still focuses on the low-price strategy. Although its prices in overseas markets are slightly higher than those in China, in the local market, Snow King is still the most cost-effective brand. Take its store treasures ice cream and iced lemonade as an example. The domestic price is 2/4 yuan, while the prices in Vietnam, Indonesia, Singapore, Japan, and Sydney are about 3/6 yuan, 3.7/4.6 yuan, 5.4/13.4 yuan, 7.8/12.6 yuan, and 9.4/17 yuan respectively.

In terms of channels, Mixue Ice City, like Bawang Chaji, chose to open stores through the franchise model. This approach has brought about a rapid expansion speed, and it now has more than 3,100 stores around the world.

In terms of marketing, Mixue Ice City uses its own popular IP and combines it with local culture to create a brand image that is both unified and localized. Based on the domestic version, the image of the Snow King is adjusted according to local characteristics, and the theme song is also changed to the local language version. Moreover, like the domestic "street kid" Snow King, he can be seen on major streets overseas, singing, dancing, and walking around, in order to attract people's attention, narrow the distance between consumers and the brand, and attract traffic for the brand.

4. Nayuki’s Tea

In terms of products, Nayuki's Tea's business model is similar to that in China, and is also composed of three parts: tea drinks, baking and retail. Unlike the above brands, Nayuki's Tea pays more attention to the regional characteristics of its baked products. In its first store in Japan, it launched Matcha Custard, which combines the characteristics of Kyoto Uji Matcha and local Japanese custard, and Takoyaki bread inspired by Osaka's specialty food "Takoyaki".

In terms of price, Nayuki's Tea is priced at the high end, mainly targeting high-spending groups. For example, the signature product, the medium-sized cheese strawberry cup, costs 21 yuan in China, while the price in Japan is about 44 yuan and in Singapore is about 43 yuan when the store is open.

In terms of channels, Nayuki chose the same direct sales model as in China. Its founder believed that the direct sales model could better control store operations and product quality, making the brand image more consistent. However, the direct sales model also has its drawbacks. In the case of an unclear overseas market, the company needs to bear more pressure on capital, localized operations, sales, etc.

In terms of marketing, Nayuki's Tea relies on its own popularity and does not conduct too much localized marketing. It generally uses overseas social platforms such as Instagram and domestic Xiaohongshu for word-of-mouth communication. It can be seen that Nayuki wants to promote the brand through spontaneous social sharing of featured products.

A few years later, different brands with different strategies have also handed in their own overseas performance reports. Mixue Bingcheng quickly occupied the market through "low-price strategy + IP localization brainwashing + franchising", becoming the brand with the most overseas stores among new tea drinks, and has begun to penetrate the hearts of local people; Bawang Chaji has also achieved a scale of 100 stores in Southeast Asia, where there are many Chinese people, by "differentiated categories + national style trend + franchising"; and Heytea has taken a different route, using the method of "Internet celebrity high-quality products + city themes + mixed model" to open 8 stores in four continents.

Although it has a smaller store scale than the first two brands, it has become the most international new tea brand. Nayuki’s Tea is more “product-focused and less marketing-focused” and uses a direct sales method that has greater operating pressure. Although it has opened three stores overseas, all of them have now been closed.

In summary, catering to the preferences of local consumers is the first step for brands to go global. Secondly, localized marketing can effectively help brands integrate into the local market, and the franchise model plays a big role in brand market expansion.

As can be seen from the above, going overseas has "added color" to some new tea brands, while "increasing pressure" has also been added to some. Even in the face of uncertainty about the results, various brands have gone overseas one after another, accelerating their overseas layout, trying to "not fall behind" in this wave of going overseas.

2. Market, price, users…a “new way out” under internal circulation?

As one of the most promising tracks in the new consumption field in recent years, new tea beverage brands have been thriving in China. Why take the huge risk of starting over overseas?

