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'Hold My Tea': HeyTea to Double Stores in 2020?
COVID-19 and China
Image credit: Frank Zhang/Unsplash

As per data disclosed by HeyTea on January 14, the Chinese tea startup is accelerating its expansion, having added 227 stores in 2019, of which 157 are main stores and 63 Go stores. This brought the total number of stores to 390 stores across 43 cities by the end of 2019, up from 163 in 2018. The company is set to double its size by the end of 2020.

The champion city in terms of sales goes to Shenzhen, as it has the most number of stores. A total of 20 million cups were sold there in 2019. The city also acts as a testing ground for the firm; it tried out its unmanned pick-up service there and opened the LAB flagship store.

HeyTea has been introducing innovative retail channels in the battle against its core pain point of queuing time. Online ordering has become the main purchasing channel since the operation of the Go store began in 2018, securing over 82% of all purchases. The channel attracted an additional 15.8 million users in 2019, three times the number accumulated in the previous year. In the second half of 2019, Heytea initiated the ‘pick-up point’ to further reduce offline store queues.

HeyTea has also implemented its strategy to customize each stores' design and products based on different locations, evoking sensory experience. Black gold, pink, daydream plans are among some of the themes that were adopted. At the same time, ice-cream lab and dessert lab made their debut, enhancing and completing ‘tea culture,’ in an effort to boost consumers’ enthusiasm.

Despite its rapid expansion, HeyTea is determined to become a responsible enterprise. The company is utilizing 1.7 ktonnes of degradable material in 2019 and has participated in a number of poverty alleviation programs.

As post-80s generation has gradually emerged as the main driving force of beverage consumption, creativity and innovation have undoubtedly become the main weapons in ushering consumers towards one’s product. Hence product research has become the cornerstone of HeyTea’s development program in recent years. The firm is quick to adapt to consumers’ demands and presented as many as 240 new products in 2019 alone, including hot teas, wheat bread, tea desserts and other series. The firm is currently promoting low-calorie, sugar-free stevia, plant-oat milk etc., to create a healthy product image.

Tea is hardly a foreign idea for most Chinese. Yet data from Euromonitor reveals that, during 2014 to 2017, the industry contracted from CNY 125 billion to CNY 118 billion, reflecting a structural change in the nation’s tea beverage consumption, shifting towards quality. Consumption upgrade has spawned a new sub-sector of tea beverage in China, with a group of new tea brands appearing. The industry rebounded in 2018, with a year-on-year increase of 15.7%, reaching CNY 137 billion. 

However, due to serious homogeneity issues around tea beverages, only 10% of brands have achieved profitability, leaving many to collapse throughout the years. After two years of rapid development, aside from HeyTea, other brands that have survived the fierce competition are Kraftea (茶煮), Nayuki (奈雪的茶) and Lelecha (乐乐茶).

Editor: Luke Sheehan

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