Jasmine Milk Tea White has received nearly 100 million yuan in financing led by Alibaba Local Life. There are still new stories in the tea beverage industry | Exclusive Interview

Author | Li Xiaoxia

Editor | Qiao Qian

36Kr has learned that the new Chinese-style tea drink brand "Jasmine Milk Tea" has recently completed a nearly 100 million yuan financing round, led by Alibaba Local Life, with Xiangyang Capital serving as the exclusive financial advisor for this round. The financing will be mainly used for product research and development, brand investment, supply chain improvement, and strengthening team building, while also empowering franchise partners to continuously create a lightweight model.

Over the past few years, regardless of the ups and downs of the consumption trend, the new tea drink industry has been vibrant, occupying an absolute leading position. The industry propositions have been constantly changing, from the choice between direct operation and franchising, from the competition for ten thousand stores to the price war, and then to the listing boom.

And this year, the biggest buzz in the tea drink market may be the eagerness of various brands for fresh milk tea with original tea leaves. In addition to Heytea and Gu Ming, which originally focused on fruit tea, and have been making continuous moves, coffee giants such as Luckin Coffee and Starbucks have also vigorously started the business of fresh milk tea. This trend seems to confirm the prediction made by Zhang Bocheng, the founder of Jasmine Milk Tea, two years ago: "Fresh milk tea will become the mainstream."

As a rising star in the new Chinese-style tea drink industry, Jasmine Milk Tea has grown into a force that cannot be ignored.

In 2021, Jasmine Milk Tea opened its first store in Shenzhen, positioning itself as "Oriental Chasing Fragrance New Tea Drink", and it is the first tea drink brand that focuses on the jasmine category. Zhang Bocheng, the founder, is a serial entrepreneur who has been involved in Chinese cuisine, baking, and beverages, with more than ten years of entrepreneurial experience in the catering industry. He told 36Kr that jasmine tea is the most widely used and recognized type in the freshly made tea drink industry, but at that time, there was no brand that mainly focused on jasmine tea drinks. Therefore, Jasmine Milk Tea determined to focus on "Chinese tea" and "jasmine fragrance".

Shenzhen is a city of tea drinks, where brands such as Nayuki and Heytea were born. When Jasmine Milk Tea only had three to five stores, Zhang Bocheng wrote in his WeChat Moments: I hope that in the future, when people think of Shenzhen tea drink brands, in addition to Nayuki and Heytea, there will also be Jasmine Milk Tea.

In just two or three years, this wish is no longer out of reach. According to 36Kr, Jasmine Milk Tea has opened 785 stores, with a revenue growth of nearly 400%, and has also achieved a good profit in the first half of the year. These are the outstanding performances that Jasmine Milk Tea has achieved in the past few years with a "slow" pace.

"We did not blindly pursue the speed of opening stores. Although the scale is an important moat for the brand, we also pay more attention to the quality and standards of the stores. The sustainable development of the brand and the long-term profitability of the stores have always been what we value more." Zhang Bocheng told 36Kr.

Compared to three years ago, the competition has increased exponentially, and we need to be flexible in the face of challenges. In the past, Jasmine Milk Tea was mainly concentrated in first-class business districts, and the store area was mainly 60 square meters. By the middle of this year, Jasmine Milk Tea made an update and adjustment to the store model, launching a small store model of 35 - 40 square meters to reduce the initial investment cost of opening stores and shorten the payback period.

When the small store model gradually became operational and the internal skills were well-trained, the expansion speed of Jasmine Milk Tea also accelerated, and the number of stores will exceed one thousand by the end of the year. The overseas market also continues the outstanding performance in China. An interesting point is that the first store of Jasmine Milk Tea was opened in New York, USA. In Zhang Bocheng's view, that is a market that is bound to succeed. However, he still has some caution about the speed, "In the current environment, the test for the brand lies in whether the founder team has enough patience and determination."

The following is a conversation between 36Kr and Zhang Bocheng, the founder of Jasmine Milk Tea (with some deletions and arrangements):

"A Little Time is Needed for Physical Businesses"

36Kr: In the past two years, the consumer market has experienced a cold period for capital. It's quite impressive to be able to obtain financing.

Zhang Bocheng: The consumption investment in the primary market has indeed cooled down, but I think that food and drink are always the basics of people's livelihood. This is a market with certainty, and the new tea drink track will also become more and more mature. From the perspective of our own enterprise development, the optimized and polished model, the verified expansion strategy, and our growth rate in recent years have all proved the potential of the track. My investors and I are optimistic about the future, remain patient, and believe that the market will recover in the long term.

36Kr: What supports the rapid development of Jasmine Milk Tea?

Zhang Bocheng: It is the differentiated brand positioning, practical business ideas, and clear development strategies.

