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Read Our Full Report on the Tea Market in China

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Read Our Full Report on the Tea Market in China THE TEA MARKET IN CHINA April. 2020 HONG KONG | BEIJING | SHANGHAI www.daxueconsulting.com [email protected] +86 (21) 5386 0380 1 TO ACCESS MORE INFORMATION ON THE TEA MARKET IN CHINA, PLEASE CONTACT [email protected] Who we are Your Market Research Company in China Covered Tier-1 cities Covered Tier-2 cities Covered Tier-3 (and below) cities We are daxue consulting: • A market research firm specializing on the Chinese market since 2010 • With 3 offices in China: in Shanghai, Beijing and Hong Kong 北京 BEIJING, CHINA Room 726, Building 1, 40 • Employing 40+ full-time consultants Dongzhong Road, Dongcheng District • Full, complete, national coverage • Efficient and reliable fieldwork execution across China 上海 • Using our expertise to draw precise, reliable SHANGHAI, CHINA (Head Office) recommendations Room 504, 768 Xietu Road, Huangpu District • With key accounts from around the world © 2020 DAXUE CONSULTING 2 ALL RIGHTS RESERVED The strengths of Daxue Consulting 6 crucial competitive advantages 1. Localized & Creative 创造和本土 2. Responsive & Flexible 负责和灵活 Our team has an international At all levels at daxue consulting, daxue is creating an background, leveraging the best of environment where freedom and responsibility go Rigorous together. & creative both worlds Responsive Teams are tailor-made depending daxue consulting has a commitment to answer on the projects emails within a day. We are result-oriented and do not count our time to accomplish our tasks. One client = one dedicated team Regular reports with our clients in order to make sure we reach the goal expected from our clients. Manage from A to Z 3. We manage from A to Z 内部 4. Actionable recommendations 可行建议 daxue consulting does not outsource We care about results and design our its services. We manage our own research in order to be operational. assistants and use directly technological We are driven by metrics such as tools. customer acquisition costs, business Actionable We have a deep understanding on the plan KPIs, P&L optimization. recommen- fieldwork and the context within which dations data was collected. 5. Innovative 创新 6. Professional 专业 Innovative Constant on the look for new Our methodologies are rigorous and Professional research tools and methodologies serious, taking information from the best practice in the world of consulting Our goal is to combine and research. traditional methodologies with the latest tech tools Demanding on the results, detail- oriented, respectful towards our commitments. © 2020 DAXUE CONSULTING 3 ALL RIGHTS RESERVED Our services Experienced in answering to a wide variety of strategic business questions MARKET GAP MARKET RESEARCH REGULATORY BUSINESS PLAN MARKET POTENTIAL IDENTIFICATION 市场调研 FRAMEWORK 商业计划 ASSESSMENT 市场缺口 管理框架 市场潜力评估 GO-TO-MARKET MARKET ENTRY CUSTOMER JOURNEY COMPETITOR MARKET SIZING STRATEGY 市场准入 消费者旅程 BENCHMARKING 市场规模 市场进入 竞争者对标 VALUE PROPOSITION PARTNERSHIP PRODUCT TESTING DIGITAL STRATEGY OMNI-CHANNEL & USP DEFINITION SCREENING AND LOCALIZATION 数字战略 STRATEGY 价值主张和销售主张 合作伙伴筛选 产品测试和本地化 全渠道策略 © 2020 DAXUE CONSULTING 4 ALL RIGHTS RESERVED 350+ clients with 600+ projects for the past 7 years Examples of references © 2020 DAXUE CONSULTING 5 ALL RIGHTS RESERVED A recognized expertise on the Chinese market Regularly featured and quoted in global publications Daxue latest quotations in recent publications © 2020 DAXUE CONSULTING 6 ALL RIGHTS RESERVED CONTENT OUTLINE ** 01. The largest tea market in the world 08 02. Key characteristics of tea consumers 16 03. Case studies: The path to success 24 04. The impact of COVID-19 37 © 2020 DAXUE CONSULTING 7 ALL RIGHTS RESERVED 01 The largest tea market in the world © 2020 DAXUE CONSULTING 8 ALL RIGHTS RESERVED 7 types of tea leaves in China Non-Oxidised Semi-Oxidised Fully-Oxidised Post-Fermented Blended Panning/ Panning Withering Sun Withering Withering Panning Drying flowers Steaming Indoor Withering Blending with Rolling Sweltering Drying Rolling Rolling and Tossing Green or White Tea Drying Rolling Panning Oxidising Drying Drying Rolling Drying Piling Drying Fermenting Green Tea Yellow Tea White Tea Oolong Tea Black Tea Dark Tea Floral Tea Longjing, Biluochun, Junshan Yinzhen, Silver Pekoe, Paochong, Oolong Tea, Ruby (TRES No.18), Pu’er, Liuan, Chrysanthemum, Huangshan Maofeng, Huoshan Huangya, White Peony, Tieguanyin, Oriental Honey Black Tea, Liubao Jasmine, Rose, Sencha, Gyokuro, Matcha Anhui Huangdacha White Eyebrow Beauty, Wuyi Rock Tea Keemun Black Tea, Hibiscus, Lily Yunnan Black Tea © 2020 DAXUE CONSULTING 9 ALL RIGHTS RESERVED ‚Tea can be mild like green tea which is not fermented, it has chlorophyll, vitamin selenium, and tastes slightly refreshing. White tea is a kind of slightly fermented tea with cooling (yin) nature. Yellow tea is semi- fermented tea or post-fermented tea with cooling nature. Oolong tea belongs to semi-fermented tea, and is gentle, neither cooling (yin) nor warming (yang), which can be considered as neutral tea. Finally, Black tea belongs to fermented tea. But can also be post-fermentation tea, which has a mild nature with a strong taste and less obvious smell.