Author / Huang Qingchun
However, industry insiders believe that the ByteDance tea business will never be limited to internal supply once it matures, and it is very likely to face the market in the future.
On the one hand, when ByteDance “entered the game”, the tea drinking circle was in a cold winter. In 2021, after the “cooling down” of the venture capital boom in the tea drinking circle, the two major tea drinking cities in Shanghai and Beijing will be deeply impacted by the epidemic in 2022. A number of people in the tea drinking circle told Huxiu that Shanghai and Beijing, as the cities with the most prosperous tea consumption, the impact of this round of epidemics is not limited to the decline in sales. The logic of store opening, the drainage model, and the SKU iteration model are all undergoing profound changes. . “More tea brands will accelerate online in 2022 – when the offline world is full of uncertainty, online traffic and consumption power will become particularly important.”
On the other hand, since 2020, the products under the Byte series have become the most concerned “traffic portals” in the tea drinking circle. Taking Heytea and Naixue as examples, they both have official accounts on Douyin, and the tea brand’s “Douyin fan size” and its “tea drinking circle status” seem to have some inherent logic: as a domestic market value ( Valuation) is the highest tea drink brand, and the fans of Naixue and Heytea’s Douyin accounts exceed those of their peers in the circle—as of press time, Naixue’s Douyin account has 1.033 million fans and Heytea’s fans are 963,000 (for comparison, : Chabaidao has 779,000 fans, and Chayanyuese has 142,000 fans).
This constitutes a picture worthy of pondering: when tea drinking fell into the “cold winter”, the “big brother of traffic” in the tea drinking circle ended up “making tea”. And this leads to a deeper question. In the tea drinking track where the market structure is increasingly solidified, how much variable will the entry of Bytes bring?
Why is byte eyeing new tea?
In 2022, many big Internet companies are shrinking their businesses, trying to reduce costs and increase efficiency through open source and throttling. Only ByteDance, an Internet upstart, is still arguing on the new business, like a “catfish” bringing a new wave of discussion and attention to the industry it has entered.
This time, ByteDance jumped into the new consumption track again, and it has been coveting the new tea business for a long time.
In 2021, ByteDance has significantly accelerated the pace of “sweeping goods” in the new consumption track – there are nine investments in just one year, covering Manner, Ningji, Yinweicha, Rilakkumahot pot, Shark Fit, Kongka and other cutting-edge brands, according to a rough estimate by the media, ByteDance’s investment in the new consumption field may have exceeded 800 million yuan.
In addition, ByteDance has also invested in Black Ant Capital, a “new consumer hunter”. The latter’s investment list includes Heytea, Yuanqi Forest, Jane Ai Yogurt, HARMAY Huamei, Wang Satsuan, and KK Group.
It is worth noting that He Yu, the founder of Black Ant Capital, once worked for Byte. When communicating with Huxiu in 2021, He Yu once mentioned his views on the online world: “The changing trend of the entire online world is to go in the direction of experience and content, and how to find the difference between experience, content and consumption. Combining and finding consistency, this trend is related to the iteration of consumers. This is how the online development is, and the offline development must also be the same.”
As for the layout of ByteDance’s own tea business, ByteDance has launched an internal tea brand “Taoyuan Yuye”, mainly tea bag products. The brand has recently opened an official flagship store on Douyin; in November last year, Beijing ByteDance Network Technology Co., Ltd. has applied for the registration of “Byte Tea” and “ByteTea” trademarks, which are internationally classified as beer beverages and convenience foods.
According to Tech Planet’s previous reports, Bai Guang and Liu Yuzhang, the strategic cooperation directors of ByteDance, took over the newly established Beijing Xingang Trading Co., Ltd. as early as 2018. This company mainly explores new consumer businesses such as tea industry and red wine.
Industry insiders speculate that the reason why ByteDance began to bet on the new consumption track is that the growth rate of its main business is showing signs of slowing down. According to previous media reports, ByteDance’s revenue for the whole year of 2021 will be about 58 billion US dollars, a year-on-year increase of 70%, a significant decrease from last year’s 111% growth rate.
According to Shanghai Securities News, ByteDance’s domestic advertising revenue stopped growing in the first half of 2021 (the first time this has happened since commercialization began in 2013). ByteDance’s two core products, Douyin’s revenue stopped growing. Today’s headlines are even on the verge of losing money.
