Shenrancaijing original
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Editor | Wei Jia
The new year is just around the corner, how is your industry doing?
2022 is a special year for too many industries, especially the consumer industry. In the third year of the epidemic, the turmoil, adjustments, and opportunities in the consumer market have led to more stories of struggle, exploration, and madness than in previous years.
Wealthy bigwigs joined the dock department, smashed more unicorns, cautiously waited and watched capital, and waited for “buying bottom prices”, resulting in some consumer items that could not be reached at high prices, and some valuations bottomed out.
What cannot be changed by the three-year epidemic is that consumption is still the eternal theme of the Chinese market. As an important branch of the new economy in recent years, new consumption has been and is still being born the most online celebrity track. Tea, coffee, prepared dishes, Frisbee, camping, as well as home fitness and beauty makeup, are all big things in 2022. Among them, some are evergreen tracks with long-lasting popularity, some have long been in the red sea of competition and have been re-heated, and some are still immature markets that have been pushed to the forefront before they are ready.
As 2023 is approaching, practitioners need to take a look at the changes that have taken place in the industry in the past year before embarking on a new journey. Combining the popularity and scenes, we selected seven industries in the three major sections of “eat and drink”, “play”, and “pleasure yourself”, from which we roughly outlined the new trends of the Chinese consumer market.
“eat and drink”
Tea drinking: direct sales change to franchising, high-end “snatch” mid-end
In 2022, there will be many major events in the new tea industry: Michelle Ice City hits the IPO, HEYTEA is open to franchising, Naixue acquires Lele Tea, Shuyi Shaoxiancao, and Ningji enters the ranks of unicorns.
Behind this is the epitome of the tea drinking industry-the head effect is more prominent, the presence of players in the mid-end market becomes stronger, and high-end brands use franchises or acquisitions to “enclose land”.
The epidemic that has lasted for three years has dealt a severe blow to high-end tea drinks, which are heavily invested. In the first half of 2022, Naixue experienced a decline in revenue for the first time since its listing, and its performance turned from profit to loss. According to the information of Jiuqian Zhongtai Minutes, HEYTEA’s revenue in the first three quarters of 2022 will decline by more than 20% year-on-year.
High-end brands began to lean over to grab the share of the low-end. Xicha took the lead in reducing the price by 5 to 7 yuan at the beginning of the year, and Naixue and Lelecha followed suit. However, the income in exchange was different. Ling Han, an investor close to Xicha, told Shenran that this led to a decline in the gross profit of Xicha; The situation is slightly better, because its supply chain capability and automation level have improved after its listing, and the overall profitability has not been affected.
Two more unicorns emerged from the industry. In the first quarter of 2022, Shuyishao Xiancao and Ningji received financing of 600 million yuan and hundreds of millions of yuan respectively. What attracts the most attention from the market is Michelle Ice City, which has only one round of financing since its establishment 24 years ago: its expansion does not rely on its own 22,000 franchise stores, and its supply chain does not rely on selling milk tea to make money. According to the prospectus, it will return to its mother in 2021. The net profit reached 1.91 billion yuan, which is far better than that of catering companies.
Facing the increasingly “volume” market and the pressure of investors’ financial returns, HEYTEA and Naixue have different ways of coping.
In December 2022, after adhering to the direct sales model for 10 years, HEYTEA will open to franchising. Ling Han said that for HEYTEA, which is preparing to go public, this is a “quick-acting medicine” to seize the market outside the high-tier cities and relieve financial pressure.
Ji Yao from Liaoning was the first batch to apply to join HEYTEA, and she just passed the interview recently. She and many franchisees have a common question about HEYTEA, compared to first-tier cities, how much influence can it retain in the second-tier and below markets; HEYTEA is not as good as franchise-based brands such as Guming in terms of franchisee management More experienced, does the first batch of franchisees mean that they have to step on the pit with HEYTEA?
Naixue chose to spend 525 million yuan to acquire a 43.64% stake in Lele Tea and become its largest shareholder. According to the interview minutes of Jiuqian Zhongtai, Naixue’s primary purpose is to obtain financial returns, and he expects Lele Tea to go public independently or sell its shares; the secondary purpose is to optimize the competitive environment and reduce the company’s pressure on store expansion and operation.
