The "Pinduoduo" of milk tea: less than 10 yuan per cup, 2.5 billion sold in a year

Have you heard of the milk tea brand Tianlala? While we are still attracted by the various marketing collaborations of Heytea and Nayuki, this milk tea shop focusing on the sinking market has quietly completed the scale of 7000jia chain stores, and is poised to develop into the next "Mixue Ice City". How did it develop to such a scale? Let's take a look.

With 7,000 stores opened, has the next Mixue Bingcheng appeared in counties and towns?

"Have you ever tried Tianlala?" The New Consumption Think Tank asked this question to many consumers, but they got the same answer - "No, I haven't tried it, and I haven't heard of it."

This milk tea brand, which many first- and second-tier workers have never heard of, has quietly opened 7,000 stores and has annual sales of over 2.5 billion.

Large scale and extremely low popularity, these two slightly "divided" labels appear on Tianlala at the same time.

Compared with Cha Baidao, Guming, Shanghai Auntie, Mixue Ice City, and Mo Yogurt, which have long been active in the public eye, Tianlala is like a mysterious person in the lively new tea market, without financing or publicity. Before this, there were few reports about it from the outside world, and even those in the industry who have been deeply involved in the consumer or catering industry for many years have only heard of it.

But in fact, since its launch in 2015, Tianlala has been rooted in the sinking market for nine years. With a price of less than 10 yuan, it has grown into the Pinduoduo of the milk tea industry, and even shook the position of Mixue Bingcheng, which dominates the sinking market. In a corner that no one noticed, Tianlala and its franchisees created a milk tea storm from the county.

After rapidly growing to a certain scale in the sinking market, Tianlala began to enter first-tier cities. According to Meituan data, there are currently 31 stores in Beijing. Recently, its founder Wang Wei publicly revealed that the brand will enter North America, Europe and other regions in 2025, and plans to be listed on the Hong Kong stock market in the same year. In addition, Tianlala's first overseas store will soon be located in Indonesia, and it plans to open 60 stores in Indonesia by the end of this year.

Image source: Screenshot of Dianping.com

What is the secret of this "dark horse" tea drink that emerged from the sinking market? What new insights does its expansion path bring to the new tea drink market?

1. Small town youth drink out an invisible "giant"

When a friend told Ding Chao during a chat that a county-level fresh fruit tea brand already had more than 7,000 stores, he immediately opened Dianping.com and typed the three words "Tianlala" in the search box.

Image source: Screenshot of Dianping.com

"I was thinking, where did this store come from?" Ding Chao, who works in an innovative brand incubation company, keeps surfing every day. Due to his job, he is familiar with new brands and consumption trends on the market. Among the brands he is following, Tianlala seems to have slipped through the net.

But such a brand has impressed a lot of young people in small towns. A Xiaohongshu user with an IP address in Anhui posted, "After the high school entrance examination, the students went to different schools, but every summer vacation, everyone habitually met at Tianlala in the county town, drank a few sips of drinks, and then decided where to go for the party."

As the population of fourth- and fifth-tier cities continues to grow, they are becoming a new driving force for the growth of China's consumer market. The consumption demand for tea drinks among young people in small towns is also becoming increasingly strong. "Whoever wins the small town wins the world" seems to be becoming an indisputable fact.

Tianlala was born in such a background.

Image source: Tianlala official Xiaohongshu

In 2014, traditional tea drinks began to decline, while new tea drinks gradually emerged. At that time, Imperial Tea (now renamed Heytea) had begun to expand stores in the Pearl River Delta region, Cha Yan Yue Se opened its first store in Changsha, and Mixue Bingcheng stores gradually expanded and became popular.

After years of doing business in Bengbu, Anhui, Wang Wei, the founder of Tianlala, was keenly aware that tea drinks were a track worth investing in. He gave up the spicy hot pot restaurant he had run for many years, joined a tea drink brand, and opened 8 franchise stores in one year. But gradually, in the course of business, he discovered that the quality of franchised brands' products varied greatly, but he could not optimize it.

Why not create his own brand? He immediately launched Tianlala, a high-quality and affordable brand.

"Only by truly understanding the tea brands of small town youth can we make products that sell well in the sinking market." At the beginning of its establishment, Wang Wei determined the route of Tianlala to make small profits but quick turnover. Tianlala has a full range of products and categories, with a price range of 3-10 yuan. There are dozens of products, and the average price is only 7 yuan, including a barrel of fruit tea, peach lemon tea, succulent bayberry, passion fruit grand slam and other products. From the price point of view, this is a level that ordinary junior and senior high school students can afford.

Currently, Tianlala's popular products include a bucket of fruit tea, a bucket of family portrait, black warrior mulberry, succulent bayberry, etc. In the second half of this year, a "super bull avocado" directly pushed Tianlala out of the circle. The general avocado drinks on the market are 20 to 30 yuan, while Tianlala's product is priced at only 12 yuan.

Judging from the distribution of stores, Tianlala has firmly controlled market areas such as schools, communities, and streets in third- and fourth-tier cities.

Although brands that are deeply rooted in the sinking market are not as glamorous as the catering brands in first- and second-tier cities, they have also become solid "regional kings."

2. “Copy” Mixue Ice City’s expansion path

It is also dormant in the sinking market, also taking the high cost-effective route, following Mixue Bingcheng to explore the market, and even the way of debut is almost exactly the same. Many people in the industry believe that Tianlala inevitably has the shadow of the tea giant Mixue Bingcheng.
Back in 1997, the predecessor of Mixue Ice City, Hanliu Shaved Ice, was established. This shaved ice stand, which started in a small county town in Henan Province, was renamed "Mi Xue Ice City" after several twists and turns. With the 2-yuan ice cream, the absolute price advantage made Mixue Ice City attract a large number of young people from small towns in Henan Province.