Even, a person close to ByteDance revealed to a reporter from the Shanghai Securities News that it has become an open secret that the growth of Douyin and other related businesses has slowed down significantly since last year, “mainly because of the current ceiling of the number of domestic users of short videos. Already here, Douyin, built on strong marketing, must have diminishing marginal benefits.”
This can also be exemplified from the data side. As of September 2021, the DAU of Douyin applications is 640 million, the main station is about 500 million, and the speed version is about 140 million; time is pulled back to June 2020, the DAU announced by Douyin It has exceeded 600 million, and the traffic growth is obviously weak.
To sum up, ByteDance’s online traffic will naturally go offline, and new tea drinks are obviously a good choice as a popular consumer track. Relevant data show that the scale of China’s tea market will reach 262.66 billion yuan in 2020, with a compound growth in the past five years. According to the data of the Prospective Industry Research Institute, the market size of China’s ready-made tea drinks has reached 113.6 billion yuan in 2020, a year-on-year increase of 6.87%.
The deeper reason is that tea, as a huge blue ocean market of hundreds of billions, now has a historical window to be subverted and transformed.
compared to teacoffeeThe advantage is that compared to the Chinese coffee market in its infancy, tea is more likely to break the circle at the cultural level – especially outside the super cities such as Shanghai and Beijing, the penetration rate of tea culture is significantly higher, which means that the relative Compared with coffee, tea is in the “market”educateAnd the pressure on users’ consumption mentality building” is less.
However, the shortcomings of tea compared to coffee are also obvious. In the investment circle, the “addiction” of coffee is regarded as the key to ensuring repurchase. In contrast, most tea products are difficult to achieve.” In-depth repurchase like Americano” and “Latte”. This means that the tea drinking track needs to find a user-deep cultivation strategy other than “product addiction” – digitization and the private domain traffic strategy behind it are regarded as the key.
It is worth noting that the Internet genes of new tea drinks have brought about an industry change. Represented by a number of new tea brands such as Heytea, Naixue, and Chayanyuese, China’s tea drinks are rapidly completing digital evolution: they generally have Internet genes, and they can be quickly opened with marketing channels after combining traditional tea with milk tea In the market, to a certain extent, the raw materials, production, and channels have become standardized and large-scale (the tea’s own sweetness and various accessories can be combined to achieve pipeline-style taste innovation), which has greatly activated this market demand and invested in the hot money of the Internet. Naturally, it also flocked to the new tea drinking track.
Data source: Meituan/Catering Boss’s internal reference “China Catering Big Data 2021”
Taking the number of offline stores as an example, the “2021 New Tea Drinks Research Report” shows that at the end of 2019, the total number of beverage stores in my country was about 427,000, and by the end of 2020, this number reached 596,000. Among them, new tea beverage stores accounted for the highest proportion, reaching 65.5%, and the number of stores was about 378,000. This wave not only brought Nai Xue to the market, but also brands such as Hi Tea and Lele Tea have also reported IPO news.
Sorting out the consumer business that ByteDance has frequently attacked since the first half of the year, it is not without commonalities that ByteDance has been in the beverage business and perfume business some time ago to build a new tea team.
An investor who pays attention to the consumption track believes that the expansion of ByteDance’s new business seems to be out of order on the surface, but in fact there is an underlying logical connection between these consumption targets. “ByteDance has always embraced young people, and the new business has a high degree of fit with basic disk users.”
According to the “2020 New-Style Tea Drinks White Paper” released by Nai Xue and CBNdata, it is expected that by the end of 2020, the number of domestic new-style tea drink consumers will exceed 340 million, and nearly 70% are post-90s and post-00s.
In addition, the core audience of this batch of cutting-edge tea companies is young people, and their overlap with Douyin and Xigua video users is very high. McKinsey’s “2020 China Consumer Survey Report” shows that the second-tier and below cities in the survey sample “Young shoppers” accounted for only 25% of the respondents, but contributed nearly 60% to the growth of consumer spending that year. Young people are becoming the new main force in the consumer market.
