Taiwan coffee festival and the Heytea layoff rumor explained

Sina Finance reported that Heytea had begun internal layoffs affecting about 30% of staff, with cuts before and after the Spring Festival. Heytea responded that the report was untrue and described only normal personnel optimization tied to year-end performance reviews. The claim said the information security department was dissolved and the store expansion department cut 50%.

The episode refocuses attention on the new-style tea sector, where Nayuki has warned of losses, Heytea's growth has slowed, store expansion has decelerated, and homogenized competition is intensifying. Heytea's countercyclical price cuts and moves into lower-tier markets have drawn discussion. The wider beverage world, from tea chains to events like the taiwan coffee festival and the sydney coffee festival, is watching how these brands respond.

Recently, Sina Finance published an exclusive report claiming that Heytea had initiated internal layoffs involving about 30% of its employees, and the news quickly sparked heated discussion. Heytea responded promptly, saying the report was untrue and that there was only normal personnel optimization based on year-end performance reviews. This incident has once again drawn public attention back to the new-style tea beverage sector: Nayuki has warned of losses, Heytea's growth has slowed, store expansion has decelerated, and homogenized competition in the industry is becoming increasingly fierce. At the same time, Heytea's countercyclical price cuts and moves to tap lower-tier markets have also triggered discussion. This article will sort out the sequence of events and present Heytea's business changes and market challenges since 2021.

When it comes to new-style tea drinks, the brands that first come to mind are either Nayuki or Heytea. Compared with Nayuki, although Heytea has not yet listed on the capital market, its pace of expansion has been quite aggressive. It keeps launching new themed stores, frequently partners with brands across different regions to create co-branded merchandise, and even invests in emerging brands through equity stakes. This series of moves makes people feel that Heytea is doing quite well.

However, this morning, Sina Finance published an exclusive report saying that Heytea was pushing forward with layoffs internally, that some staff had already been cut before the Spring Festival and that more would be laid off after the holiday, with the overall ratio reaching 30%. In response, Heytea quickly said the claims were untrue and that the company did not have any so-called large-scale layoffs.

In its report, Sina Finance said that after verifying with multiple Heytea employees, the core information included: the total number of layoffs accounted for about 30% of all employees; some employees revealed that year-end bonuses had not been paid to all staff, while others said payment "would be delayed"; the information security department was dissolved entirely, and the store expansion department had a layoff ratio of 50%; laid-off employees could choose internal transfers, for example from technical positions to business positions.

The report also mentioned that during the annual meeting livestream, the screen was once filled with scrolling comments such as "raise wages" and "pay year-end bonuses"; Heytea founder Nie Yunchen publicly criticized competitors' shortcomings at the annual meeting, a move interpreted by some employees as "lacking class."

Heytea officially responded that a small number of personnel adjustments before the holiday were normal personnel optimization based on year-end assessments. At the same time, employees' year-end bonuses were paid normally to individuals before the Spring Festival in accordance with performance.

Today, competition in the new-style tea beverage market has entered a white-hot stage. Those that can go public are busy going public, those that can raise funds are rushing to raise funds, and the products of many brands are becoming increasingly similar. Whenever a seasonal fruit becomes a hit theme, other brands quickly follow suit. For example, the popularity of wampee and naranjilla last year was a typical case.

In the just-ended 2021, Heytea's sales growth was also less than ideal, and its pace of store expansion slowed markedly. It was not until the third quarter that its total number of stores exceeded 800, mainly distributed in first- and second-tier cities; starting in July last year, the sales per square meter and average revenue of Heytea stores declined. Some netizens also commented on social platforms that Heytea's management was chaotic and that there was infighting among executives.

Heytea is positioned as a high-end tea beverage brand. Its main consumer groups are white-collar workers and young people, and its stores are usually located in popular commercial districts, so cost pressures such as rent are naturally considerable, and product pricing is therefore generally on the high side.

Perhaps in order to cover lower-tier markets and expand its consumer base, while many tea beverage brands announced price increases, Heytea did the opposite: instead of raising prices, it lowered them, with the cheapest product even dropping to 9 yuan, directly approaching the price range of mid-range tea drinks. However, some consumers found that this was actually "a cut in price with a hidden increase," as after the price reduction there were problems such as "cutting corners" and declining quality; some toppings that were originally free now require an extra charge. Some consumers said bluntly that they did not feel Heytea's sincerity in cutting prices.

This kind of price reduction may not be ruled out as a phased strategic move aimed at increasing the brand's market share and thereby squeezing the profit margins of mid- and low-end tea beverage brands.

New-style tea drinks have long been favored by capital and have attracted a large amount of investment in just a few years. But at the beginning of the new year in 2022, Nayuki warned of a loss of more than 100 million yuan, and Heytea was reported to be laying off 30% of its staff. What exactly is going on with new-style tea drinks?

Image source: Internet

For more coffee bean news, please follow Coffee Workshop (WeChat public account: cafe_style) For professional coffee knowledge exchange, please add WeChat ID kaixinguoguo0925

The above content is compiled by CoffeeHunters, a coffee news website.