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On September 18, Heytea sent an internal letter titled "Creating Differentiated Brands and Products for Users" to its business partners. The letter names intensifying homogenized competition and low-price involution in the tea beverage industry, and sets differentiation as the way through. It states the company will not chase popular categories, will not join pure price wars, and will slow store openings while focusing on operational quality.

Public reaction has been mixed: some back the differentiation route, others point to weak innovation and declining quality. Heytea did not detail how differentiation will work, saying only it will focus on areas where it excels and users have needs. It plans more investment in brand design, packaging, activities, store space and merchandise, and says new products will not repeat existing ones. As with when did coffee become popular in Europe centuries ago, crowded markets push brands to stand apart.

On September 18, Heytea sent an internal letter titled "Creating Differentiated Brands and Products for Users" to its business partners, directly addressing the increasingly fierce homogenized competition and low-price involution in the tea beverage industry. The letter proposed "extremely creating differentiated products and brand experiences for users" as the direction to break through, explicitly stating it would not follow popular categories, not simply engage in price wars, and would control store opening speed while focusing on operational quality. However, netizens had mixed reactions: some supported the differentiation route, while others complained about weak product innovation and declining quality. Can Heytea win back consumers with this strategy? This article will outline the key points of the internal letter and voices from various sides.

On September 18, Heytea released an internal letter to its business partners, themed "Creating Differentiated Brands and Products for Users."

In the letter, Heytea candidly acknowledged that since the beginning of this year, the broader consumption environment has changed, and competition in the tea beverage market has become increasingly fierce, with the entire industry facing new challenges. The letter mentioned: "Due to the mismatch between the growth of consumer demand and the overall supply growth in the tea beverage industry, facing limited consumer demand, the industry has generally chosen convergent product and brand strategies, leading to increasingly intense homogenized competition."

Facing this situation, Heytea's proposed breakthrough approach is to "extremely create differentiated products and brand experiences for users," that is, to escape the quagmire of homogenization and take a differentiation route. Heytea made it clear: it will not make homogenized products, nor participate in pure low-price involution.

As for how to specifically pursue differentiation, Heytea did not disclose more detailed plans, only stating it "will focus on areas where we excel and users have needs."

The internal letter also revealed that Heytea will increase investment in both brand and products, covering brand design and packaging, brand activity content, store space, peripheral products, etc. On the product level, it "will not follow popular industry categories, and new products will no longer repeat the existing product structure," but will explore more differentiated new products and new categories under the direction of healthy tea beverages.

Additionally, Heytea promised not to pursue short-term store opening speed and quantity, and will control store density in the coming months, focusing more on opening quality and the operational quality of existing stores.

Public information shows that as of July 2024, Heytea's total global store count has exceeded 4,000. By the end of 2023, Heytea's store count had surpassed 3,200, including over 2,300 business partner stores. In 2024, 1,000 new stores were added, and the expansion speed has clearly slowed down.

#Heytea Partner Internal Letter# topic sparked heated discussion among netizens. Some netizens supported Heytea, believing that sticking to differentiation and surviving is the right path, and that extreme low-price involution will eventually lead to failure.

Others felt that Heytea hasn't innovated for a long time, didn't release any new products this year, and after opening the tea menu, had no desire to order. Every quarter, they just take a seasonal fruit, add some tea, and pass it off as a new product. Then, to match the low price, the fruit becomes fruit jelly, losing its fresh attribute.

Some netizens bluntly stated that Heytea's problem isn't about homogenization or not, but about increasingly declining product quality. It can't compete with those milk tea brands that use truly good ingredients. Doing a good job in quality control is better than anything. After all, when it used to be 30 yuan a cup, it was really delicious.

There are quite a few netizens who hold this view. "In the early years, that pile of cheese fruit tea at 28 yuan really had a stunning taste. Now the 18 yuan fruit tea is completely indistinguishable from the crowd." They hope Heytea can raise the price back to 30 yuan per cup, using real tea, real ingredients, and real fruit, rather than powder mixing.

It is understood that recently Heytea's product prices are once again testing consumers' bottom line, with non-promotional items returning to around 20 yuan per unit.

Of course, regarding Heytea's declared anti-involution and anti-price war stance, some are not optimistic: "Since the rise of Pinduoduo, low price as king has become an unshakable truth for C2 industry re-growth. Especially after the current situation of employment and economy in society, first the BBA industry was unwilling to engage in price wars and withdrew, then Heytea also doesn't make low-price products. Most likely they will all be proven wrong."

After all, once this internal letter from Heytea came out, the key point is "no price cuts" and "price increases." If the higher price isn't justified, in the fiercely competitive tea beverage market, it will be very difficult to win back consumers' hearts.

Image source: Internet

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