---
title: "Where Is the Next Gold Mine in the Tea Industry?"
description: "Tan Changchun, chief expert at Huaxia Jishi Consulting Group, delivered a speech titled \"Where Is the Next Gold Mine in the Tea Industry?\" at the China Tea Industry Conference held at the National Convention Center. He argues that the next gold mine lies in tea beverages, advocating for standardization, industrialization, and channel expansion, drawing on his experience as the first product manager for Nestea, a joint venture between Coca-Cola and Nestlé."
author: "谭长春"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2018-03-24"
language: "en"
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# Where Is the Next Gold Mine in the Tea Industry?

> Tan Changchun, chief expert at Huaxia Jishi Consulting Group, delivered a speech titled "Where Is the Next Gold Mine in the Tea Industry?" at the China Tea Industry Conference held at the National Convention Center. He argues that the next gold mine lies in tea beverages, advocating for standardization, industrialization, and channel expansion, drawing on his experience as the first product manager for Nestea, a joint venture between Coca-Cola and Nestlé.

Tan Changchun, chief expert at Huaxia Jishi Consulting Group. This article is a compilation of Tan Changchun's speech titled "Where Is the Next Gold Mine in the Tea Industry?" delivered at the China Tea Industry Conference held at the National Convention Center.
**What is the next gold mine in the tea industry?**
Twelve years ago, an opportunity was placed before me, and I let it go. Twelve years ago, Lipton approached me. At that time, I was at Coca-Cola. Lipton had set up a four-person project team and came to China hoping to do ready-to-drink tea. That was a time when the tea beverage market was exploding, but I was still at Coca-Cola, so I didn't accept their invitation. Their ready-to-drink tea didn't take off, and I feel everyone has benefited from that. Twelve years later, I want to revisit the concept of bagged tea and ready-to-drink tea. My speech today is titled: Where is the next gold mine in the tea industry? At the beginning of this year, the tea market situation was already very grim. At that time, I visited two relatively large tea companies. In their view, the market for tea priced above 800 yuan had stalled. Although they still had annual revenues of several hundred million yuan, breaking through was very difficult. It was under these difficult circumstances that they mentioned to me—and I also discussed with the Overseas Chinese Tea Council—that the next gold mine in tea is actually tea beverages. So why can I stand here and talk about this? Because I was the first product manager for Nestea, a product developed in cooperation between Coca-Cola and Nestlé. So today I'm very happy to talk about a topic that may be quite different from what other guests have discussed—that is, ready-to-drink tea.
Recently, I encountered a very interesting matter. In Yunnan, through a friend's introduction, a deputy director of the provincial government found me and wanted to cooperate with us. Cooperate on what? As everyone knows, Yunnan is rich in products, including coffee beans. This deputy director mentioned in our exchange that since we have so many coffee beans, and he often travels abroad and sees coffee shops, he approached us to cooperate on coffee machines and selling coffee. As for coffee beans, if you know, a jin (500 grams) sells for very little in Yunnan, but we pay at least 5 or 8 yuan for a cup of coffee. He analyzed that two cups of coffee earn the price of a jin of coffee beans. With one machine, we can produce coffee continuously all year round. In this case, we can see that the market can be made infinitely large. Just now, a guest mentioned the biggest pain in our industry: the profit of one Lipton product is how many times the total profit of more than 70,000 domestic tea factories. In recent years, I've started to think again: in our tea industry, with six major tea categories, so many products, and so many tea merchants, why is the output value so low? A steamed bun costs only five mao (0.5 yuan). But if it becomes a cake, think about it: what's the cost difference between a bun and a cake? Yet the output value of a cake is how many times that of a bun? Why is there such a large tea market to expand in China? Is it because we haven't thought of it? Why do we think of it but dare not do it? Why can't we achieve it? I'll mention that below.
Lipton's success has triggered several major reflections in our industry. I hope that after the forum, everyone will take these questions and think them over carefully. What is the ultimate good industry in the world? I think it's fast-moving consumer goods (FMCG). I come from Coca-Cola, the world's largest brand company. What is Coca-Cola's concept? Actually, it doesn't produce products; it calls itself a brand company. But over the years, its brand value has ranked first globally, and more than 4,000 factories worldwide serve this brand. Although many industries are constantly changing, like Alibaba's recent IPO, change brings impact. Coca-Cola is the only company in the world that has stood for over a hundred years without product innovation, yet its brand remains unshakable. We can see that Apple is doing very well now, but it still needs constant product innovation. Recently, the iPhone 6 came out, so there's a joke: gentlemen, don't argue with your wives, because you'll need to buy a new phone! The ultimate good industry in the world is FMCG, which can stand for a hundred years, including Coca-Cola, Procter & Gamble, and others.
