---
title: "Why Can't China's 70,000 Tea Companies Produce a Lipton?"
description: "In June 2018, People's Daily published an article titled \"Why Do Ten Thousand Chinese Tea Companies Have Lower Profits Than One Lipton?\" highlighting the awkward situation of China's tea industry. Despite being the world's largest tea producer and consumer, with 44.7% of global production in 2018, most Chinese tea companies are small, and the industry lacks product standards and transparent pricing, hindering brand building. The key to success, as shown by Lipton and other examples, is to provide consumers with simple, clear product knowledge and selection criteria, rather than empty cultural narratives."
author: "空手"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-08-07"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/why-can-t-china-s-70-000-tea-companies-produce-a-lipton-aa7dd3b4/"
markdown: "https://xinjignxiao.com/en/articles/why-can-t-china-s-70-000-tea-companies-produce-a-lipton-aa7dd3b4.md"
original_source: "https://mp.weixin.qq.com/s/dx_GdNKJjKVs592MZyt0rQ"
translation: "https://xinjignxiao.com/zh/articles/%E4%B8%AD%E5%9B%BD%E4%B8%83%E4%B8%87%E5%AE%B6%E8%8C%B6%E4%BC%81-%E4%B8%BA%E4%BB%80%E4%B9%88%E5%81%9A%E4%B8%8D%E5%87%BA%E4%B8%80%E4%B8%AA%E7%AB%8B%E9%A1%BF-aa7dd3b4.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/why-can-t-china-s-70-000-tea-companies-produce-a-lipton-aa7dd3b4/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Why Can't China's 70,000 Tea Companies Produce a Lipton?

> In June 2018, People's Daily published an article titled "Why Do Ten Thousand Chinese Tea Companies Have Lower Profits Than One Lipton?" highlighting the awkward situation of China's tea industry. Despite being the world's largest tea producer and consumer, with 44.7% of global production in 2018, most Chinese tea companies are small, and the industry lacks product standards and transparent pricing, hindering brand building. The key to success, as shown by Lipton and other examples, is to provide consumers with simple, clear product knowledge and selection criteria, rather than empty cultural narratives.

**Click the image above for details**
In June 2018, People's Daily published an article titled "Why Do Ten Thousand Chinese Tea Companies Have Lower Profits Than One Lipton?" which succinctly captured the awkward situation of China's tea industry.
China is the world's largest tea producer and consumer. In 2018, China contributed 44.7% of global tea production, amounting to 2.616 million tons, nearly half of the world's total. However, as of the financial reports in April 2019, only 7 out of 16 listed tea companies in China had annual revenues exceeding 100 million yuan.
Even Tenfu Tea, known as "China's first tea stock," had revenues of only 1.797 billion yuan in 2019, which includes income from its hotels, tourism, and catering businesses. Excluding these, tea sales were only 1.117 billion yuan, accounting for a mere 0.5% of China's entire tea market. If the leading brand is like this, it's even worse for others: over 90% of tea companies have annual sales below 5 million yuan.
Compared to Lipton's annual sales of 30 billion yuan, it's no wonder people say that 70,000 tea companies are not as good as one Lipton. Moreover, the UK, where Lipton originated, is not a major tea-producing country; Lipton relies on importing tea raw materials from Sri Lanka, India, and China, and has become the world's third-largest non-alcoholic beverage brand after Coca-Cola and Pepsi.
Facing this market reality, building tea brands has become an urgent task. However, when it comes to tea brand building, many industry insiders argue that tea promotion should not be limited to color, aroma, and taste, but should appeal to consumers through tea culture, influencing them to form tea-drinking habits.
It is a standard practice to build a brand not just on the physical product but through spirit and culture. But the problem is that the more tea culture is emphasized, the further consumers drift away from tea consumption and the more they shy away from tea brands.
This is because we have forgotten the original purpose of building a brand. The significance of a brand is to simplify consumers' decision-making process, making it convenient for them to purchase by name. Therefore, a brand first and foremost represents a product selection standard; building a brand means giving consumers that standard.
**In consumers' purchasing decisions, there are four key elements: category, price range, product strength, and brand.** This applies to consumption in any industry.
