From imitation to transcendence, learn to "copy homework" from Bawang Tea Princess

Bawang Chaji, a brand that came from behind in the tea beverage industry, has achieved a transformation from following to surpassing by imitating and learning from successful cases in the industry. The article deeply analyzes how Bawang Chaji has rapidly expanded and become a dark horse in the new tea beverage market through precise market positioning, efficient supply chain management and innovative franchise model.

Who are the tea brands copying this year?

It is obviously Overlord Tea Princess (hereinafter referred to as Tea Princess).

Recently, Luckin Coffee launched Qingqing Jasmine to enter the milk tea circle. The trial price is only 9.9, and netizens call it "Boya Juexian Pingdai". If you search "Boya Juexian Pingdai" on social media, you can also see the presence of major tea brands.

Boya Juexian VS Qingqing Moli/Hot search terms about "Boya Juexian Pingdi" in social media

What’s interesting is that Cha Ji, which is now being “copied”, has always been a “master of copying homework”. For the tea beverage industry, Cha Ji is a latecomer, having only entered the circle in 2017, but has come to the center of the spotlight by “learning” from Suji.

Looking back at the development history of Cha Ji, it has been embroiled in controversy since its establishment. From product positioning, packaging design to franchise management and marketing strategies, none of them are completely original, and the shadows of other mature brands, especially Cha Yan Yue Se (hereinafter referred to as Cha Yan) can be seen.

Cha Yan is a pioneer in Chinese tea drinks and original leaf milk tea, but it can never leave Hunan. The latecomer Cha Ji, from "copying homework" to "surpassing", directly took the best results of its predecessors that have been verified by the market and made innovative combinations, and unexpectedly became the biggest dark horse in the new tea drinks market.

Judging from the speed of expansion, by 2023, Cha Ji opened more than 2,300 stores in a year, and more than 4,700 stores in 7 years.

What does this mean? It took Heytea 12 years to expand its store count to more than 4,000 stores, with the fastest expansion last year, when it opened more than 2,300 stores a year after opening for franchising.

Behind the crazy expansion, Chaji's revenue performance is not bad: in 2023, the revenue exceeded 4 billion, and the profit was 800-1 billion. This means that last year, Chaji used less than half of the number of stores of Cha Baidao (the second largest milk tea company), but created more than 70% of its revenue and more than 60% of its profit.

"The first major foundation of the milk tea market is the scale effect. It's a competition of scale. You can't get on the table before you reach scale. You're eligible to get on the table only after you reach scale." Zhang Junjie, the founder of Cha Ji, is very clear about this.

The "learning-overtaking" path of Cha Ji is to learn first and then run faster on the road that few people take. If you want to run faster, you have to accelerate the expansion and scale.

Today, we will take an in-depth look at how Cha Ji has grown to its current scale step by step.

1. Learn first, then scale up and then play poker

In 2017, when Cha Ji opened its first milk tea shop in Kunming, Cha Yan already had more than 40 stores in Changsha and was well-known. At that time, fruit teas represented by Heytea and Nayuki were very popular in the domestic tea market, and Cha Yan was the only brand that made traditional Chinese tea.

Standing at the crossroads between crowded fruit tea and sparsely populated traditional Chinese tea, Cha Ji chose the latter. "Being different is better than being better," said Shang Xiangmin, co-founder and CTO of Cha Ji, when talking about this choice.

Of course, for Zhang Junjie, the founder of Cha Ji, being “different” is not enough. Tea + milk actually has a greater category opportunity than fruit tea. High-concentration extracted original leaf tea has both production efficiency and refreshing and addictive properties. In terms of function, it can basically be regarded as a substitute for Starbucks coffee.

Therefore, Cha Ji entered the mid-range price range of 15-20 yuan, where there was no absolute leader, and made whole leaf fresh milk tea, avoiding competition with all leading brands such as Heytea and Nayuki Tea in the price range above 20 yuan, and COCO and Yidiandian in the price range below 15 yuan.

