In recent years, Mixue Bingcheng can be called a dark horse in the tea drink industry. Since the IP image upgrade in 2018, Mixue Bingcheng's performance has been like a cheat code. First, it broke through the 10,000-store mark, and then within just two to three years, it achieved the feat of surpassing 20,000 stores, becoming the undisputed number one in the chain tea drink industry. It is understood that its store count is still growing rapidly. In contrast, the second-place Shuyi Shaocao has only 7,000+ stores. This makes Mixue Bingcheng the only brand in the tea shop sector with over 10,000 stores. After achieving such outstanding results, Mixue Bingcheng announced last year its entry into the bottled water market, and it has been a year since then. Why did Mixue Bingcheng, which is doing "smoothly" in the tea drink industry, choose to enter the bottled water market? Can it create brilliance again in the future? Official Entry! In September last year, while preparing for its IPO, Mixue Bingcheng officially announced its entry into the bottled water track, launching the natural drinking water "Snow King Loves Drinking Water." After the failed IPO sprint, Mixue Bingcheng became more determined to enter the bottled water market. Soft drinks, as one of the categories with the largest market capacity and high-frequency rigid demand in FMCG, are extremely competitive, and many FMCG companies want to get a share of this field, with cross-industry and entrepreneurial attempts everywhere. Among the new entrants, there are billion-level clothing company Youngor and billion-level grain and oil giant Beidahuang Group vying to enter. There are also functional drink leader Dongpeng Beverage and lactic acid bacteria leader Junyao Health continuing to make efforts, as well as Yuanqi Forest with a valuation of 100 billion, food giant Panpan, and soda companies "Dayao" and "Hongbaolai" constantly pouring in... In fact, in the tea drink industry, Mixue Bingcheng's entry into the bottled water market is not early. Heytea launched bottled beverages as early as 2020, and Naixue's Tea began entering this field in 2021. Although Mixue Bingcheng's products were launched later, it seems to have been planning for a long time, starting with purified water - Snow King Loves Drinking Water, and then extending to juice sparkling water - Snow King Baqi. It is reported that the third bottled product - juice tea - will be launched in February next year. Step by step, steadily, choosing currently popular sectors. But it is not easy to make a name in the fiercely competitive water drink market. Currently, the competitive landscape in China's bottled water market is relatively stable, with a high concentration rate. According to the "2022 JD Supermarket Mineral Water Consumption Trend Report," as of 2021, Nongfu Spring's market share reached 26.5%, and China Resources C'estbon's market share was 21.3%; Master Kong, Wahaha, Ganten, and Ice Dew had market shares of 10.1%, 9.9%, 7.4%, and 5.3%, respectively. In the bottled sparkling water field, one company dominates: in 2021, Yuanqi Forest's online sales accounted for over 60% of total sparkling water sales. Although Mixue Bingcheng is a leading brand in tea shops, it is a "newcomer" in the bottled water market, and it is not easy to stand out in the existing competitive landscape. So why did Mixue Bingcheng choose to cross over from chain tea drinks to the bottled water track? Why Enter the Bottled Water Market? As a leader in the freshly made tea drink sector, Mixue Bingcheng has over 20,000 franchise stores and annual sales of 10 billion yuan, achieving performance that peers cannot match. But limited by the business characteristics of chain stores, Mixue Bingcheng's ceiling is obvious. Mixue Bingcheng does business with franchisees, with 80%-90% of its profits coming from supplying ingredients, packaging materials, equipment, and operating supplies to franchisees. To achieve higher sales, it needs to further expand the number of franchise stores. How much more can the number of franchise stores grow? Mixue Bingcheng's rapid growth in recent years, besides its own factors such as the popularity of its IP image and the viral hit song "You Love Me, I Love You, Mixue Bingcheng Sweet," also benefited from the advantages of the freshly made tea drink trend and the sluggish consumption environment. Its overall performance has been exceptional. It is challenging to maintain such exceptional performance in the future. Referring to the "Global Chain Restaurant Brand Store Count TOP100" list released by Canyan in 2022, McDonald's topped the list with a total of 39,980 stores, while Mixue Bingcheng ranked fifth with a total of 22,276 stores. Drawing lessons from the operating numbers of "predecessor" catering franchise brands, as the market saturates and the freshly made tea drink trend fades, growth fatigue is inevitable. In contrast, the bottled water market has huge potential and scale. According to Euromonitor data, in 2020, China's soft drink industry scale was 573.5 billion yuan, of which packaged water was about 215.9 billion yuan, the largest sub-category in soft drinks, and it is expected to reach 313.1 billion yuan by 2025. Consumers need to drink water every day, but they