Source: Daozong Youli (ID: daotmt)

The tea drink market has never stopped being fiercely competitive.

At the forefront, Nayuki, Heytea, and Mixue Bingcheng are all vying for the top of the milk tea chain, while behind them, countless aspiring entrants are like carp crossing a river, using various tactics to outsmart the veterans. Recently, VV Soy Milk, which had been quiet for a long time, has become restless. Not only has it partnered with the Summer Palace to open a handmade drink shop, but it has also boldly claimed it will open over 10,000 stores.

Even during the heyday of tea drinks, only Mixue Bingcheng achieved over 10,000 stores. The wave of consumption has surged forward, and countless traditional beverage brands have been left behind. VV Soy Milk is not the only one trying to reinvent itself through new tea drinks. The past few years have been particularly lively:

In 2019, Wanglaoji set a goal for its tea drink brand "1828 Wanglaoji": 5,000 stores in 5 years; in the same year, Mengniu opened its first milk tea store "Nan Xiaobei"; in 2020, Wahaha announced it would open 10,000 stores within 10 years; in 2021, VV Soy Milk made a bold entrance...

Thanks to the hit TV drama "Aspirations" in the 1990s, VV Soy Milk became a household name, with popularity comparable to Genki Forest today. By 1997, VV Soy Milk's sales soared to 1.3 billion yuan, with a market share of 70%, and it remained the top seller for many years. Now, however, times have changed.

Plant-based milk is hot, but VV has "cooled down"?

At least a decade ago, soy milk held a slightly higher status than milk in consumers' minds.

Surveys show that between 2002 and 2006, soy milk sales peaked at 1.06 billion yuan and never fell below 1 billion yuan, while dairy product sales peaked at only 900 million yuan during the same period. At that time, several brands that would later dominate supermarket shelves emerged, including VV Soy Milk.

Perhaps due to limited purchasing power, affordable plant-based milk once thrived, making VV the "Soy Milk King," while others formed a strong lineup: "South Coconut Palm, North Lulu, West Weiyi, East Yinlu." Even though these once-familiar brands have lost their glory, plant-based milk continues to be popular in the consumer market.

Some public reports describe the current state of plant-based milk clearly: from 2007 to 2016, the compound growth rate of plant protein beverages reached 23.3%, far higher than the revenue growth rate of the overall soft drink category, and the industry share rose to 18.69%.

By 2020, the heat had not diminished; the plant protein beverage market grew by 800%, with the number of buyers increasing by 900%, ranking third in the entire beverage market.

Soy milk, oats, coconut juice... these are enough to satisfy foodies' appetites. As of now, there are over 5,000 new oat milk brands alone, and in 2020, China's soy milk sales reached 10 billion yuan.

In the capital market, plant-based milk has great potential. According to incomplete statistics, in the past two years, 10 plant-based milk brands have secured a total of 17 rounds of financing.

Traditional beverage giants are not immune to this trend. As early as May 2019, Nongfu Spring launched three plant-based yogurts; subsequently, Yili introduced three high-protein plant milks; in 2020, Mengniu incubated the oat milk sub-brand "Yiduomai."

This shows that consumer enthusiasm has not faded, but times have changed, and both capital favor and market preference are destined to drift away from VV.

According to the "2019-2025 China Plant Protein Beverage Industry Strategic Research Report," VV Soy Milk, known as the "King," now holds only 0.51% of the market share, down from a peak of 80%.

In fact, before entering the milk tea business, VV had already dabbled in various industries, from its main soy milk business to real estate, liquor, coal, and tea.

But the outcome is lamentable. By July of this year, ST VV announced that Xinsheng Group would acquire 216 million shares of the company held by VV Group through a share transfer agreement, accounting for 12.9% of the listed company's total share capital.

VV, which makes soy milk, has clearly become "neither fish nor fowl." Not only VV, but despite the plant-based milk trend, traditional plant protein beverage companies are struggling.

In August last year, the first-quarter net profits of Yangyuan Zhiyin, Chengde Lulu, VV Shares, SDIC Zhonglu, and Jilin Sen Gong were 526 million yuan, 182 million yuan, 92.21 million yuan, 1.03 million yuan, and -79.48 million yuan, respectively. In the soy milk sector alone, the top three surpassing VV are Doudou Ben, Vitasoy, and Weiyi, with market shares of 20.7%, 16.9%, and 10.4%.