Li Jiaming, an investor of Hangzhou Xindebao Venture Capital, concluded to Shenran that lowering the unit price and opening up franchises all show that the current growth of HEYTEA in the high-end market is weak, and they urgently need to sink to find growth. Xuebing City is a good business expansion model; Naixue’s acquisition of Lele Tea and Heytea’s investment in a minority of coffee brands are signs that tea brands are gradually starting a matrix war, and industry competition will become more intense.
Coffee: The veteran “sinks” fierce battle, and the rookie enters the field
From 2020 to 2021, the amount of hot money pouring into the coffee market will be less than that of tea drinks. In 2022, the primary market will send a stronger chill to coffee brands than tea drinks.
Although instant coffee has been introduced to the market faster by taking advantage of the online epidemic, the latest round of financing for Santong and Sumidagawa Coffee has also stagnated in 2021. Among the freshly ground coffee brands, the last round of financing for Manner, M stand, and Nova Coffee is still in 2021. Only Seesaw announced in February that it has received hundreds of millions of new financing.
Chen Li, an investor who focuses on beverages, no longer pays attention to the early projects of freshly ground coffee, and only considers investing in star projects. Even for star projects, the attitude of large institutions is very cautious and they are all waiting and watching the price.
Compared with tea drinking players who are becoming more and more alike, coffee is becoming more and more differentiated due to demand differentiation. Chen Li concluded that the three major demands of cost-effectiveness, scene, and quality, and the price range from low to high, correspond to three types of players, Luckin Coffee, Manner, Starbucks, Tims Coffee, Seesaw, and % Coffee.
Under the consumption environment in 2022, the “cost performance” with low unit price and fast consumption has won the “space scene”. The performance of Luckin and Starbucks, the representative players of the two models, is the most direct proof. Ruixing Coffee started to make a profit, and achieved a net profit of 435 million yuan in the first three quarters of 2022. Starbucks China’s revenue has plummeted for several consecutive quarters.
In essence, coffee is moving from the scene to the product, from business to life. In Li Jiaming’s view, the scenes provided by foreign brands such as Starbucks used to have social and space premiums, but today they “failed” due to the abundance of offline businesses. The “fast coffee” of Luckin and Manner better matches the needs of consumers and realizes Higher single store efficiency.
Chen Li summarized Ruixing’s strategy as follows: beverage-based coffee products, channel penetration from high-tier cities, fine-grained community operations, and digitalization of product development, store location, and marketing.
However, after surviving the wave of store closures during the epidemic, Ruixing’s next challenge is to maintain continued growth in revenue and users. New players are constantly entering the Chinese coffee market, and coffee is a business that competes in different regions. Different strategies need to be adopted in different regions. In 2022, Ruixing restarted franchising in early December, which is a means to accelerate store expansion after experiencing the pain of the epidemic; and Lucky Coffee, a brand under Michelle Ice City, with a price of 7-10 yuan, opened 800 new stores through the franchise model.
Li Jiaming compared and analyzed that the competition in the coffee track has just begun, and the competition stage is equivalent to the new tea drink 5-6 years ago. New coffee forces have to face the competition from overseas brands Tims and Peet’s Coffee, the eagerness of traditional industry giants China Post, Sinopec, Tongrentang, and Li Ning, and the accelerated expansion of new local brands.
Prefabricated dishes: Market education is not enough, wait another three years to join
Prefabricated dishes are considered to be the first “big meal” in the capital world in the past year. The landmark event is the advocacy of in-situ Chinese New Year during the Spring Festival in 2022. The scene of the New Year’s Eve dinner is superimposed with the development of cold chain logistics, which has attracted more C-end users to try it.
Chang An, an investor who has had contact with several prefabricated vegetable projects, recalled that in 2021, the investment priority of prefabricated vegetables within the organization will be relatively high, and by 2022 it will be on par with carbon neutrality, metaverse and other fields.
