Chinese tea chain Naixue, formerly Nayuki, has recently become a hot topic amongst many pundits as it celebrates its 9th year. The brand, once hailed as the first of the “new style tea” chains to go public, is considered the “fallen aristocrat” of the tea chains amongst competitors such as CHAGEE, ChaPanda and, mostly, HeyTea.
Naixue and HeyTea were seen as the first of the “New Style Chinese Tea” brands and both started out as higher end entities. However, as competition stiffens, HeyTea quickly embraced a mid-tier positioning and opened franchising, while Naixue struggled between facing coemption and maintaining its premium brand image and did not expand in time to secure its market share. Naixue’s higher positioning and high costs due to large menu and marketing investment made it “aristocratic” compared to many homegrown competitors. Some commentators went as far as to say that Naixue had peaked in 2021 as it has mostly seen loss in the last 6 years, apart from a small profit in 2023.
However, as if to refute the analyses, Naixue celebrated its birthday with two campaigns. The first one, to celebrate its membership reaching 100 million, Naixue announced a 100 million RMB (13.90 million USD) giveaway by adding 100 RMB to every 200 RMB worth of top-ups for members. The 100 million members number is especially impressive when the chain only has 1,885 branches. Comparatively, Mixue Bingcheng reached 100 million members when it had 25,000 locations while Goodme had only 94 million members when it reached 8,000 stores.
Another campaign is Naixue’s seasonal Yunnan rice pudding milk tea which drove hot drink sales up 40% on average for the chain, and up to 5 times at certain branches. The two moves combined dispute the idea that Naixue missed out on expansion and its high prices had deterred consumers, and costs are not effective with its marketing. With HeyTea recently announcing it will not be participating in price wars to focus on products, it might seem that the higher end focus can still be a winning strategy.