don't need to drink milk tea every day. To create greater value, it is necessary to expand into new markets. In addition, with consumption upgrades and increased public health awareness, traditional milk tea drinks are gradually unable to meet the needs of young consumers. Facing the highly homogeneous tea drink market, Mixue Bingcheng must find new directions to break through its growth ceiling. Entering the bottled water market can bring more hope and possibilities. The Troubles of Cross-Industry Crossing from chain freshly made tea drinks to bottled water, Mixue Bingcheng has encountered many practical obstacles. First, brand positioning. From the consumer's perspective, Mixue Bingcheng is positioned as freshly made tea drinks, and this is deeply rooted in people's minds. However, its first product in the bottled water market was purified water, unrelated to milk tea or fruit tea, which made many consumers not buy it. In response, a Mixue Bingcheng spokesperson said there were two considerations: first, for cross-industry, it is necessary to prioritize testing the waters in sectors with large market share and abundant resources; second, bottled products can rely on existing stores for display and sales, but it is necessary to avoid conflicts with existing product types. Of course, these are only considerations for the early trial stage, and there are plans to bring the characteristics of milk tea to bottled beverages in the future. Second, insufficient operational experience. Initially, Mixue Bingcheng thought about replicating its successful experience in the casual dining sector to the bottled water sector, but in practice, it found this unrealistic. There are many differences between catering chains and FMCG bottled drinks, with obvious distinctions in production processes, sales channels, and consumption scenarios. Strictly speaking, they belong to different tracks, so the strategies are difficult to replicate. For example, in team building, catering franchise stores focus on operations, requiring supervision and management of the store rather than business development. Store employees can get on the job with a little training or guidance. Bottled water drinks, on the other hand, require professional business promotion, and for recruited employees, selection is more important than training. These detours caused by insufficient experience need to be explored in practice and then adjusted. In addition, it is difficult to differentiate water drink products, which is also one of Mixue Bingcheng's main troubles at this stage. There are many new bottled water players in recent years, such as Youkuang, Liangkaishui, Baikaishui, and Snow King Loves Drinking Water. As products with high daily consumption frequency and strong immediacy needs, beverage purchases are still mainly offline (67.3%). Mixue Bingcheng's bottled water sales channels are mainly catering and supermarkets. Now consumers have more and more products to choose from in various channels, and the differences between products are small, which leads to a lack of terminal resources and fierce competition. Snow King Loves Drinking Water focuses on natural drinking water, with 550mL and 380mL specifications, with terminal retail prices of 2 yuan/bottle and 1.5 yuan/bottle, respectively. This price band is firmly occupied by Ice Dew, Nongfu Spring, and C'estbon. Although in the short term, the volume of Snow King Loves Drinking Water has not yet felt the direct squeeze from leading brands like Nongfu Spring and C'estbon, to have a place in this price band, competition for resources is inevitable. Since it is difficult to differentiate products, Mixue Bingcheng has been active in marketing. On August 25, Mixue Bingcheng launched its self-made animated series "Snow King Arrives," further increasing stickiness with young consumers through cute images and interesting plots. From the data feedback, Mixue Bingcheng's new wave of marketing has won the hearts of consumers. On the night of the broadcast, the topic #雪王驾到# on Douyin had nearly 100 million views. Within 50 minutes of airing, Bilibili views reached 310,000, and it also received a high score of 9.9. Marketing heat will to some extent drive consumer attention to the product and deepen memory. But as a typical immediate consumption product, besides a good marketing strategy, water drinks also need a high distribution rate to achieve good sales results. The specific effect of Mixue Bingcheng's marketing moves remains to be seen. Final Thoughts Mixue Bingcheng's achievements in the freshly made tea drink industry are unquestionable. But water drinks are a red ocean market, with entrants rushing in. It is easy to gain short-term popularity, but too difficult to become a long-selling product. It seems thriving, but in reality, many products eventually become cannon fodder. What will happen to Mixue Bingcheng's attempt? It is still too early to judge; let's leave the answer to time. PS: Friends interested in the on-site speech content can follow the recent push of the "New Distribution" WeChat official account. We will organize and publish all guests' speeches for readers. Click Read the original text to see more of the 5th China FMCG Conference and the 1st China FMCG Distributor Conference...