VV has lost badly, but it is not unaware of the problem. To save its deteriorating situation, VV launched a canned soy milk series targeting young consumers and even invited Gao Yuanyuan as a spokesperson. As for making tea drinks, according to Guosen Securities, Heytea's gross margin in 2020 was as high as 62.1%, while soy milk's gross margin was 20%.

Selling soy milk is naturally less profitable than selling milk tea. It is said that many wholesalers, when stocking up, can buy Vitasoy, which has a relatively high unit price in the soy milk industry, for less than 30 yuan for 18 boxes. From 2017 to 2019, VV Soy Milk's debt-to-asset ratios were 62.3%, 67.3%, and 68.6%. VV is short on funds, but milk tea may not satisfy its ambitions.

Is VV's milk tea also trapped in "raw materials"?

According to Chuancai Securities data, the new-style tea drink market reached 113.6 billion yuan in 2020 and is expected to reach 340 billion yuan by 2025. Consumers born in the 1990s and 2000s account for nearly 70%, and they are willing to spend generously on new-style tea drinks, with 30% spending 200-400 yuan per month.

No wonder everyone is envious.

Interestingly, even when making milk tea, VV cannot forget its "old business." When its first milk tea store opened, the signature soy milk tea sparked curiosity among some milk tea enthusiasts. As the tea drink industry reaches a critical juncture, innovation is limited to tinkering with tea base ingredients.

VV still focuses on soy milk. Similarly, in July 2020, Wahaha's first milk tea store opened in Guangzhou, with most of the drinks using Wahaha's own products like AD calcium milk and lactic acid calcium milk as ingredients. Indeed, many want to enter the milk tea business, but countless have failed, especially in the past two years.

One factor that cannot be ignored is the rising cost of raw materials. Surveys show that the price of citron lemons has quadrupled or quintupled this year, and kumquat prices have soared to 25-30 yuan per jin due to reduced production. The prices of grapefruit and pineapple, commonly used in fruit teas, remain high.

Combined with fruit, tea base, and milk, the average cost per cup has increased by 3%-4%. The popularity of internet-famous milk tea relies on classic signature elements, such as Nayuki's cheese, Heytea's boba, and Lelecha's milk cap. Now, the era of pearls and milk tea has passed, and the differentiation competition is about to begin.

Undeniably, the latter half of the milk tea war is closely tied to raw materials. Heytea's data shows that in 2020, four of the top five most popular products were cheese fruit tea series, which are also the most costly, involving three supply chains: fresh fruit, dairy, and tea leaves.

This summer, after mainstream fruit prices rose, niche fruits suddenly became popular, first wampee, then oil citrus. On platforms like Douyin, Weibo, and Xiaohongshu, notes related to "wampee tea" and "oil citrus" have reached over 30,000 and 10,000 posts, respectively.

The seemingly unbelievable "duck shit fragrance" also made a splash in October. As of now, the Weibo topic "How delicious is duck shit fragrance milk tea" has 150 million views and over 35,000 discussions. It is a type of oolong tea. On October 22, Nayuki quickly launched a new product with "duck shit fragrance."

For milk tea enthusiasts, raw materials represent more than just taste. According to iResearch, raw materials or ingredients account for 27.9% of factors influencing consumer purchase decisions, and are even directly linked to health.

Almost every so often, a new "internet celebrity" appears in the milk tea world. This year, besides niche wampee and oil citrus, coconut is at the top.

According to the "2021 Q2 China Online High-Growth Consumer Market White Paper," coconut milk is the fastest-growing beverage this year, with sales of 169.443 million yuan on Tmall, a year-on-year increase of 67.5%. According to Kamen statistics, from early February to the end of July, over 160 new products from more than 20 beverage brands used coconut elements.

Today, the entire beverage industry's tastes are transitioning toward middle-class consumption. In the past, a cup of soy milk was a childhood luxury.

According to the "2021 Beverage Industry Flavor Trends," Google searches for blood orange, grapefruit, passion fruit, tamarind, and fig increased by 22% from January to October this year. Last year's flavor insight report showed that globally, new products with white peach flavor grew by 63%, with Asia-Pacific accounting for 83%.