However, at that time, Cha Ji was "overly benchmarked" against Cha Yan, learning everything from brand logo, positioning to core products. So much so that Cha Yan's supporters complained on social media that it was a copycat, which also made many investors pessimistic about its development, believing that if Cha Yan opened up to franchising, Cha Ji would have a hard time surviving.

Cha Yan was indeed very successful in the past, but its founder Lü Liang was very conflicted about how to expand Cha Yan beyond Changsha and into the whole country.

Lü Liang seems to be running a chain with the mentality of opening a fly restaurant, hoping to make good products and services, and focusing on being popular and well-received, so he has been reluctant to expand. He even said, "I am quite pessimistic. Either we will die by expanding, or we will die by not expanding. If we don't expand, we will die with more dignity." It can be said that he is both pessimistic and calm.

This gave the latecomer Cha Ji the opportunity to overtake.

Therefore, Cha Ji, which did not want to stay in a corner, made a series of strategic adjustments around "product-supply chain-store expansion integration".

Dissecting Chaji’s “product-supply chain-store expansion integration” layout

In terms of products, Cha Ji's key move is to reduce SKUs and focus on classic big items : first, the fruit tea is reduced to only products such as lemon and coconut that are non-seasonal and easy to standardize, and then the focus is on original leaf fresh milk tea that can be highly standardized and addictive (meaning high repurchase potential).

In order to make the product a hit, Cha Ji iterated "Boya Juexian" 7 times, continuously optimizing the proportion of tea base and the origin of jasmine, and adjusting the taste to suit the widest range of people and one that people will never get tired of drinking (the tea flavor is stronger and more addictive), which increased the repurchase rate of the product.

In terms of supply chain, Cha Ji’s learning object has changed to Starbucks. Because Starbucks can sell a cup of coffee to the world, its supply chain system is very competitive. The main cost structure of coffee/milk tea is very similar, that is, coffee beans/tea leaves + milk + packaging materials. For brands, the most important thing on the supply side is to solve the standardization problem of coffee beans/tea leaves.

How did Starbucks solve the problem? First, it cooperated with coffee farmers in the upstream industry and built 10 grower support centers around the world, covering the most important coffee producing countries in four continents; second, it laid out in the midstream of the industry and built 7 large bean roasting plants around the world to ensure the stability of the coffee bean flavor.

So Cha Ji followed Starbucks' example and started to integrate the industrial chain : in the upstream, Cha Ji not only operates 2,700 acres of tea gardens in Anxi, Yunnan, to directly purchase raw leaves, but also cooperates with local tea farmers to cultivate more distinctive flavored teas through tea planting plans; in the midstream, Cha Ji has built tea processing factories in Lihu Town, Chaoshan, Guangdong, and Jiangmen City.

Zhang Junjie also said in 2021, "The most important thing for Bawang Tea Princess in the next 10 years is to develop a tea planting plan to integrate the industrial chain, improve the efficiency of the entire tea industry chain and ultimately realize overall monetization."

In November last year, Cha Ji also made arrangements in packaging materials and supply chain management: it and Cha Baidao, through its holding company, jointly established a joint venture with an enterprise called Sichuan Huizhijie, whose main businesses include supply chain management and plastic product manufacturing.

This series of strategic adjustments not only made Cha Ji's products more focused, but also streamlined the production process and supply chain, and improved the overall efficiency of front-end stores and back-end supply chains.

Another interesting phenomenon is that it seems that all bosses who come from product backgrounds are obsessed with the idea of ​​"delicious". Even Nie Yunchen, the founder of Heytea, once set up a position in the store to peel taro. But he later gave up and switched to using factory-made packaged taro paste.

Because "delicious" is naturally anti-efficiency and the "enemy" of scale. Lv Liang is trapped in the reputation of Cha Yan, but Zhang Junjie has no such burden. He just wants to win.

2. Expanding stores, franchisees become partners

If launching big single products and building the supply chain allowed Cha Ji to complete the standardization of the 0-1 stage, then in the next stage, Cha Ji will have to do 1-N standardized replication to speed up store expansion.

