According to the '2019 New Tea Consumption White Paper,' the total size of the Chinese tea market exceeded (in Chinese) CNY 400 billion in 2019. Post-90s generation (21-30 years old) has become the mainstream consumer group, accounting for 50% of the total headcount. Milk tea started to become popular among young people several years ago and a busy roster of competitors now jostle for their attention.
Since tea consumption is ordinarily more of an offline business, the question of survival became their main focus during the epidemic period. According to the white paper, ordering online and picking the drink up at the store occupied 29% of the sales channels in 2019, and food delivery only took 17%. So when the disease outbreak started in January 2020, 90% of tea drink marketers closed stores and 65.86% of stores had almost zero income. Meanwhile, open online stores on food delivery platforms needed to pay at least 15% as the commission fee for sales.
Under such a burden, several surviving strategies were brought to the table. The most welcome part was 'No touch delivery,' initiated by Luckin Coffee and Heytea. Online sales channels included the largest food delivery platform, Meituan, and WeChat small programs and Alipay. Others, including online live broadcasting and video shooting, aimed to keep exposure to users.
Having sustained themselves during the health crisis, better days approach. According to the WeChat big data source called 'Workers' Alliance' (复工者联盟), comparing data from March 2 to March 10 with February 2 to February 10 for the same month, tea drinks mini-program orders increased 744%, far beyond other food areas such as appetizers (with 229% increase) desserts (139%) and normal meals (133%). The mini-program sales channel visits on WeChat increased nearly five times.
Apart from WeChat mini program orders, Naixuecha opened (in Chinese) an online flag store on Tmall on March 19 after a similar move by Heytea. Online sales channels are now another important competition place for milk tea players – Heytea will also cooperate with Alibaba Group's enterprise platform DingTalk.
As for Naixuecha, the main competitor of Heytea, their founder Peng Xin said (in Chinese) that the "Naixue Tmall flagship store is actually an extension of the Naixue brand, opening up more channels, expanding a larger consumer market, and providing our high-quality retail products to more consumers. As a follow-up, we will also add more investment in new retail and design more products that meet the operating characteristics, scenarios and user portraits of each channel to meet the changing needs of the market."