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Naixue's mystery of tea IPO: why can't it be Starbucks forever?

via:博客园     time:2021/2/25 1:42:49     readed:735


Image source @ Vision China

The author is Yong en

On the eve of the Lunar New Year of the ox, Naixue tea, a new tea brand, formally submitted its listing application to the main board of the Hong Kong stock exchange, and appointed JPMorgan Chase, Zhaoyin international and Huatai international as its co sponsors.

With the news of Naixue's IPO, the judgment of Naixue's future is polarized again. You can joke that whether Naixue can be listed successfully or not, you can bet ahead of time.

From the perspective of capital, the rationality of Naixue's tea is still open to question. According to the prospectus, Naixue's tea has been at a loss for a long time. In 2018 and 2019, the net loss of Naixue's tea was 56.58 million yuan and 11.735 million yuan respectively under the non international financial reporting standards. Although Naixue's tea made an adjusted net profit of 4.484 million yuan in the first nine months of 2020, the overall net profit margin was only 0.2%.

More interestingly, under the premise of not making much money, Naixue's tea is still crazy. According to the prospectus, as of September 30, 2020, the number of tea stores in Naixue has reached 422, covering 61 cities in mainland China, Hong Kong Special Administrative Region and Japan, and further increased to 507 by the last practicable date.

A business that does not make money, or a business that makes little money, can you convince Hong Kong stock investors? After all, Ruixing coffee was the last listed company which was related to drinks, opened stores crazily and didn't make much money.

Crazy capital game

In terms of market scale, the market scale of China's new tea industry will reach 60 billion yuan in 2019, the CAGR will reach 23.5% in 2019-2024, and it will still increase by 7% to 113.6 billion yuan in 2020. It is estimated that the market scale will reach 172.2 billion yuan in 2024. It can be said that this is an imaginative market.

According to incomplete statistics, in 2020, there will be a total of 11 financing events in the new tea circuit, and the total amount of disclosed funds will exceed 1.2 billion yuan.


Among them, the gold absorption ability of Naixue tea is particularly obvious. In June 2020, Naixue's tea announced that it had obtained nearly 100 million US dollars of round B financing from Shenzhen Venture Capital. After the completion of the C round of $100 million financing in January this year, Naixue's tea is valued at nearly $2 billion (about 13 billion yuan), according to Bloomberg.

In September 2020, it was reported that Xicha plans to go to Hong Kong for listing before the end of 2021, and is expected to raise US $400 million to US $500 million. In addition, in early 2021, miyue ice city also announced that it is preparing to list in a shares. This time, Naixue's tea is the first to deliver the prospectus in Hong Kong stock market, which means that the battle for the first share of tea has officially started.


The IFR quoted sources as saying that Naixue's tea aims to raise $500 million through its initial public offering in Hong Kong. These funds will be mainly used for the company's planning in the next three years: first, to expand the company's tea shop network and improve the market penetration in the next three years; second, to further carry out the digitization of the overall operation, so as to improve the operation efficiency by enhancing the technical ability; third, to improve the company's supply chain and channel construction ability to support scale expansion; fourth, to use as working capital And for general business purposes.

Naixue's essence: selling Starbucks culture

Guosen Securities pointed out in the research report that considering the cultural origin, consumer base and similar consumption characteristics, the essence of domestic tea drinking track can be compared with European and American coffee track, while the long-term performance of existing tea drinking enterprises can be compared with some of American coffee bar track, which has broad imagination space.

Referring to the report of American cafes 2020 released by the world coffee portal at the end of 2019, it is estimated that the market scale of American cafes is expected to reach 47.5 billion US dollars in 2020, and the number of cafes is expected to reach 37274, with a huge scale. Referring to the white paper on new tea drinks 2020 issued by the business data center of China first finance and economics, it is estimated that by the end of 2020, the total scale of China's tea drinks market will reach 442 billion yuan, the total scale of China's coffee market will reach 215.5 billion yuan, and the scale of tea drinks market will still be more than twice that of coffee market. By the end of 2019, the number of new tea drinks stores in China is expected to be nearly 50% There are about ten thousand, and the same scale.

The above data seems to be enough to show that Naixue's tea is in a competition Road, or in the tuyere.


Photo source: prospectus

From the perspective of industry status, Naixue's tea is also in the leading position. According to the retail consumption value of all products, as of the third quarter of 2020, Naixue's tea accounted for 17.7% of the market share, ranking second in the industry. However, from the perspective of profit margin, there is still a significant difference between the two. From 2018 to the first three quarters of 2020, Naixue's profit margin of tea is - 5.2%, - 0.5% and 0.2% respectively, while Starbucks's net interest rate data of fiscal year 2018, fiscal year 2019 and the first three quarters of 2020 are 18.28%, 13.56% and 6.33%.

Starbucks products are highly standardized, easy to copy, and its management system has a higher level of industrialization. For example, a latte needs a pump of espresso, which can be filled with milk and sugar in a certain proportion. The difficulty of tea standardization is an important factor to limit the stable expansion and improve the profit margin of tea industry enterprises, and it is also one of the main reasons for Naixue's loss.

In an interview with the media, Peng Xin said that nearly 20% of the cups of coffee currently account for the proportion. At the same time, it is expected that the integration of coffee and tea will become a trend in the same beverage brand.