To expand stores and compete on scale, you can either get money from investment institutions or money from franchisees. If you get both, you can expand the scale even further.

Judging from financing, Ba Wang Cha Ji is not entirely a game of capital.

Compared with its peers, Nayuki's Tea completed two rounds of financing as early as 20 years, totaling US$200 million. Among the investors are top VC/PEs such as Tiantu Capital and Shenzhen Capital Group. Heytea also completed a US$500 million Series D financing in 21 years. The investors include old shareholders such as IDG Capital, Meituan Longzhu, Sequoia China, and Black Ant Capital. The lineup is very luxurious.

Unlike Heytea, which raised its valuation in order to increase its brand potential. If Heytea had not received 100 million yuan from IDG and had not waited in an epic queue, it would have been difficult for it to break out of the circle and increase its potential. Before Heytea, no tea brand had received hundreds of millions of yuan from VC. But today, Heytea is still overvalued and has not yet digested it. It is also a mystery when it will go public.

From the beginning, Chaji did not have the capital and qualifications to play high-profile games like Heytea, but it has made a comeback. According to Tianyancha APP data, Chaji only received two rounds of financing in 2021, totaling more than 300 million yuan, with only three investors, namely XVC, Fosun Group, and Congbi Qiushi.

In addition to investment institutions, it is the franchisees who make Cha Ji soar.

Different from the franchisees of catering and tea beverages in the past, who mostly wanted to run a small business, the franchisees of Cha Ji are more like financial investors.

Zhang Junjie talked about the franchise model of Cha Ji in 2021, "Franchisees only need to get a shop in the designated location they want, and the investment in the shop will be the responsibility of the franchisee. After that, the operation and management rights of the shop will be handed over to the company. Franchisees do not participate in management and can directly receive dividends."

This investment-style franchise model actually has a precedent: MINISO. Its domestic franchise is mainly a partnership model, where MINISO partners take over the store and bear the store opening and operation costs, while MINISO has full management, and then the two parties share the profits according to a certain ratio.

This franchise model can solve most of the funding problems, allowing Cha Ji to accelerate expansion while maintaining its brand tone.

Now, to invest in a Cha Ji in Jiangsu, Zhejiang and Shanghai, you need to have a base of 1 million yuan and the ability to get a shop with an area of ​​100 square meters. For those middle-class Chinese who have money but cannot find a good investment channel, investing in Cha Ji seems to be an option, at least it is obviously better than investing in A shares in recent years.

When it comes to store expansion, Cha Ji has a unique approach, 1+1+9+N : before expansion, first build a branch in the target city, make development plans, and draw a store location map; then seize the core stores in the local high-quality business district, and open a flagship store of over 200 square meters to create brand potential in the local area; then, polish the operation through several directly-operated stores and establish a replicable single-store profit model; after running the single-store model, open it to franchising on a large scale.

It is obvious that Chaji mainly uses flagship stores and mall stores to continuously increase brand potential, create a sense of being a big brand, and attract consumers and franchisees. In terms of expansion, Chaji opens up franchises after running a single store profit model to avoid suspicion of cutting leeks.

In addition, Chaji has also developed automated tea-making equipment, which takes only 7 seconds on average to produce a cup. Automated production not only ensures customer experience and reputation, but also reduces labor costs and guarantees franchisee single-store revenue.

Thanks to the integrated product-supply chain-store expansion strategy, the number of Chaji stores has skyrocketed. According to the data from the Zhaimen Canyan APP, as of August 21, the number of Chaji stores has reached 4,992. At this rate, the number of stores this year is expected to exceed 5,500+.

3. Fission, betting on health and going global

While frantically expanding its offline stores, Cha Ji is also making various efforts to grow online.

If Cha Yan's "snail house" in Changsha means that everyone knows about it but cannot drink it, which has consumed consumers' expectations, then Cha Ji's online marketing and volume building while rapidly opening offline stores is a timely fulfillment of expectations. It is obviously a smart move and does not waste traffic in vain.