The reason why prefabricated dishes are favored by capital is “mainly because of the efficiency improvement and cost optimization brought by prefabricated dishes under the trend of B-end catering chains, and the completion of natural consumer education during the epidemic, which promotes the development of C-end prefabricated vegetable market ahead of schedule. Three to five years”, He Wenjie, President of Central China Region of Beijing Canglang Fund, concluded.
In the past, players were all serving the B-side, their profits were too low, and there was no real national brand for the C-side.
When Wei Zhixiang, the “first professional prefabricated vegetable stock”, landed on the A-share market in April 2021, the investment and financing of prefabricated vegetables in the primary market also peaked. Entering 2022, industry-related standards will be introduced in many places to bid farewell to the savage growth of prefabricated dishes, and the popularity of prefabricated dishes will resume: Zhenwei Xiaomeiyuan and Xunwei Lion have all received a new round of financing, and listed companies such as Yasui Foods, Guolian Aquatic Products, SF Express, and JD.com have increased their stakes. At the same time, Yasui Foods and Guolian Aquatic Products also represent Chinese-style prepared dishes and seize the overseas market.
The two serial entrepreneurs, Lu Zhengyao and Luo Min, are the ones with the biggest battles. However, the franchise model of their project Tongue Hero and Qudian Prefabricated Dishes has not been convinced by the market.
For the franchise mode of prefabricated dishes itself, Changan is optimistic about it in the long term, but the time to roll out the franchise mode has not yet come, and it will take another two to three years. He Wenjie also believes that there are many factors that affect the penetration of prepared dishes to the C end. In addition to improving the degree of taste reduction and penetrating more scenes, it is also necessary to link prepared dishes with health and safety.
This is also the reason why C-end prefabricated dishes mostly choose to “enclose land” in a single channel. One faction focuses on online channels, while the other faction seizes offline channels, and prudent capital is more inclined to the former. Lin Zhiyong, chairman of Frozen Products Online & Three Meals, a senior entrepreneur in the field of prepared dishes, analyzed that online brands make up for the lack of density with breadth, start volume faster, and enter the field of capital faster, but online is limited by traffic and The cost of fulfilling the contract has a low ceiling, and it will also be rolled out offline when it matures. Brands that focus on offline are usually still in the stage of “leading the way” with mature business formats (supermarkets, vegetable markets, new retail channels, etc.), and will set up their own offline stores after one or two years.
In the prefabricated vegetable market that is close to 500 billion in 2021, the scale ratio of the C-end and the B-end is 2:8, and the top three Yasui Foods, Wei Zhixiang, etc. have less than 2% of the share. Who can circle a larger market in the prefabricated dishes of “big industries and small companies” is the most important thing for capital. Changan is optimistic about C-end companies with B-end background, because in the field of food industry, enterprises that grasp the production profits or channel profits of B-end have more opportunities for development.
“fun”
Frisbee: The industry is too immature, and capital does not buy it
Under the epidemic situation, more and more people are eager to leave indoors with ceilings due to health and social needs, and new urban outdoor sports have emerged. In the summer of 2022, Frisbee suddenly became popular. It is strong in social interaction, low in barriers to entry, weak in confrontation, and very well-produced. It meets the needs of the middle class in first- and second-tier cities, especially novices and women, for outdoor sports.
Wang Yipeng, who has been playing for 6 years, is the first player from mainland China to be selected for the American Professional Ultimate Frisbee League. He is also one of the organizers of BUC, the first Ultimate Frisbee organization in Beijing. Only 20 or 30 people signed up. Since the end of spring and early summer of 2021, the number of applicants has increased dramatically. According to the survey data of the National Frisbee Sports Promotion Committee, there will be about 500,000 players participating in the Frisbee sport nationwide in 2021, and it will show geometric growth in 2022.
In the first half of 2022, the frisbee market will really heat up. The frisbee clubs that are rapidly increasing in first- and second-tier cities are the first to heat up the market. A club in Shanghai established in May 2022 has absorbed more than 500 members in just one month. The number of clubs in Shenzhen and Beijing has increased from a few a year ago to dozens or hundreds.
In the second half of the year, the first China Frisbee League was held, and Ultimate Frisbee, as an emerging sport, was officially included in the compulsory education curriculum, and the popularity of Frisbee continued. According to iiMedia Consulting, the core industry scale of flying discs will increase from 36 million in 2019 to 76 million in 2021, and will reach 232 million by 2022.