However, the future of coffee and milk tea is still uncertain.

From the third space to socializing

When Starbucks first entered the domestic market, it already aimed at the potential dividend of the third space. Therefore, in the eyes of many people, Starbucks has long been consciously regarded as the best leisure and comfortable place outside the home and workplace.

But from the overall feeling of decoration, the interior decoration of Starbucks chain stores strictly abides by the unified decoration style of chain stores. Every store itself is an image promotion and a link in Starbucks business chain. American designers specially create rich visual elements and unified style for every store, so as to make customers and passers-by enjoy themselves and achieve the purpose of brand promotion. This kind of promotion is called tie in, which connects the image of the cafe and the store closely.


Photo source: Naixue's official website of tea

From the perspective of store layout, they are similar. At present, Starbucks has 4704 stores in mainland China, accounting for nearly 5% of the total number of Chinese coffee shops. According to talking data, as of April 2020, the distribution proportion of Starbucks stores in the first and second tier cities is as high as 90%, and only 10% of them are distributed in the third tier cities and below. The distribution proportion of the first and second tier cities in Naixue is higher, 95%, only 5% in the third tier and below.

However, in terms of consumption scenarios, there are differences between Starbucks and Naixue in terms of tea consumption demand. Coffee is more functional and business oriented, while new tea mainly meets emotional and entertainment needs, and its combination with business activities is weaker than coffee. Therefore, the proportion of men in Starbucks consumers is higher than that of women, while the proportion of women in Naixue consumers is higher than that of men.

Can't copy Starbucks, got lucky's disease

In 2017, 2018, 2019 and the first three quarters of 2020, the number of tea stores in Naixue was 44, 155, 327 and 422. Among them, the growth rates of stores in 2018 and 2019 were 252% and 111%, respectively. Compared with the previous report period, the number of stores in 2019 and the first three quarters of 2020 increased by 172 and 95 respectively, and the growth rate of stores was very fast.

High speed expansion, most of the time is not a bad thing, just need to control the rhythm is very important, the pace is too big, easy to have problems. Last time, Ruixing coffee, a listed company which mainly engaged in drinks and was expanding crazily, now it's all over again in Naixue.

In the report of Hunshui shorting lucky coffee, it clearly points out that lucky's business model has fundamental defects, that is, the product lacks core competitiveness, the platform is full of opportunistic customers without brand loyalty and crazy opening speed. Now Naixue is facing the same model dilemma.

From the product point of view, although the new tea drinking leaders all have their own core products, such as Naixue fruit tea, Xicha cheese milk tea, Lele tea dirty bag / milk tea, etc., but on the whole, the product homogenization is more serious.

A new-style tea lover with an average daily cup told capital star that she basically relies on the take out platform to buy drinks. From the taste point of view, there is no big difference among Naixue's tea, Xicha, gongcha, yidiandian, coco and other common brands. The main factors influencing her decision-making are the price, product appearance and delivery time. Another consumer who is keen to buy tea offline also said that the taste difference of several brands of tea he often drinks is not big. When there are many new tea shops nearby, he will give priority to brands with less queuing time and fast production speed to place orders.

In the long run, only by creating a series of popular products and forming a complete product matrix can new tea enterprises build the long-term vitality of the brand.


Photo source: prospectus

On the other hand, according to the prospectus, the average daily sales of Naixue's tea shops in 2018 was 30700 yuan, and the average daily order volume was 716. However, in the first three quarters of 2020, the average daily sales of a single store will only be 20100 yuan, and the average daily order volume will also drop to 465 orders, with a growth rate of - 35.06%. In the first three quarters of 2020, the return cycle of the stores that opened in 2018 will rise to 14.7 months.

However, these efforts do not seem to translate into a significant increase in customer price. In 2018, 2019 and the first three quarters of 2020, the customer price of Naixue is 42.9 yuan, 43.1 yuan and 43.3 yuan respectively, with little growth. This figure is lower than the average customer price of Starbucks in China of 80 yuan, and also lower than the customer price announced by Xicha of 52-56 yuan.

In addition to internal worries, strong competitors such as Xi tea, Lele tea and miyue ice city have been squeezing the market space of Naixue, and Naixue has never been able to control the market pricing power.

The rapid expansion without pricing power can not bring scale effect to Naixue, but aggravate the overall loss of the company.

This makes Naixue not have the life of Starbucks, but get lucky's disease. The reason is that the product lacks unique competitiveness, the platform and user loyalty are low, and at the same time of scale expansion, it does not effectively refine the operation and improve the product profit margin.


From 2018 to the third quarter of 2020, Naixue's asset liability ratio of tea exceeds 100%, which indicates that the company has great short-term debt pressure.

From the perspective of solvency, the company's current ratio and quick ratio are on the low side. The company's current ratio rose from 0.34 in 2018 to 0.39 at the end of the third quarter of 2020, and the quick ratio rose from 0.29 in 2018 to 0.32 at the end of the third quarter of 2020. Although there was a slight increase, there was still a long way to go from the level of 1.

On the other hand, there are also many problems in the company's turnover. In the first three quarters of 2020, the turnover rate of Naixue's tea declined, the turnover rate of total assets decreased from 1.47 to 0.91, the turnover rate of accounts receivable decreased from 25.36 to 12.81, and the turnover rate of inventory decreased from 43.34 to 21.08.

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