‛ Manli Wu (Esther), founder at Esther tea shop © 2020 DAXUE CONSULTING 10 ALL RIGHTS RESERVED New Style Tea: trend since 2014 The new style tea (新式茶饮) is made of fresh tea leaves and concentrated liquid, such as milk or cream. It also includes tea’s with toppings like jellies, tapioca pearls, and fruit. Key characteristics of new-style tea 3 typical kinds of new-style tea Milk/Bubble tea Snow cap tea Fruit tea Fresh materials Aesthetic Standardized appearance recipes Commercial Usually 10 RMB Publicity through stores or more per KOLs and social Source: askci.com drink media © 2020 DAXUE CONSULTING 11 ALL RIGHTS RESERVED ‚There has been rapid development in Chinese tea innovation and tea houses in the last couple of years, but around about 4 years ago there wasn’t nearly as much, and I think that was because there is such a strong culture of tea and history behind it and they are very proud of the tea that they became very insular.‛ Martin Papp, co-founder at PAPP’S TEA © 2020 DAXUE CONSULTING 12 ALL RIGHTS RESERVED China is the largest tea producer in the world The major tea leaf producers in the world (million tons, 2018) 2.62 1.31 0.49 0.30 0.25 0.17 China India Kenya Sri Lanka Turkey Vietnam The total global tea output in 2018 was 5.9 million tons, China contributed 2.6 million tons of them (44.7%). China is the largest tea producer in the world, but its huge market demand for tea leaves are still unmet. Hence, the output of major tea producing countries will continue to grow. In particular, the increased awareness of Chinese consumers on health & wellness will also drive the global tea market to further increase. Source: iimedia; World Tea News © 2020 DAXUE CONSULTING 13 ALL RIGHTS RESERVED The tea industry chain in China Raw materials collection Tea production Sales channels Tea planting & picking Supermarkets Use of fertilizers & Tea shops pesticides Restaurants Processing and packaging E-commerce platforms Withered, rolled, dried, fermented and/or oxidized to make black tea, green tea, yellow tea, white tea, dark tea, or oolong tea. © 2020 DAXUE CONSULTING 14 ALL RIGHTS RESERVED China’s tea production market Green tea leaves make a majority of China’s tea production. Considering China's tea growing environment and huge market demand, green tea will continue to maintain its output advantage for a considerable period of time. Drinking tea is an important part of the Chinese culture and living customs. China's tea sales will maintain an upward trend. With the increase of per capita disposable income of Chinese residents and the upgrading of residents' consumption, quality will become an important factor in the sales of tea. The output of 6 kinds of tea leaves The tea sales revenue in China (10,000 tons, 2018) (billion RMB) 284 Yellow Tea 0.8 235.3 240 White Tea 3.7 214.8 186.9 Oolong Tea 27.1 150 Black Tea 26.2 Dark Tea 31.9 Green Tea 172.2 2014 2015 2016 2017 2018 2019 Source: iiMedia, Qianzhan.com © 2020 DAXUE CONSULTING 15 ALL RIGHTS RESERVED China’s demand for tea is rising steadily China’s 1.4 billion people already drink nearly 40 percent of the world’s tea, and they are thirsty for more. Chinese consumers prefer higher quality tea products, they often rely on third-party certification for assurance the tea is organic and sustainably grown. They are accustomed to paying much more per serving than Western tea consumers. The best tea in China can be up to US$1,000 for 500 grams. Tea leaf prices in China Per capita consumption of tea leaves in China (RMB/500g, 2018) (kg, 2011-2018) 1.4 13% 1.3 3% 1.2 1.2 1.1 2,000+ 1 5% 0.9 39% 1,000-1,900 0.8 3,000-4,999 5,000-7,999 500-999 40% 2011 2012 2013 2014 2015 2016 2017 2018 Source: chyxx.com, askci.com © 2020 DAXUE CONSULTING 16 ALL RIGHTS RESERVED China exports green tea and imports black tea China’s tea exports Proportion of tea exports from China by tea type (2018) (2014-2018) China‘s tea exports are 2% 1% Green Tea 35.5 36.6 4% 32.5 32.9 steadily increasing. 30.2 Black Tea 10% 17.8 Green tea accounts for 83% of 14.9 16.1 12.7 13.8 Oolong Tea the total tea exports. Exports Floral Tea of black tea, green tea and 83% flower tea all increased by 2014 2015 2016 2017 2018 Camellia sinensis var. more than 6%. assamica Exports (10k tons) Export value ($100 million) Tea import trade in China Proportion of tea imports to China by tea type Black tea accounts for (2014-2018) (2018) 83.3% of tea imports.
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