CHINA
Heytea’s success is captured in the oft-cited and photographed lines outside its Shanghai store where customers wait for up to four hours to buy its cheese tea. It has more outlets that any other tea chain in China. It commands a premium price for a product that is not rated among the best in consumer blind tests. Revenues are around $150 million. Heytea raised $60 million in investor funding in mid-2018, following $16 mn in late 2016.
And it has started on its global expansion, beginning with Singapore and Hong Kong. It seems close to certain that it will target the US within a year or so. Here are answers to questions from its executives concerning expansion from an investor podcast:
“We will open a 100 new stores this year.”
“We aim to create a national tea brand and make Heytea a part of people’s everyday living.”
“At the same time, we also have the plan to expand globally. We are not talking about just opening one or two stores but to really explore the local markets.”
So, for many companies, Heytea may become a competitor, bringing the differentiation of cheese tea, a strong understanding of selling to Asian millennials and very successful use of social media in marketing and brand building. Cheese tea is often summarized as “Sounds weird/awful, tastes surprisingly good/wonderfully different.”
Heytea says uses “high quality tea leaves” from different regions in China, complemented by fresh fruits, low-calorie natural rock sugar, and natural cheese imported from New Zealand.
Heytea’s social media, building brand awareness through online buzz. It relies on bustle to help translate buzz to business, with the long lines of people waiting for hours to buy their cheese tea in its noted Shanghai store an explicit part of this.
There is a status consideration here. Heytea is located in high-end malls and just being in line has some peer prestige, signaling hip, sophisticated, and with money to spend. The aim is to make consumers feel they are privileged.
Its menu is exotic and the ambience “Zen chic.” Popular teas include King Fone Cheezo, a smoky oolong tea, and Jade Dew Cheezo, which has “seaweed and matcha notes.”
Will cheese tea take off in the US? Is there the same potential to build a millennials market (minus the line-tolerance) in North America and Europe? Is Heytea’s brand building through social media the coming wave of innovation? It will be interesting to see who gets the answers right and effective strategies executed.