What Does the Coffee Industry Learn From New Tea Brands' Retreat?

New tea beverage brands that pushed into the coffee industry are pulling back. Raven Coffee, backed by the founder of Heytea, has closed its founding store at Tianli Central Plaza in Shenzhen and listed the space for rent, leaving one shop in Dachong. AOKKA Coffee, supported by Nayuki, will close all its Shenzhen stores by the end of August.

The retreat follows a 2022 expansion in which Heytea and Nayuki invested in Seesaw, Minority, KUDDO and Monster Insomnia. Raven Coffee once sold about 6,000 orders a month and led Shenzhen coffee delivery, yet it peaked at five Shenzhen stores plus one in Dongguan. Customers reported weaker quality control after the brand scaled up.

New tea beverage brands' attempts to cross over into the coffee sector are running into setbacks. Raven Coffee, invested in by the founder of Heytea, has closed and put up for rent its founding store at Tianli Central Plaza in Shenzhen, leaving the brand with only one remaining store in Dachong. Meanwhile, AOKKA Coffee, backed by Nayuki, has announced it will close all of its Shenzhen stores by the end of August. Back in 2022, Heytea and Nayuki quickly entered the coffee market by investing in brands such as Seesaw, Minority, KUDDO, and Monster Insomnia, but these invested brands now generally face the predicament of closures and downsizing. This article reviews the current store status of each brand and analyzes the challenges and competitive landscape facing tea beverage brands venturing into coffee.

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Recently, a netizen posted that the Raven Coffee Tianli Central Plaza store invested in by the Heytea founder has closed, the brand logo on the signboard has been removed, and the store is being re-listed for rent. It is reported that this store was Raven Coffee's founding store in Shenzhen. As of now, the brand has only one store still operating, in Dachong.

The news of the store's closure came so suddenly that many users were shocked upon hearing it: "I still have a bunch of redemption cards they gave me before," "I just ordered from them last month, and now they're gone," "Every time I went to Tianli to meet clients I'd arrange to meet at their place, and I hadn't been in just two months." According to media reports, Raven Coffee's monthly sales peaked at 6,000 orders, once topping Shenzhen's coffee delivery rankings.

Perhaps it was its own unique style that attracted the Heytea founder to invest, allowing this raven perched at Central Plaza to fly out and expand its reach. According to its official account, Raven Coffee at its "peak" had 5 stores in Shenzhen and 1 in Dongguan.

However, in the eyes of some users, after transforming into a chain brand, Raven Coffee's quality control and brand tone changed, and complaints about declining quality increased on the platforms. At the time, a few people were already bearish on Raven Coffee after Heytea's investment, and the fact that only one store remains in Dachong today is enough to prove that fans' concerns were not unfounded.

It is worth noting that Raven Coffee's Huangting Plaza store, which closed last November, was renamed "Magpie Coffee," with Heytea still behind the capital. However, after checking Dianping, it was found that this store has also closed, and some netizens said Magpie Coffee's specific closing time should have been the end of July.

In addition, Nayuki-invested AOKKA Coffee posted on social media yesterday that it will officially close all of its Shenzhen stores by the end of August. It is reported that AOKKA originally had 5 stores in Shenzhen, but netizens revealed that three have already closed one after another. Now that the official "farewell letter" has been issued, fans who had sensed this outcome feel great regret and sorrow.

In 2022, many new tea beverage brands turned their attention to the coffee market. Sexy Tea, Mixue Bingcheng, and others successively established independent coffee brands, while Heytea and Nayuki's Tea took a more "clever" approach, using investment to buy admission tickets into the coffee sector.

According to a 2022 compilation by Tech Planet, Heytea and the Heytea founder at the time jointly invested in Seesaw, Minority, Raven Coffee, and KUDDO Coffee, while Nayuki's Tea invested in AOKKA Coffee and Monster Insomnia. But unexpectedly, the development of these invested coffee brands has not been good.

(Image screenshot from the Tech Planet official account)

There is no need to say more about Raven Coffee—only a single "lone sprout" remains. Seesaw, which received over 100 million in investment, has fallen into a wave of closures, with its existing store count sharply reduced. Data from Narrow Door Dining Eye shows that Seesaw currently has 71 stores in operation. As for the other two brands, Minority has 3 stores and KUDDO has 22 stores.

As for Nayuki-invested AOKKA, Narrow Door Dining Eye shows it currently has 5 stores in operation; if all Shenzhen stores close at the end of August, only its 3 Shanghai stores will remain. The other brand, Monster Insomnia, has 6 stores in operation.

When growth in the tea beverage industry slows, some leading brands hope to expand their territory and seek breakthroughs by investing in other businesses. However, in a coffee sector where everyone wants a piece of the pie, neither Heytea nor Nayuki's Tea achieved the expected results; the brands they bet on failed to help the investors establish a foothold in the coffee industry, gradually falling silent amid fierce competition and ultimately heading toward the regrettable outcome of closure.

Image source: Internet

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