Mainland Chinese tea chain Heytea spawned a three-hour-long queue when it opened its first Hong Kong shop in Sha Tin recently, showing how pop culture on the mainland is getting widely accepted among young Hongkongers.
The success of the Chinese tea brand has as much to do with the tea itself as with its savvy marketing tactics that project a cool image on tea-drinking.
Fed up with low-quality milk tea offered by local tea shops, Nie Yunchen launched the Chinese tea-drink brand and opened his first tea-drink shop in 2012 in Jiangmen, Guangdong province.
Heytea is known for its milk cap fruit tea drinks, which use authentic ingredients rather than concentrates.
The company does not use traditional channels to market its products. Rather, it relies on word of mouth among consumers, like when people discuss about the long-queues on social media platforms such as Weibo and WeChat, or when millennial customers post well composed photos of the drinks and shops online.
Initially, Heytea only expanded within the Guangdong province. It was not until 2017 that it opened the first shop outside the province, in Shanghai.
The brand relies mainly on word of mouth. The reach of social platforms such as Wechat’s signature Friends Circle has a geographical limitation, Nie explained.
The company has therefore taken a step-by-step approach in growing its footprint.
To keep a tight control on quality, all Heytea shops are directly operated by the company itself, rather than relying on models such as franchising. That is another factor limiting the speed of expansion.
With less than 100 shops across the nation, Heytea’s sales revenue already topped 1 billion yuan last year.
Heytea raised 100 million yuan from private-equity funds led by IDG in A series funding in 2016. It raised another 400 million yuan in B series funding in April this year, which values the company above 6 billion yuan.
The taste is just one element that contributes to Heytea’s success. In the internet era when almost anything can be ordered online, Heytea has smartly promoted its hand-crafted and freshly made products as a value proposition to give customers, especially youngsters, a reason to visit its shops.
This article appeared in the Hong Kong Economic Journal on Dec 27
Translation by Julie Zhu
[Chinese version 中文版]
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