Frisbee equipment manufacturers, venue operators, frisbee clubs, and frisbee teaching in the industrial chain all benefited. However, the manufacturers are scattered, the venue operation mode is too heavy, and the teaching scale is smaller. The most lively Frisbee club is still far away from large-scale commercialization.
Qing Qingzi, a practitioner who has conducted research, told Shenran that the biggest problem is that stakeholders are involved in interest disputes prematurely due to the low overall output value; the long-tail effect is insufficient, and it is necessary to attract new ones and promote vitality.
At this stage, the vast majority of clubs still cannot earn event sponsorship fees and advertising fees, relying solely on membership admission fees. Each frisbee activity organizes 20-50 people, and each person charges 50-200 yuan. Excluding venue fees, coach fees, water money and recruiting costs, it is a state of meager profit. Only by ensuring the number and stickiness of members can the income increase steadily.
But Frisbee is more difficult than camping. Qing Qingzi analyzed that frisbees are mostly played by individuals or with one or two friends, and camping is generally a gathering of single or multiple families. Another reason is that before Frisbee events and bases were formed, the industry was basically operated by small clubs. Shen Ge, head of the Beijing Huddler Comprehensive Training Center, explained that because of the strong community nature, low organizational threshold, and transparent costs, the Frisbee Club is not easy to “big eat small”, but it is easier to split from “big” into several For “small” clubs, the repurchase rate and scale are not easy to ensure.
Frisbee sports are also subject to seasonal restrictions, and business is affected in winter and rainy seasons. For example, at the end of 2022, practitioners in the north are waiting for the next spring, and practitioners in areas severely affected by the epidemic are waiting for the recovery of people infected with the new crown. The frisbee activities at the Shenge Training Center have been stagnant since the end of October. Considering that after being infected with the new crown, strenuous exercise is not recommended within a month, the real recovery of the market may have to wait until the spring of 2023.
An outdoor sports enthusiast in the investment circle joked, “For Frisbee, we only play and don’t invest.” Shen Ge also said that it is unwise for capital to enter the frisbee industry now, because it is too immature and needs at least two to three years of maturity.
Camping: high-end equipment, difficult to make a profit in the camp
The trend of outdoor consumption in the past year has not only made Ultimate Frisbee popular, but also blown to exquisite camping. Contrary to the large reduction in the tourism market under the epidemic, camping, which has been in the limelight in early 2020, will have a market size of 100 billion by 2022. The “camping +” model (camping + frisbee/paddle board, camping + parent-child/group building, etc.) more popular.
The investment opportunity in the camping industry is considered far greater than that in frisbee. First, some individual investors, such as homestay, cultural tourism and even catering investors, entered the market for camping. While the stock prices of “camping stocks” such as Mu Gaodi rose in the secondary market, institutional investors also intensively sold in the primary market.
Let’s first look at equipment companies, such as Mugaodi, etc., during the window period when external demand is weakening and domestic camping is trending, they will accelerate their occupation of the local C-end market and increase their price range. Lin Ke, an investment manager who pays attention to the outdoor track, analyzed that although domestic equipment brands are backed by China’s strong supply chain, the outdoor industry started relatively late in China, and their brand power is not enough to support them to abandon the export OEM business. Therefore, although the “krypton gold” attribute of domestic camping equipment is outstanding, the high-end market was once monopolized by overseas brands such as Snow Peak (Xuefeng) and Nordisk (Big Pyrene Bear).
In contrast, Lin Ke is optimistic about investment opportunities in camping subdivisions such as campsites. He shared a set of data: After the epidemic, the number of campsites has surged, and there will be seven or eight thousand new campsites in 2022.
Some commonalities can also be seen from the invested projects in the primary market: most of them are related to camping sites, the company has a short establishment time, and the financing rounds are concentrated in angel rounds.
