Recently, many people have tried to make their own electrolyte water at home. As a result, lemons have been snapped up, and the price of lemons has risen in the short term. In the new tea beverage industry, lemon is also an indispensable raw material for many brands. If the price of raw materials increases, new tea beverage brands will be affected.
How does the tea market address concerns about the raw materials of popular products? In fact, as competition in the industry intensifies, some new tea beverage companies have set long-term strategic goals in the construction of supply chains for upstream raw materials, and the layout of agricultural supply chains has become a new trend in the industry. For example, Gu Ming has started supply chain construction since 2016. In addition to stable cooperative orchards and tea gardens, Gu Ming also grows its own lemons and holds the raw materials in its own hands. This not only avoids the impact of price fluctuations , but also helps product quality control, providing consumers with fresh drinks with stable taste and high cost performance. At present, Guming has developed a complete supply chain model covering raw material cultivation, rapid distribution, and storage base construction.
Next, controlling the entire industry chain from upstream orchards to downstream sales will be the only way for the development of new tea brands.
Supply chain, the most difficult part of the new tea business
In the new tea industry, product innovation is the strongest weapon to attract consumers, and the supply chain determines how far the brand can go. Therefore, for new tea beverage companies, the most difficult part of this business is the supply chain.
Taking the tea leaves and fruit raw materials required for new tea drinks as an example, production is still fragmented in the supply market. In order to solve these problems, Mixue Bingcheng set up a collection and storage base in Anyue County, Sichuan in 2020 to collect lemons directly from farmers through local cooperatives. Naixue’s tea has invested in and built exclusive tea gardens, orchards and gardens in many places across the country. Ningji, which specializes in lemon tea, has also completed the layout of 1,000 acres of its own plantations in Guangxi in 2021.
In 2016, Xicha , Naixue’s tea and other brands were established successively, extending and amplifying the concept of “fruit tea”. It was also this year that Gu Ming began to get involved in agriculture. In the fruit tea market that was not yet mature at the time, Gu Ming was the first to "rush" out.
Unlike some brands that insist on opening stores, Guming has already been deeply involved in the creation of the supply chain. "Perfume Lemon" is one of Gu Ming's most popular products. It is sweet and has no bitter taste like ordinary lemon tea. In order to obtain this good lemon, Gu Ming decided to grow lemons that met quality standards. After years of development, Guming currently has a perfume lemon base covering an area of 4,300 acres, with 180,000 lemon trees and an output of 4,800 tons. Nowadays, Guming's self-produced perfume lemons have achieved year-round production and a 7-day picking model. The output can meet the needs of all stores.
Ancient Tea Yunnan Lemon Base. Picture provided by the company
Starting from growing lemons, Gu Ming has developed a unique supply chain model in the new tea industry. With sufficient raw materials, the next step for Gu Ming is to quickly distribute the raw materials to various stores.
It is understood that Gu Ming has been continuously investing in warehousing bases. Currently, Gu Ming has 17 warehousing bases across the country, distributed in West China, Central China, East China, South China, Jianghuai and other regions. Most of these warehousing bases are located in regional centers, radiating to stores within 250 kilometers to 300 kilometers around. "The purpose of such a center layout is to ensure that raw materials out of the warehouse can be delivered to various stores in the area as soon as possible. Currently, we are the first in the industry to achieve the standard of one delivery every two days." said the person in charge of Guming's warehousing and logistics.
Gu Ming said that delivering better raw materials to various stores in a shorter time is also the best way to ensure the quality of every cup of Gu Ming milk tea. Although this method requires Gu Ming to invest more construction costs, management costs, and labor costs, it is worth it.
From quantity supply to quality improvement
The supply chain of new tea drinks is not simply quantity supply. For new tea drink companies, while ensuring quantity, quality is particularly important.
The era of using jam, creamer powder, and crushed tea powder to make a cup of milk tea has passed. Fresh fruits have become the standard for new tea brands, and "deliciousness" is a necessary condition for these fruits.
The "2021 New Tea Drinks Research Report" released by of the China Chain Store and Franchise Association shows that the supply chain capabilities of each brand currently vary greatly, and the level of supply chain management is a decisive factor in brand store expansion, innovation capabilities and profit margins. In terms of cost ratio, fruit costs account for 30%-40%. Due to the wide variety of fruits, relatively low degree of standardization, strong seasonality, and large price fluctuations, supply is challenging.
For fruit procurement, Gu Ming has strict quality control. The fruits must be fresh in season and directly picked from the place of origin. According to the staff, once a suitable fruit is selected, Gu Ming usually purchases it by booking a garden. For example, for the best-selling Super A grape series, Gu Ming selects the summer black grape produced in Yunnan. The grapes sold on the market can be shipped within 130 to 140 days of fruiting. However, Guming requires the orchards it cooperates with to have a fruiting time of more than 150 days, because only the most suitable grapes can be transported to Guming's major stores.
Gu Ming Super A Cheese Grape. Picture provided by the company
In fact, while making large-scale purchases, new tea beverage companies have compressed upstream scale costs and provided space for product price adjustments through the joint construction of tea gardens or orchards, digital management control, and brand bargaining power. Gu Ming said that in the next few years, as the head effect of new tea brands strengthens, the industry will also compete on several basic aspects, namely supply chain, store standardization level, franchisee operation management system, product strength and consumer service competition.
text/Wiziyang
editor Zhu Fenglan