In terms of marketing, Cha Ji has learned from many others.

For example, learn from Luckin Coffee to do fission. Luckin Coffee’s Chief Growth Officer Yang Fei wrote a book called Traffic Pool. His “Traffic Pool Thinking” emphasizes a whole set of processes from traffic acquisition to traffic operation, to monetization, to re-exploitation.

Based on this thinking, Luckin Coffee has launched activities such as free cups for new customers, fission games, social sharing (rewards, benefits, interesting content, etc.), and self-propagation, with the main goal of achieving maximum customer growth at the lowest cost.

Chaji also did several waves of fission growth, such as using "invite friends to win free orders" to attract new customers and "guess the password to win free orders" to spread through social sharing, and it was on the hot search several times. This type of new customer growth based on social trust relationships has high conversion and retention rates, and the cost is lower than traditional new customer acquisition channels.

Tea Princess's fission and new customer acquisition activities

Another example is learning from Heytea to engage in joint marketing. The former marketing director of Heytea once said that she spent most of her energy on finding various big brands to engage in joint marketing. The intention is also very obvious, which is to use the "freeloading" method to improve the quality of the brand.

But not all big brands are easy to get along with, just like the last time Heytea failed, it was a joint venture with Durex, which was full of indecent implications. But this is off topic, let's go back and look at how Chaji learned from Heytea:

Last year, Heytea's biggest hit was its collaboration with the luxury brand Fendi, which dominated social media platforms, creating buzz and raising the brand premium. Cha Ji also became popular because of its packaging design that was similar to that of luxury brands such as Dior and LV, making milk tea cups and takeaway bags look like big brands.

In March this year, Heytea officially announced that fitness blogger Pamela would be its chief product recommendation officer, promoting a healthy mindset; in April, Heytea officially announced that tennis player Zheng Qinwen would become its brand health ambassador.

Fortunately, Cha Ji's bet was successful. Zheng Qinwen won the first gold medal in the history of Chinese women's singles tennis in the Olympics in August. Among Zheng Qinwen's many sponsors, Cha Ji appeared at the same time as Nike, Rolex and McDonald's.

Tea Princess officially announces Zheng Qinwen as health ambassador

Putting luck aside, compared with Heytea, Cha Ji won by betting more firmly on the trend of healthier tea drinks and the rise of national trends, and based on this, it promoted the marketing of products and brands.

For example, the company published its "product identity card" and "calorie query calculation" to strengthen the health awareness of its products, leading its peers to start promoting "ingredient disclosure"; it collaborated with the Sanxingdui cultural and creative IP and became a joint promoter of the "Forbidden City Tea World", thus gaining a strong bond with Chinese culture and tapping into the trend of cultural confidence and the rise of national trends.

In the seven years since its establishment, Cha Ji has followed the footsteps of its predecessors and, through extreme standardization, scale and automation, has turned the milk tea production into an assembly line. Even if it arrives the latest, it can still run the fastest.

All great things are driven by people. Finally, let’s look from Cha Ji itself to its promoter, that is, its founder.

The founder was a "quasi" illiterate, a wanderer before the age of 17. He changed his name to Zhang Junjie to encourage himself that "a man who knows the current situation is a hero."

With such a growth experience, we guess that he can bend down more than most people and get to where he is today. He also has a stronger and more stable spiritual core than most people and can start a business more resolutely.

Therefore, he has a strong learning ability, dares to "copy the homework of predecessors" all the way, and implements all strategies more firmly than his peers without any constraints. In him, we can't even see the human "weaknesses" of a founder, such as hesitation, narcissism, and path dependence.

All of the above, as the foundation of Zhang Junjie's personality, continue to support him. This is perhaps the biggest bargaining chip that has allowed Cha Ji to get to where she is today.

Author: Helena, Editor: Zhu Tian

WeChat public account: New Consumption Think Tank