The camping industry is still in the early stages of development, and many capitals hold a wait-and-see attitude towards heavy-duty campsites. The per capita charge for campsites ranges from 200 yuan to 1,000 yuan, but because of the intensified competition in the industry, even the top players do not make much money. Take Darehuangye, a domestic chain camp operating company, as an example. According to the Huaxi Securities Research Report, less than a year after its establishment, its revenue from January to October 2021 reached tens of millions (10.96 million yuan). The profit was 102,100 yuan, and the net interest rate was only 1%.
The biggest uncertainty lies in the continuity of camping consumption.
The best seasons for camping are spring and autumn. “Currently affected by the epidemic and the weather, the enthusiasm for camping is at a low level.” Zhang Yi, CEO of Light Camping, a camping brand that radiates in Jiangsu, Zhejiang and Shanghai, predicts that there will be signs of recovery next spring.
Long-distance tours are recovering simultaneously. As an important carrier for short-distance tours, how much camping demand is left? The management and services of different campsites are uneven, and there is still room for improvement in industry regulation. Will this slow down the overall development of the industry?
The “shop-in-shop” model of campgrounds (adding camping sections to hotels, resorts, etc.) is therefore more promising. A campground practitioner analyzed that under this model, the stability of service and experience and the control of operating costs are more guaranteed. At present, many listed companies are making such attempts, and the campsite will also accelerate into the reshuffle period.
“Please yourself”
Home fitness: Liu Genghong’s phenomenon is short-lived, and the smart fitness mirror completely reduces the fever
Catalyzed by the epidemic, the fitness industry continues to penetrate online. When more people pay attention to using the “home exercise” method to control their body and improve their physical condition, 2022 will become a year when home fitness will flourish.
The popular Liu Genghong phenomenon has driven a large number of novice users to start the first fitness class, and content platforms such as Douyin, Kuaishou, and Station B have taken advantage of the trend to undertake traffic and increase fitness.
Keep, China’s largest fitness platform, is sprinting for an IPO in February 2022. At this time, people suddenly discovered that fitness platforms such as Keep’s rivals Gudong and Leke have joined the “Hundred Mirrors War” in the face of a saturated market.
Before that, Lululemon acquired Mirror, and later, FITURE magic mirror was promoted into an industry unicorn. Fitness mirror was once the biggest “dark horse” emerging in the fitness industry at home and abroad.
However, home fitness, which is blooming more, will obviously reduce the fever in 2022.
After Liu Genghong, the trend of following bloggers to exercise quickly passed. Li Chao, a sports and fitness entrepreneur, analyzed that because of homogeneity and lack of advanced content, many fitness beginners quit the live broadcast room, and deep users chose to return to the gym after the epidemic recovered.
Keep’s listing has not yet settled. Due to the invalidation of the submitted IPO application, it will update the prospectus in September 2022. Keep’s user disk and live broadcast content are in the leading position in the industry, but the accumulated loss of 6 billion yuan and the loss caused by a large amount of marketing expenditure before the IPO lead to its customer acquisition efficiency and profitability.
The fitness mirror has also become a short-lived product, leaving only sporadic financing information, and the negative information that FITURE was exposed to layoffs and Mirror sales declined. In the official stores of mainstream e-commerce platforms, fitness mirrors such as Leke LITTA and Gudong FITMORE can no longer be found.
At present, the top sellers on the e-commerce platform are Tiantian Smart Mirror and FITURE. An investor close to FITURE revealed that the team overestimated the fitness habits and sports foundation of the Chinese people. The FITURE fitness mirror has not achieved the sales target for 2021, and spending thousands of yuan to buy a fitness screen is only suitable for people with strong purchasing power and already A small number of people who develop the habit of exercising at home.
In the final analysis, Liu Genghong’s phenomenon is difficult to bring substantial changes to the industry, and there is still a long way to go to popularize home fitness.
Beauty Makeup: The race to go public starts, and domestic products go overseas in teams
In 2022, the beauty market will not be as popular as in 2021 in the primary market. However, in the secondary market, a group of companies will flood into the “first share” in the vertical segment. In overseas markets, domestic beauty products will continue to expand their territory .