The above-mentioned investors further added, “Some people think that Internet companies like Byte have always had the advantage of doing business online, and that doing offline entities is highly likely to be a false shot, just to ‘support valuation’ and ‘increase user penetration’. In fact, in the new consumption track, mild alcohol, scented perfume, and new tea drinks have become a way of life and a trend in a certain sense, with a strong sense of consumer identity, which can be said to be the social currency of young people today Consumer aesthetics.”
Moreover, the milk tea business model has matured, and this asset-light, high-profit business model is becoming more and more dependent on popular models. There will be more and more marketing and promotion expenses invested in Douyin and Xiaohongshu, and Douyin obviously has an advantage over these new tea drinking forces under the blessing of huge traffic, algorithm recommendation, and business efficiency.
However, the new tea drinking track in 2022 is accelerating its involution. Some industry insiders believe that the growth rate of the epidemic-superimposed industry has slowed down, and the entire new tea drinking track is entering an era of stock competition, which forces top players to compete across borders and begin to penetrate each other in business (for example, Yuanqi Forest began to make beer and milk tea. and other products, Ruixing Coffee has launched new products such as peripherals and tea beverages that are different from coffee), and the product forms are more diversified and subdivided, giving birth to lemon tea, tea bags, tea freeze-dried powder, and tea cold extract , freshly made pure tea,health caretea etc.
Another thorny problem is that offline store operations for new tea brands are becoming more and more difficult.
Affected by the epidemic and several times of stagnant shipping, the cost of raw materials (coffee beans, milk, etc.), manpower, and rent (some industry insiders said that the rent in 2022 may be 2.5 times that of 2020) has continued to rise since last year. Starbucks, Tim Hortons Brands such as , a little bit, chayanyuese, and ruixing coffee have announced an increase in product prices. Even, with the soaring labor costs of the tea drinking track, tea brands such as Heytea, Naixue, and Lelecha frequently reported news of store closures, salary cuts, and layoffs.
Under such an environment, ByteDance wants to build its own tea brand, and its operating costs will only remain high. Moreover, tea drinks are highly dependent on the construction of logistics, cold chain and other service facilities, and the competition between brands will increasingly focus on products and supply chains, and ByteDance at these two levels is not dominant.
Douyin’s Infinity War
In fact, ByteDance not only covets the consumption track, but has penetrated its power map into various fields such as medical care, education, corporate services, social networking, consumption, and real estate by virtue of its advantages in technology, algorithms, and business efficiency. And its expansion of new businesses is mostly based on the synergy and supplementation of business and technology, and it quickly grafts external resources into its own business system, and achieves data overtake in the “arms race” of sub-tracks in a blitzkrieg manner. Byte is one of the logics that has always been able to “work miracles” on the product side in the past.
For this reason, some investors said to Tiger Sniff, “After reviewing the rise of ByteDance, the strategic significance of business and investment going hand-in-hand has been underestimated. Sometimes the risk of business expansion is not only in the business itself, but also in the rivers and lakes. order, but Zhang Yiming successfully integrated the advantages of subdivided track talents into the product ecology through investment and mergers and acquisitions, and built his own evolutionary system for the core business.”
Following this logic, Douyin will also adjust its growth path under the new ecology as the marching route of ByteDance’s business territory becomes more and more radical, and the organization, business structure, and product form will be iterated.
However, if Douyin wants to realize its ecological advantages, the business of selling traffic is obviously too shallow, and the same is true for Meta now. New business models have become particularly important.
Reflected on the traffic side, the author of Tiger Sniff’s “Commercialization VIEW” wrote that ByteDance reproduced the mainstream commercialization evolution path of Internet giants, that is, after gathering large-scale traffic, first realize traffic realization, and then tap technology overflow value. Today, ByteDance’s advertising resources are upgrading and evolving in two directions:
Today’s headlines and Douyin are both pan-traffic products made by ByteDance in the early stage; Knowing Chedi, Zhuxiaobang, and Xingfuli are all products that expand vertical traffic in the middle and late stages. Their value lies in undertaking generalized traffic and leveraging vertical product development To increase the flow of traffic to extend more realisation scenarios;
ByteDance’s overseas traffic resources are rapidly being commercialized, which strongly boosts the growth of international revenue. In 2021, overseas promotion and marketing resources will be officially added to the huge engine, and overseas product resources (TikTok, BuzzVideo, TopBuzz) will be opened to meet the needs of advertisers. overseas promotion needs.