What is the ultimate business model in the world? I think it's standardization. Why is standardization the ultimate business model? Because business has logic; after product standardization, it's most conducive to promotion and reasonable operation. When we go to Pingshan, people say, how can our products be standardized? We can see hundreds of booths outside, and each company's products are different. Lipton, as we know, doesn't produce a single tea leaf, but the Lipton tea we drink in China and Europe tastes basically the same. In terms of standardization, its promotion cost is the lowest. Many of our professional marketing methods are also easier to execute after product standardization. What is the ultimate way to make money in the world? Replication; the cost of replication is the lowest. Being confined to one corner and opening one or two stores just makes you a small businessman. Coca-Cola has built more than 4,000 factories worldwide, all identical. We often hear the saying: if all factories were burned down overnight, they could be rebuilt the next day. So I think if an enterprise wants to develop, you need to consider whether you can replicate your product, for example, in operations, in batches. What is the last remaining largest expandable industry that can be turned into consumer goods? I think it's the industrialization, standardization, and systematic development of tea beverages! At that time, when I was at Coca-Cola, Lipton approached me, and soon after, Budweiser also approached me to do beverages. If these giants really push beverages, to what extent can they expand? Everyone knows that Wanglaoji has been quite hot recently. In Guangdong, Wanglaoji never exceeded 100 million yuan, but now it's 20 to 30 billion yuan.
Why has Nestea been able to succeed? I think it can trigger several major reflections. The first is product transformation. Actually, I've had some exchanges with relevant people in the tea industry, and they have the desire to do standardization and product transformation. Basically, we see that products above 800 yuan will be very difficult to sell. The second is channel expansion. When we run tea specialty stores, store costs will get higher and higher. We can cooperate with others. At that time, Nestea cooperated with Coca-Cola; its product capability was strong, but its channel was not as good as Coca-Cola's. The third is various alliances and integrations. Actually, cooperation can happen everywhere, from daily necessities like rice, oil, salt, etc.
If we want to dig the next gold mine in tea, I think there are these marketing tips. Due to time constraints, I'll just throw out a brick today.
**Convenience:** In the future, the more convenient things are, the stronger their possibility of existence. Our tea brewing is greatly affected by time, space, object, and utensils. Many business people around me have strong tea needs when traveling. I've seen friends who bring tea sets on business trips, which is very inconvenient. Now when I travel, I bring tea bags.
**Product:** Our products need innovation. Although I'm only mentioning this after 12 years, in my recent communications with various companies, their desire in this regard is quite strong. The difficulty lies in the gap between the operation of the consumer goods industry and our original understanding of the tea industry—the store-opening model.
**Channel, channel expansion.** We need to deeply explore the target audience and their needs. We'll discuss this in detail later. We all might open our own stores and basically understand meeting consumer needs. Actually, consumer needs are layered and graded. I bring a simple thought: which TV channel do you like most? Many say Hunan Satellite TV and Zhejiang Satellite TV. Why? With so many satellite channels nationwide and so many programs on CCTV, why do we only like watching one or two channels? When you watch "Dad, Where Are We Going?" or "The Voice of China," have you ever thought: why do I like Hunan or Zhejiang? My five-year-old child watches Hunan TV and rolls on the floor laughing. Including Hunan TV's original "Super Girl," why do even old ladies like watching it? Have we ever thought why? If we treat it as a product, other satellite channels are also products. Why do we like this one product? What needs does this product satisfy? Among the audience, business people watch financial channels, women might like soap operas, some like news, some like sports. But why do everyone like these two channels? It's because they satisfy consumer needs. You might like finance but not movies; you might like sports but not soap operas. But no one in the world doesn't want happiness; happiness is an emotional need.
If you're interested in turning tea into FMCG, making tea leaves into tea beverages, we can discuss together how to build consumer circles, how to build terminals, how to handle transportation, how to do communication, how to organize data. These are several tools we've developed for the tea industry as tea beverages and FMCG.
Time is very limited, so let me give you a few insights.
**Insight 1: If you dare to think, you can achieve it!** The tea industry contains many things—culture, history, quenching thirst, friend communication. Actually, when the high-end market above 800 yuan is weak, we should boldly step out and try some tea beverage attempts. Some large enterprises, including some industry associations, have already begun to brew such a thing.
**Insight 2: Always stay ahead of the times and be the leader.** Everyone knows that the best in the herbal tea beverage market are Wanglaoji and JDB, and the third, Heqizheng, has little market. As we say in Cantonese, you need to drink the first bowl of soup; that's the richest and most profitable.
**Insight 3: Change direction, and you'll be number one!** We always talk about where to open the best store and how to achieve the ultimate packaging, which can achieve 5% or 10% growth. But to achieve exponential growth, you must think about the problem from a different direction.
Finally, I hope everyone will continue to innovate in your work, and gallop forward to greater prosperity! Thank you all!
Source: Boss Manages Enterprise
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