Shanghai is the most active city for beauty investment in China. Zhou Yinan, a partner of an early stage investment institution in Shenzhen, has traveled between Shanghai and Shenzhen many times. She looked at a lot of projects, but she was extremely cautious when she started. In the end, she only voted for a project with a “low price” because she had no money and no confidence. Makeup and skin care, as an optional consumption, is greatly affected by the epidemic, and due to the absence of top anchors, beauty consumption is weak throughout the year.
This year, there are especially many cosmetics-related companies queuing up for IPO. Following the listing of Bloomage Bio (runbaiyan, Quady, etc. under its subsidiaries) and Bettany (the main brand Winona) in 2019 and 2021 respectively, in 2022, Juzi Bio, Shangmei Shares, and Wanmei Interactive will successively Become “the first stock of recombinant collagen”, “the first stock of domestic beauty products in Hong Kong stock market”, “the first stock of global beauty and fashion technology”, and then compete for the “first stock of medical dressings” in the IPO. Sprint to “the first unit of mechanical name”.
When the capital is transferred to the upstream, and the highest single investment amount of US$200 million in 2022 occurs in the beauty store HARMAY Huamei, it proves the maturity of the domestic beauty industry chain: “From serving foreign trade customers in the past, the evolution is mature enough and complete”, said Chen Xixi, a senior practitioner in the field of skin care.
Another trend in the beauty track in 2022 is that domestic beauty products will speed up their overseas campaigns. In fact, as early as 2019 and 2020, in the face of domestic channels and traffic dividends that continued to fade, a number of brands began to “hunt” in the vast overseas market. In terms of territory, from “outposts” in Southeast Asia and Japan, to the European and American markets; in terms of channels, from e-commerce to self-built official websites, to offline stores; in terms of promotion, make good use of overseas online celebrity marketing and beauty education, such as Huaxizi It became popular on Youtube because of being evaluated by the top foreign beauty blogger “Ms. J”.
At the beginning of 2022, Zhang Tong joined the overseas business department of a head make-up company. He told Shenran that within the company, the strategic position of going overseas is second only to domestic offline stores, and the company hopes to achieve a scale of 300 million overseas in 2022.
In the actual landing, he still felt the great challenge of going overseas with national makeup. Problems related to local e-commerce infrastructure and localized team building can be gradually adapted and resolved, but it is not easy to reverse the brand recognition of only “high cost performance”. For example, in the European market, in order to maintain a more credible brand image , The brand needs to integrate the supply chain locally, which requires constant response to out-of-stock and price increases.
In the battle of 2022, skin care and makeup are evenly matched. The head effect skin care brands are gradually deploying high-priced products, and performed better in the “barometer” of the domestic beauty market during Double 11, but in terms of overseas campaigns, color cosmetics are even better. Because functional skin care products have different compliance standards in different regions, the threshold is higher. Domestic makeup seized overseas dividends earlier, but it is still in the early stage of the brand going overseas. Chen Xixi mentioned that in the beauty makeup going overseas, there is no high-premium brand yet.
Conclusion:
In 2023, new consumption will be more benign “volume”
Looking back on 2022, it is difficult to deny the weak consumer demand brought about by the epidemic, but we cannot ignore the vigorous vitality of the Chinese consumer market amid headwinds.
Some brand-new subdivided industries have grown out of new consumption, such as prepared dishes, frisbees, and camping. The coffee and beauty track show the rise of “domestic products”. Tea drinks, make-up, and prepared dishes choose to go to sea to tell Chinese stories. The upsurge of online fitness has brought the popularization of national fitness a step forward.
Looking forward to 2023, many institutions are optimistic about the Chinese market, especially the structural investment opportunities in the consumer sector.
The catering, tourism, and hotel industries are already on the road to recovery, but it is undeniable that the consumer market in 2023 is still complicated. The year 2022 of these seven major industries can leave some inspiration for the coming year.
New consumption will continue to “volume” benignly. Chen Xixi’s observation is that to build a brand, you have to go to both ends, either to provide the best solution at the same price and provide products and services with value for money, or to build a high brand value and earn a spiritual premium.
The best time to transform from exporting commodities to exporting brands is now. Zhuang Shuai, founder of Bealead Consulting, said that it is the mission of Chinese consumer companies to conquer overseas markets, and it will also be the source of new growth in the next 50 years.
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