Image source: Photographed by the author

Seeing the proven model, the latecomer Tianlala "copied" its business model. One of its pricing strategies is "ancillary product pricing" , which is to lower the price of a certain type of ancillary product to attract customers and earn back the profits from the main product.

Tianlala uses the dual-line strategy of "ice cream + milk tea" to drive sales of other products in the store. The cost-effective beverage series is the brand's main profit harvester for customers.

Secondly, it is targeting the sinking market. In terms of store location selection, similar to Mixue Bingcheng, Tianlala also chose the sinking strategy. It started to open stores in towns and villages that big-name restaurants are reluctant to patronize, taking advantage of the "sinking market" with low cost, low consumption, high repurchase, and stable customer base, and continuously accumulating funds and expanding the scale of stores.

According to the investment information on Tianlala's official website, most of its stores are over eight square meters in size and are located near commercial streets, pedestrian streets, snack streets and schools. They are generally concentrated in university towns, followed by high schools, junior high schools and elementary schools.

In the sinking market, Tianlala has summed up a unique strategy - when creating any product, the brand adds to the product and subtracts from the price.

Browsing its menu, the New Consumption Think Tank found that although it started in third-tier cities, the popular items in first-tier cities can be seen on the menus of brand stores. For example, each item has basically been slightly modified, the price is less than half, but a similar consumer experience is achieved.

Although they have similar expansion patterns, there are some differences between the two.

In comparison, Tianlala seems to be more down-market than Mixue Bingcheng . The brand mostly chooses county towns below the fourth-tier cities. According to the data from Zhaimen Canyan, Tianlala's township stores account for 36%. In terms of channel expansion, about 50% of Tianlala's stores are in Anhui, with a small number of stores in Henan, Hebei and Jiangsu. It has taken the lead in occupying a part of the market share in the blank market that has not been touched by leading brands such as Heytea and Nayuki.

In September 2022, Mixue Bingcheng's A-share listing application was accepted. According to the prospectus, in the past three years, Mixue Bingcheng has added an average of more than 6,000 stores each year. In order to impact the listing, Mixue Bingcheng has even opened up township stores for franchising, hoping to further seize the township market and compete head-on with Tianlala.

In addition, Tianlala even "took in" many franchisees who were rejected by Mixue Ice City. However, when there are 5 or 6 Mixue Ice City franchisees on a street, the threshold for joining and the difficulty of review are also increasing. Some franchisees will choose Tianlala, which has a lower threshold, as a second choice when they cannot pass the review of Mixue Ice City.

3. Small brands from county towns, "encircling" Beijing, Shanghai and Guangzhou

In recent years, people who have lived in first-tier cities for a long time have been faced with an endless stream of new stores, and they always sigh from time to time: "Where did this brand come from?"

In the past, when walking along Shanghai Citywalk, you could see high-end and exquisite coffee shops under the sycamore trees everywhere you looked. But now, on Nanjing Road Pedestrian Street, there are five familiar county brands within 700 meters.

It is an indisputable fact that counties and even towns are becoming a gold mine for new brands. The rise of Tianlala is one of the typical brands of low-end and mid-range catering reverse sniping. From the perspective of the entire catering market, most of the chain brands that have emerged in recent years have taken the route of surrounding the city from the countryside, such as Lao Xiang Ji, Tustin, and Mixue Bingcheng.

In the past few years, new brands such as Lao Xiang Ji, Tao Tao Ju, Nan Hotpot, Qifentian, Chen Xianggui, and Momo Dim Sum Bureau have also moved out of the regions and entered the first- and second-tier cities.

Different from the brands that have emerged before, the unique features of the county-level catering brands that have emerged in the past two years are:

1. Better value for money.

For example, Tustin and Mixue Ice City are both representatives of affordable restaurants. They have been tested in the sinking market. Large quantity and low price are the consumers' intuitive feelings about such products. Today, when everyone is clamoring for consumption downgrade, county-level brands have seized the best opportunity and occupied the minds of some consumers.

2. Site selection is no longer limited to popular business districts, but takes a multi-faceted approach.

In the past, many brands were eyeing places like Qingnian Road and Sanlitun, but now, brands are more focused on being closer to consumers, such as university towns, snack streets, and even towns, rather than expensive locations.

3. The taste may not be amazing, but the key is stability and efficiency.

Consumers generally do not have high expectations for the taste or even quality of affordable brand restaurants. If they are cheap and taste good, it is a pleasant surprise. These brands often turn their attention to developing first-tier cities after consolidating the foundation of their own township development.

Although cost-effectiveness has become the main trend for snack and beverage brands, if you want to go further, can cheapness become a long-term moat?

It is foreseeable that as the consumption power of county towns increases, the continued sinking of "foreign fast food" such as KFC and McDonald's will inevitably gradually divert some consumers of "Chinese hamburgers" in the sinking market. And the "Chinese hamburgers" that have grown up in county towns, relying solely on low-price strategies, may face unpredictable pressures in high-tier cities. Even if the flag is planted in Beijing, Shanghai, Guangzhou, or stationed in county towns, it does not mean "resting easy".

No matter in which vertical category, whoever can stand out in the future must rely on extreme innovation.

Starting from a mature track, relying on localized innovation and low-price strategy, Tianlala has completed the first step of the "Long March". In the new tea market with numerous competitors, if Tianlala wants to enter the hearts of more consumers, it still needs to do more than the "low-price strategy".

Author: Lele

WeChat public account: New Consumption Think Tank (ID: cychuangye)