Reflected on the organizational side, compared with traditional Internet companies such as Alibaba, Tencent, and Baidu, ByteDance has an obvious difference.
For example, the older Internet giants like BAT are very fond of building a skyscraper with dozens of floors and building an employee office ecosystem within a radius; ByteDance has more than 40 office locations scattered in Beijing. , each team is scattered offline and coordinated online, and even the ByteDance headquarters is only located in the AVIC low-rise building at No. 48, Zhichun Road, Haidian, Beijing.
Zhang Jun, the author of Tiger Sniff, once mentioned Zhang Yiming’s views on the office space in “Inside TikTok: Zhang Yiming’s Journey of Giant Waves”, “‘Many companies move to a good headquarters and they are sluggish’. He took SUN, Yahoo, and Evernote as examples. The environment changes the mood, and the luxurious and comfortable headquarters not only stifles innovation, but also breeds comparison – for example, some company executives actually have independent elevators. ‘Very tacky’.”
Focusing on specific businesses, according to media reports, when ByteDance realizes a product function, it only takes one week from preparation to launch to resumption, and the mobility advantage of “small front desk” is fully magnified; An operation center that is collaboratively supported in terms of technology, user operation, and commercialization, to maximize the collaborative efficiency and resource allocation of various business segments.
“ByteDance’s ‘developing miracles’ style has shaken BAT in the information and short video tracks, and since then, it has skillfully used traffic backflow to make new businesses grow rapidly. Its purpose is to infinitely granulate people and teams in the business body. , and it becomes a ‘God’.” Yin Jun (a corporate management executive, pseudonym) said to Huxiu.
It means that the organizational structure and business of big Internet companies such as BAT and TMD are centralized thinking; the culture of ByteDance is decentralization. This corporate culture will link various businesses into ecology for a long time, and when the business map expands will become borderless.
In this regard, a researcher who focuses on the consumption track told Huxiu that the four major portals are 1.0 Internet companies, BAT is a 2.0 Internet company, and ByteDance has the prototype of a 3.0 Internet company. “Now Internet companies are pursuing IP, and then focusing on IP to enrich products and user needs, Douyin has a high probability of becoming such an IP company – not only providing products, but also providing value recognition outside of products.”
byMilletFor example, although it has built a huge brand IP, many users’ perception of Xiaomi’s consumption is limited by hardware, which limits the ecological expansion boundary of Xiaomi IP. For example, Xiaomi actually sells some food and daily necessities, but many users’ mentality The construction has been completed, and everyone does not consider going to Xiaomi to buy food as a default option.
The situation of Douyin is completely different. As a content platform, various forms of consumption including food, clothing, housing, transportation, eating, drinking and entertainment are included. Even if the new business of ByteDance frequently crosses borders and tracks, its brand IP is in the process of cultivating users’ minds. more easily accepted. Therefore, simply comparing Douyin and Xiaomi’s IP boundary scalability, Douyin is an IP-based brand that is more penetrating in all aspects.
This judgment fits well with ByteDance’s strategy. Previously, there was a mall called “ByteMall” inside ByteDance, where employees could purchase Byte IP (byte peripherals and co-branded) products, including tea filters, gift boxes, umbrellas, etc.
Even as early as 2019, Bilibili chairman Chen Rui said in an interview with “LatePost”, “There is a sentence in “The Lion King”, where the sun shines is my territory. I think Zhang Yiming’s real dream is to To be a Super Company, a Super Company that breaks through all the boundaries and patterns of human business history in the past.”
However, whether it is an IP company or a Super Company, it is essentially to cultivate the ecology.
This is exactly in line with the “super platform” theory put forward by “Queen of Venture Capital” Xu Xin, “In the mobile Internet era, there is no regional leader, all competition is a national battle, and all business is concentrated incell phoneOn the App, in such a new era, Internet companies will either grow into a super platform, or they will be eliminated. “
#I am Huang Qingchun, deputy head of Huxiu’s commercial consumption group. I pay attention to many fields such as entertainment, social networking, game audio and video, and add WeChat to industry professionals: 724051399. News clues can also be emailed to[email protected]