From the perspective of the domestic market, the new tea beverage market is close to saturation, and the market growth rate will slow down in the future. According to the "2023 Douyin New Tea Beverage Track Special Report" recently released by ByteDance, the scale of my country's new tea beverage market has increased from 42.2 billion yuan in 2017 to 100.3 billion yuan in 2021, with an annual compound growth rate of more than 20%. However, the growth rate of the market scale has declined from 2020 to 2022.

Especially in 2022, the domestic new tea beverage market has reached its peak. In the commercial district of any provincial capital city, there are often many different new tea beverage brands within a few hundred meters, and even the same brand will open two stores in adjacent blocks.

In a market with shrinking incremental space, industry competition is becoming increasingly fierce. There are many new tea brands, old brands are busy grabbing territory, and new brands are constantly pouring in. In the case of serious product homogeneity, "scalping" prices have become a new way to attract consumers. But in the long run, although price wars can help brands gain short-term sales, they are not good for business operations in the long run. Under the dual pressure of the market and the industry, new tea drinks have to find new growth.

1. In addition to the "sweet" price, new tea brands are also listed at "sweet" prices

In iBrandi's opinion, to some extent, the recent acceleration of new tea brands going overseas is likely related to the competition for the "second new tea stock". Among the seven brands that were previously reported to be preparing for listing, four have recently accelerated their overseas expansion. Among them, Mixue Bingcheng and Bawang Chaji plan to open several new stores before the end of the year, and Cha Baidao and Tianlala have also opened their first batch of overseas stores. For brands, going overseas is a brand new "growth" story. If you want to get a capital pass faster, you must accelerate the layout of overseas markets and tell this story well to capital.

Compared with the "volume" of the domestic market, the overseas market seems much "broader". From the perspective of the overseas market, unlike the mature coffee market, new tea drinks are still a blue ocean to be developed. A previous report pointed out that Southeast Asian consumers spend nearly $4 billion a year on new tea drinks.

Peng Xin, the founder of Nayuki Tea, once said, "When we went to shopping malls in the United States and Europe, we found that all tea drinks were more expensive than coffee, and the owners all wanted us to open stores because they felt that tea drinks were a very high-quality lifestyle." This also shows that the overseas market has a high acceptance of new tea drinks, and there is a large amount of unmet demand, and there is huge potential for growth.

In addition, there are few overseas tea brands, and most of them are in our 1.0 era. Now the Chinese market has completed the iteration from pearl milk tea to fresh fruit tea, while local brands are still dominated by pearl milk tea, and the product variety is relatively small. In addition to products, its supply chain system and marketing methods are also in the primary stage. Compared with brands that have gone through market competition in my country, it seems to lack competitiveness in all aspects.

2. At the same time, brands that went overseas earlier are also bringing back good news

In July 2022, Bawang Chaji revealed that overseas revenue has accounted for about 15% of the total revenue. Mixue Bingcheng has not only become a household name in Indonesia, but its first store in Sydney also achieved daily sales of over 24,000 yuan. Heytea also received good news. After the opening of the Melbourne store, the highest daily sales volume was nearly 3,000 cups, with sales exceeding RMB 140,000. Overseas success stories have also brought hope to more brands.

Faced with the "difficulty in finding a way out" at home and the "growth potential" abroad, regardless of whether the result of going overseas is "adding color" or "boosting pressure", brands can only try boldly and give it a try.

3. Conclusion

On the surface, the prospects for overseas markets are indeed bright, but the real problems faced by brands after going overseas are more complicated than those in China.

For example, overseas market conditions are difficult to predict. Can we accurately understand the differences in consumer interests between those in China and abroad? How to set up the product system, how to solve the high costs of cross-border logistics and transportation, and how to control the supply chain? How to ensure product compliance and business operations comply with local laws? These are all implementation issues that companies need to face and solve.

As summarized above, every brand has its own overseas strategy, and the results are mixed.

Therefore, for new tea beverage brands, although going overseas may be a "new way out", compared to the action of going overseas itself, whether they can find a business path that suits them after going overseas and "add color" to their brand story is the real test for the company.

Author: YT WeChat public account: IBrandi