For example, when choosing tea, you first look at the category: black tea or green tea, Tieguanyin or Dahongpao. After deciding the category, you consider the price: whether to buy tea at a few dozen yuan per jin or several hundred yuan per jin. Finally, you choose the product and brand. Of course, the price must be supported by product strength and brand strength; otherwise, a high price becomes a castle in the air, a "IQ tax."
Because consumers lack the knowledge to distinguish tea, many people can't even tell green tea, black tea, and oolong tea apart. This leads to two problems: **First, the tea industry lacks product selection standards; there is no set of socially accepted, consumer-recognized product parameters and references. Second, there is no clear, transparent pricing system; without standards to distinguish good from bad, merchants can price arbitrarily.**
Without these two supports, it's impossible to create consumer-recognized tea brands. Tea can only have regional brands based on categories, such as West Lake Longjing, Anxi Tieguanyin, Xinyang Maojian, etc. This becomes the only standard for choosing tea.
**The current situation of tea is similar to that of wine in China.** Thanks to years of wine brand education and the influence of movies and TV shows, many people know that red wine should be drunk from goblets, that it needs to be decanted and swirled before drinking, and that red wine pairs with red meat and white wine with white meat.
This is wine culture, but why hasn't wine become the mainstream alcoholic drink in China? It's not because Chinese consumers lack culture, but because they lack the knowledge of how to choose wine; wine lacks product standards.
For example, if you walk into a liquor store or the wine section of a supermarket, holding a bottle of wine worth a few dozen yuan in your left hand and one worth over a thousand yuan in your right hand, how would you tell the difference in price? You can't understand the labels, and you can't taste the subtle differences.
The complex system of distinguishing wine by vintage, grape variety, and château is an obstacle, not a help, to ordinary consumers' purchasing decisions.
It is precisely because consumers lack product knowledge and selection standards that the wine pricing system is chaotic. Therefore, it is extremely difficult for wine brands to emerge in China; consumers only know Lafite and, in recent years, Penfolds.
Lafite produces only 240,000 bottles a year in France, but China consumes 2 million bottles a year; "1982 Lafite" has become a joke. Imported wine at the port averages a dozen yuan per bottle, but retails for several hundred yuan in China. In the end, it's because consumers don't understand. Since they don't understand and fear being charged an "IQ tax," they might as well not drink.
A simple truth: if I invite you to dinner and bring a bottle of wine worth 2,000 yuan, but you think it's only worth a few dozen yuan, then my 2,000 yuan would be wasted. This is why wine is hard to become a mainstream social drink; it lacks a consumer-recognized pricing system and product standards. Choosing Moutai, on the other hand, doesn't carry such risks.
The tea industry is the same. Its biggest problem is that consumers lack the knowledge and product standards to choose tea, making it inconvenient to make purchasing decisions, which hinders the popularization of tea consumption. For many people, tea at a few dozen yuan per jin looks no different from tea at a few thousand yuan per jin, and it's not easy to taste the difference. So they can't choose.
**Lipton's global acceptance is not based on premium tea, but on convenience, providing consistent taste and product quality.** Consumers buy Lipton for its convenient product experience, predictable taste and quality, and mass-market, transparent pricing, which makes it easy for consumers to choose and purchase.
In contrast, most domestic tea companies overemphasize tea culture, frequently citing historical references, and focus their promotion on the historical status and packaging of tea. This not only makes consumers more confused about how to choose products but also makes it difficult to build trust between the company and consumers. It makes consumers wonder, "How do I know this product is worth this much?" "Am I being fooled?"
A brand is first and foremost a carrier of product information, a concentration of product value. So building a brand means giving consumers a standard to identify value and a basis for choosing products.
In recent years, Xiao Guan Cha (Small Can Tea) has emerged in the tea industry. Its core approach is to simplify the consumer's selection process. A box contains multiple flavors, so consumers don't have to agonize over which tea to buy. The "small can" provides a convenient usage experience and gives a sense of refinement and high-end. Finally, Xiao Guan Cha uses large-scale advertising to increase brand awareness, and "master-made" endorsements to support product value. Once the brand is well-known, the price can hold.
However, **the core of Xiao Guan Cha's success is still the gift market strategy.** For gift-giving, what matters most? It is the mutual recognition of the gift's value between the giver and the receiver. Both parties must believe the gift is worth the price for it to be worth giving. So Xiao Guan Cha's strategy is to use advertising, "masters," and "small cans" to elevate the brand's perceived quality, face, and high price, making it easy for consumers to choose.