We come from Shenzhen, and our genes carry the practical and innovative spirit of this city. Growing up during the epidemic has made us more focused on the essence. We have been exploring the market with real efforts, relying on the idea of being ourselves, and have established a benchmark for Jasmine Milk Tea in a very saturated and highly competitive tea drink track.

After determining the brand, we began to carefully polish the store model. Through the continuous optimization of the store model in the early stage of direct-operated stores, we concluded that the store with an area of 40 to 60 square meters is the most suitable for Milk Tea.

After the epidemic ended, relying on the forward-looking judgment of the market, we quickly focused on the development of the national market. In the future, products that are healthy, refreshing, highlight the tea fragrance, and return to the tea itself will become the mainstream. Therefore, we took Shanghai as the potential highland, and opened stores in Zhejiang, Jiangsu, and Beijing, as well as all first- and second-tier cities and provincial capital cities, to increase our popularity nationwide.

Therefore, behind the rapid development, every step is the cultivation of internal skills and forward-looking judgment.

36Kr: As you mentioned earlier, fresh milk tea will become the mainstream, and this is indeed the case now. In this situation, how does Jasmine Milk Tea define its own differentiation?

Zhang Bocheng: First and foremost, I think it is to return to the product and focus on the product itself. So in the earliest stage, we determined the vision of allowing young people to easily drink good tea, and we started with green tea because black tea and red tea are preferred by experienced tea drinkers. Among green teas, jasmine has the highest recognition. We chose to start from jasmine, but over the years of development, we started with jasmine but did not stop at jasmine.

Jasmine is the prominent label and core feature of Jasmine Milk Tea, which has the adaptability to meet the public demand and more product research and development applications. Therefore, while we are constantly innovating and deepening jasmine flower products, we have also launched many innovative and popular products. For example, the Jasmine Cloud Top that we jointly created with Anchor is something that no other brand has ever had, but it has been applied in our entire product system.

In addition, we take jasmine as the starting point and floral fragrance as the resonance, and quickly developed other floral fragrance product series such as gardenia, michelia, and osmanthus, forming a differentiated product positioning characterized by floral fragrance.

At the same time, the aesthetic tea time in the smallest unit, the product experience of smelling and drinking tea... maximizing the emotional value that a cup of tea brings to consumers. These are also the core of shaping the difference of Jasmine Milk Tea.

36Kr: I heard that you have achieved profitability in the first half of the year?

Zhang Bocheng: Achieving profitability is not actually difficult. In the past, after getting financing, everyone was used to investing in a wide range of advertisements and opening stores. Why be so fast? In fact, it was all driven by capital or because the heart was too eager for quick success. Moreover, in the past, many used the thinking and tactics of the Internet to do offline physical business, but physical business needs to be given some time to grow slowly. With this original intention, everything has become faster instead.

During the epidemic, we honed our internal skills through direct-operated stores and also established our own middle and back office. Therefore, from Shanghai, Beijing to the whole country, the store performance has been very good. Probably because we are more efficient in spending money, spending every penny carefully.

36Kr: How is the revenue growth this year?

Zhang Bocheng: This year should be more than four times that of last year, with a nearly 400% growth. The store plans to reach 1100 to 1200 by the end of the year. Currently, 785 stores are in operation, and more than 100 stores are under decoration.

"Slow" is "Fast"

36Kr: The store opening speed was not that fast before. Was it intentionally controlled?

Zhang Bocheng: Jasmine Milk Tea did not deliberately pursue the speed of opening stores. Although the scale is an important moat for the brand, we pay more attention to the quality and standards of the stores. Moreover, development is logical, and stores are not opened randomly. Last year, we received more than 10,000 applications from franchisees, but only signed more than 100 franchisees. Because the sustainable development of the brand and the long-term profitability of the stores have always been what we value very much.

The original plan for this year was 2000 stores, but later we adjusted the target down. Based on the consideration of sustainable development and the long-term profitability of the stores, we slowed down a bit.

36Kr: Your stores are not actually that many. What is the moat of Jasmine Milk Tea?

Zhang Bocheng: In addition to the scale, we just be ourselves, mainly in three aspects: First, in terms of products, we have seized the characteristic of floral fragrance. With a fast and accurate product research and development ability, we have developed a series of popular products. In the fresh milk tea track with a high degree of homogeneity, we have also opened up our own unique positioning.

Second, in terms of the brand, Jasmine Milk Tea adopts a modern and fashionable perspective and an original Oriental modern aesthetic style, which is different from the tone of the new Chinese-style tea drink, triggering the love and resonance of young people. The national trend is more down-to-earth, and we are a differentiated brand with a younger and more modern Oriental tone.

Through a delicious and easily accessible floral fragrance Chinese tea, experiencing the aesthetic time of the smallest unit on a cup of tea, and extending to various fragrance peripherals, we have created a happy time for a cup of tea for consumers. Therefore, our slogan is "Seeing Jasmine, Feeling Happy". Digging the value of happiness to the end and maximizing the emotional satisfaction of consumers on a cup of tea is our irreplaceable place.