Whether VV's soy milk can replicate the glory of its predecessors remains unknown.

"Guochao" is a brick; move it wherever needed

As soon as VV Soy Milk's milk tea store opened, social media was flooded with photos. The taste of the milk tea was secondary; the key was that, backed by the Summer Palace, the store exuded "photogenic" vibes from the inside out.

It is reported that the store's overall design was inspired by Emperor Qianlong's seal, with the Summer Palace's Seventeen-Arch Bridge and galleries reflected in it.

It is easy to see that both VV Soy Milk and the Summer Palace are well-versed in current traffic tactics.

Especially with Sexy Tea leading the way, whose logo features a beauty holding a round fan behind an octagonal window, and every tea drink name exudes Chinese elegance, this seems to give VV some confidence. Chinese-style bakery brands like Mozhi Pastry and Tiger Head Bureau also actively label themselves with national style.

Looking across industries, national style has swept in with business opportunities, and every field is trying to inject poetic and artistic elements into products, evoking Jiangnan mist and rain. For example, besides milk tea, clothing and cosmetics are also following suit. Li Ning, Bosideng, and Peacebird are increasingly incorporating landscapes and pavilions into their designs.

Huaxizi's carved lipstick has sustained the entire brand. China Li Ning, with the theme "Enlightenment," has moved from the 24 solar terms to cranes, auspicious clouds, mountains, and rivers, returning to the youth market from the corner of the era. The Baidu 2021 Guochao Pride Search Big Data report shows that attention to guochao has increased by 528% over the past decade.

According to Bilibili data, in the first quarter of 2020 alone, the number of guofeng video submissions increased by 124% year-on-year, and the number of guofeng content creators increased by 110%. Guofeng ancient charm is a virtual utopia created by young people in the online world. In 2020, 44.5% of Chinese music users preferred guofeng-themed Chinese music variety shows, the largest proportion.

On LOFTER, works related to #guofeng photography# have over 4 million reads, #guofeng art# has 2 million views, and #guofeng literature# has 308,000 views. Bilibili has over 40 million guofeng enthusiasts, with content ranging from poetry to life philosophy.

Young people pursue artistic confidence, and being able to wear the glory of five thousand years of history or hold it in their hands is both an active outward choice and a passive trend. When this collective consciousness spreads from the streets to the business world, the value it unleashes is immeasurable.

In 2020, Tmall launched a "guochao theme" for Double 11, and Hanfu topics on Douyin accumulated 51.5 billion views.

The Summer Palace behind VV Soy Milk is riding the museum craze, which brings its own attention. On the consumer side alone, the Forbidden City has opened six Taobao stores. Data shows that the number of people visiting museum flagship stores online has reached 1.6 billion, 1.5 times the annual visitors to all museums in China.

This Mid-Autumn Festival, Chinese-style elements were everywhere in six evening galas. Since Henan TV's rise, cultural output has replaced traffic idols as the traffic password. "Tang Palace Night Banquet" went viral, with a single video gaining over 52 million views, and the commercial value of Henan TV's series of galas has risen.

In September this year, Juhuasuan collaborated with Henan TV on "Shenma Wonderful Night," and in 2021's "Mid-Autumn Wonderful Journey," it secured naming rights from Jindian Organic Milk and Xiaomi. It can be said that with guofeng empowerment, Henan TV is a true example of a second-tier TV station's counterattack.

What follows is logical. According to the official Weibo of "Tang Palace Night Banquet," Tang Palace Cultural and Creative has developed 8 series with over a hundred products. Tang Palace cultural and creative masks have sold over 2 million units, with sales approaching 3 million yuan.

The cultural and creative products of the Henan Museum, based on the actresses from "Tang Palace Night Banquet," include a series of lady band figures. The blind box, priced at 59 yuan per unit or 413 yuan for a set, has accumulated over 5,700 reviews. Guochao has become a brick in the hands of merchants, moved wherever needed.

Whether VV Soy Milk's combination with the guochao trend can help it expand into new territory in the tea drink field remains unknown, but it clearly exposes VV Soy Milk's attention and ambition for its new business. Regardless of success, the new tea drink consumption field is bound to be lively for a while.

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