Including Xiao Guan Cha's brand slogans like "When distinguished guests arrive, Xiao Guan Cha," emphasizing "hospitality tea in the CEO's office," and "drinking tea, a more elegant social interaction," and choosing media channels like high-speed rail stations, airports, and CCTV, are all essentially targeting the high-end gift market.
But there's a saying in the beverage industry that is quite apt: "If it's not for drinking, it won't last long." Not focusing on the product itself, but blindly pursuing high-end and face, led to the joke about Xiao Guan Cha's masters working all year round to fry 80,000 jin of tea. It is not the answer to tea brand building.
Actually, a brand truly worth learning from in the tea industry is Zhuyeqing. Zhuyeqing tea undergoes complex processing to achieve a moisture content of 3%, allowing the leaves to stand upright in water, floating up and down. What defines good Zhuyeqing? It's when the leaves stand upright in the cup. This is a very intuitive product selection standard. As someone who doesn't know tea, I can perceive the product value of Zhuyeqing based on this.
(Left: old version, Right: new version)
So Zhuyeqing builds its brand around this point. The new brand logo designed by Chen Youjian for Zhuyeqing emphasizes the shape of the tea leaves in the cup, while also being a "bamboo" character. Including the product packaging design and brand visual identity, they all emphasize the upright leaves, giving consumers immediate product knowledge, making it easy to choose and perceive product value.
Based on this, Zhuyeqing ranked first in the tea category in the "2020 China Brand Strength Index Report" for consecutive years, with sales reaching around 1 billion yuan in 2019.
In contrast, there is also the "Xin" character can created by Hua & Hua for Wenxin Xinyang Maojian. The main message of the "Xin" can is to associate the Wenxin brand with Xinyang Maojian, so that when consumers think of Xinyang Maojian, they first think of Wenxin's "Xin" can, making Wenxin the first choice for Xinyang Maojian. As for what makes Xinyang Maojian good and how to select it, the "Xin" symbol doesn't convey that; it doesn't establish a core product standard.
However, the "Xin" can labels detailed product information on the can, including the tea's origin, variety, bud, picking time, and processing, clearly stated, plus the chairman's handwritten signature. This is informing consumers of the standard for selecting tea.
So for **tea brand building**, **we should avoid empty tea culture propaganda. Instead, we should truly stand from the consumer's perspective, starting from their cognition and feelings, and convey practical, concise tea knowledge.**
This highly refined tea knowledge, such as "leaves standing upright," "one leaf, one bud," "spring tea in March," and "bright red tea liquor," can become the standard for consumers to choose tea and the key to experiencing the product's value. Only then can we bridge the distance between the brand and consumers, allowing them to fall in love with tea without barriers.
There is a classic case in the wine industry: Yellow Tail.
Yellow Tail was founded in 2001 and became the world's best-selling wine in just over a decade, with a repurchase rate of 67%. It not only created an industry myth but also became a classic case study at Harvard Business School, praised in the book "Blue Ocean Strategy."
Traditional wine merchants always proudly emphasize the history and elegant culture of wine, but this didn't attract consumers; instead, it left them at a loss when choosing wine. Different wine bottles look similar, yet prices vary greatly. There are many types of wine, but labels are filled with jargon consumers can't understand, so many consumers choose to stay away from wine. In light of this, Yellow Tail focused on building brand values of easy selection, good taste, and fun. It used different colored labels to distinguish wine types, simple and vivid, and initially only offered red and white wines. The goal was to simplify the wine selection process, making it easy for people to decide which one to buy, and thus Yellow Tail became very popular with consumers.
This is the case that tea should truly reference. **What consumers need is not empty culture, but practical knowledge. Knowledge provides selection standards for purchasing decisions, and knowledge provides key evidence for experiencing product value.**
Drucker said, "Knowledge is the only meaningful resource today." **For marketing, knowledge is productivity, and knowledge is the power to move people. What enterprises truly need to do is become the chief knowledge officer for consumers when they consume.**
Source: Kong Shou (ID: firesteal13), Author: Kong Shou


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671