36Kr: Have these efforts been noticed by consumers?

Zhang Bocheng: Of course. The increase in volume and sales that our every new product brings is the proof. High-frequency taste repurchase, the surrounding products that are sold out as soon as they are launched, and the spontaneous sharing traffic on various platforms can all very well verify the results of our efforts. We have also been constantly adjusting and correcting internally, constantly looking inward, and thinking about how to better express to consumers.

36Kr: When everyone is making jasmine tea, will it have an impact on your raw material costs?

Zhang Bocheng: In fact, the impact is relatively large on jasmine tea. When we first started, jasmine tea was 10 to 15 yuan per catty, and this year the flower price has risen to 20 to 30 yuan per catty. At the same time, we make tea with the seven-fumigation process, and the cost is naturally higher. However, precisely because of the pursuit of product quality and the forward-looking planning of the supply chain, when we raised the first round of financing, we invested in our own tea factory. Therefore, we can use the annual price to smooth out this fluctuation, which is our advantage.

36Kr: Do you need to make some adjustments based on the entire consumption environment?

Zhang Bocheng: Of course, although we are concentrating on our research, we also need to look up and observe the surroundings. In the past two years, we have definitely been the industry trendsetter in marketing, but the market environment is changing, and the consumer groups are also changing. To build a brand, we need to give up "self-attachment" and put the consumer demand first, which is what we have always been pursuing.

"To Be Remembered by Consumers, One Must Be Unique"

36Kr: Up to now, one of the things that Chagee is often mentioned is that it borrowed from Chayan Yuese. In fact, there are also voices saying that Jasmine Milk Tea is borrowing from Chagee.

Zhang Bocheng: It's just that everyone happens to be in the fresh milk tea track. I always believe that to be remembered by consumers, one must be unique, so we have always pursued a differentiated business idea. In terms of products and marketing, we have always insisted on differentiation, so we have not wanted to imitate or borrow from anyone. There are many excellent predecessors in the tea drink industry, and we are in awe, but we will not blindly follow.

In the next 5 to 10 years, there will definitely be more than one or two excellent global chain brands from China. I hope that Jasmine Milk Tea can be one of them. Tea is a characteristic of China, and Chinese tea has the opportunity to become a global brand, and we are also practicing such a thing. In addition, since 2022, we have been preparing for opening stores overseas. The first store of Jasmine Milk Tea was opened in Flushing, New York, and the performance can be said to be very outstanding in the tea drink track.

36Kr: Why did you choose the United States as the first stop for going overseas? Many brands start in Southeast Asia.

Zhang Bocheng: Based on different market demands and competitive patterns, we divide the overseas market into three categories: one is the market that is bound to win, one is the market that needs to break through, and one is the market that needs to be postponed. If the market demand is large and there is not much competition, we call it a market that is bound to win, and such a market must be done. If the market is large but there is certain competition, we call it a breakthrough market, which requires more investment. If the market is small, regardless of whether there is competition or not, it is a postponed market.

I thought very simply at that time, thinking about whether to open a store in a city in the United States or the United Kingdom first. Later, in the process of opening the first overseas store, we gradually improved the overseas strategy.

36Kr: How do you view the current situation of the entire tea drink going overseas? What kind of pattern will it form in the future?

Zhang Bocheng: The overseas market is actually also hierarchical. Based on different market stratifications and your brand positioning, you need to make some of your own strategic choices. Secondly, in the process of development, more patience and more efforts are needed because the overseas challenges are very great. A series of issues such as laws and regulations, culture, supply chain, and labor relations all need to be dealt with. Therefore, when making overseas layouts, there must be a very good foundation in the domestic market. If the domestic market is not done well and then goes overseas, it will only be a flash in the pan.

36Kr: You mentioned earlier that Jasmine Milk Tea has experienced several life-and-death moments, and now it has overcome many difficulties.

Zhang Bocheng: The previous life-and-death situations were mainly due to the uncertainty brought about by the epidemic. Up to today, the most important thing is to be more patient, be more practical, and control the risks well. Especially after growing and expanding, the control of cash flow is very important, and blind development should not be carried out.

36Kr: Now the entire market is relatively saturated, and franchisees and store locations are also limited. Does this mean higher challenges and requirements?

Zhang Bocheng: I think the challenge is not to compete for franchisees and store locations, but more from within ourselves. First, whether the brand is competitive in the market, and second, the brand's ability to sustain development. In the current environment, the test for the brand lies in whether the founder team has enough patience and determination.

36Kr: As the founder, what are you most concerned about?

Zhang Bocheng: In terms of business, we care about the profit situation of domestic franchisees and continuously empower them. Overseas, it is the expansion and the construction and location of stores. Internally in the organization, it is more about the construction of the middle platform.

36Kr: You mentioned that you are under a lot of pressure every day