2024 is a critical year for achieving the goals and tasks of the “14th Five-Year Plan,” with heavy and arduous tasks regarding reform, development, and stability.
2024 is an important year for implementing the “Suggestions for the 14th Five-Year Development Plan of China’s Tea Industry,” as the optimization and upgrading of the tea economic system are urgent.
Under the economic background of economic downturn and consumption downgrading, what new challenges and shifts has the Chinese tea industry experienced in 2024? What new changes and trends have emerged? How can development be sought amidst these challenges?
As a mainstream media platform for the Chinese tea industry, China Cooperation Times & Tea Weekly Full Media holds the media responsibility to promote industry development and has released the “China Tea Industry Observation Report” for three consecutive years. In addition to leveraging the expertise of professional journalists from Tea Weekly, the 2024 China Tea Industry Observation Report also invited many experts and scholars who are deeply familiar with the laws of industry development and have worked in specialized fields of the tea industry for many years to participate in its creation, identifying prominent problems, providing solutions, and contributing wisdom to industry development through profound reflection.
The 2024 China Tea Industry Observation Report consists of eight chapters, covering eight important areas: tea industry development strategy, industry chain, technology, brands, e-commerce, space, consumption, and culture; it adheres to the principle that “observation stems from the front line, and conclusions stem from practice,” insisting on finding problems in practice, seeking answers from practice, and observing trends through practice.
Moving in opposite directions, leading brands shine.
Author: Tian Youlong, agricultural brand marketing expert, digital strategy expert, specially appointed professor of the China Tea Business School, co-founder of Qinshi Brand, strategic consultant for Yibin Tea Research Institute; has served on regional public brand projects such as Yueyang Yellow Tea and Xiaoxiang Tea; author of Free Marketing and Connection: The Laws of Branding in the Social Era.
Introduction: 2024 is a turning point for the tea industry. After more than twenty years of full-speed progress, the industry has entered a mature stage, where stable low growth has become the new normal, the market has shifted from incremental to stock competition, and brands have begun the process of survival of the fittest. As society moves toward rationality, the role of gifts in business connections is weakening; in 2024, the gift attribute of tea began to decrease, leading to a decline in the market share of gift tea, while its consumer product attribute has further strengthened, making the importance of lifestyle tea increasingly prominent. In 2024, regional public brands are moving “to the left,” pursuing differentiation driven by value; product brands are moving “to the right,” pursuing inclusive development through aggregation, with price penetration aggressively entering the lifestyle tea market. Competition is intensifying, opening the door to an era of low margins, where the result for enterprises after a year of struggle is “joy for some, sorrow for many.”
(I)
2024 Tea brands moving in reverse.
Leading brands enjoy excellent prospects.
Brand-oriented development has always been the direction for upgrading supply and demand structures; the eighth consecutive “China Brand Day” event elevated branding to the level of a national strength project. The tea industry is a vital industry for rural revitalization, and branding is an essential new mission. On May 10, 2024, the 2024 China Tea Brand Construction Forum and Brand List, organized by the Xinhua News Agency Brand Office, the China Tea Distribution Association, and other institutions, triggered an even stronger wave of branding in the tea industry. Driven by public brands toward product brands, 2024 has carved out a unique trajectory.
1
Differentiation vs. Aggregation, super brands are about to be born.
New and old tea regions in the tea industry are engaged in an unequal competition; new tea regions must establish public brands, create new categories, activate new demands, and cover new users to break through; this strategy is category differentiation. In 2024, regional public brands are still exploring the path of differentiation.
In 2024, product brands are moving rapidly along the path of inclusive development driven by aggregation, and this differentiation has emerged in layers: category-wide inclusion, with the “King of Green Tea” Zhuyeqing as a single benchmark, breaking through category and regional limitations to cover multiple categories (which will inevitably be all categories in the future) to form cluster brands; lifestyle-based inclusion, with Bama, Xiaoguan Cha, etc., as role models, starting from core categories to cover all tea types and link to tea accessories, forming a one-stop product portfolio that satisfies users’ tea lifestyles, constituting an all-domain brand; and ecosystem-based inclusion, with Huaxiangyuan and Tianfu Mingcha as examples, building a tea ecosystem through the fusion of tea and alcohol based on tea lifestyle product portfolios, establishing super brands.
Aggregation hits multiple targets at once: increasing store shelf utilization, leveraging brand assets to increase marginal returns, and meeting users’ diverse tea-drinking needs. This is also a sign of leading brands engaging in nationwide battles and a prelude to the birth of super-enterprises and super brands.
2
Fragmentation vs. Limited Concentration, the curtain rises on brand survival of the much stronger and the much weaker.
The driving force for the tea industry’s progress is differentiation (from one large tea category into six major categories, and within a single large category into multiple sub-categories; regional public brands are built upon these sub-categories). The more differentiation, the more prosperous the industry; the more prosperous the industry, the more dispersed the market share of regional public brands.
The 2024 spring tea season had an unsatisfactory start, with both volume and price failing to meet expectations; even the Mid-Autumn Festival, a major highlight, was not played well. Amidst sighs of disappointment in the tea industry, leading brands such as Bama, Huaxiangyuan, Xiaochapo Po, Heishanhong, and China Tea Xiamen delivered impressive results; “top brands grow, mid-tier remains flat, and lower-tier faces hardships” is the year-end summary for tea brands.
Leading brands enjoy excellent prospects due to: first, the reason of aggregation-driven development; second, the result of intense competition among small brands in a stock market; and third, the inevitability of users actively choosing brands. This means the time for survival of the fittest in the tea industry has arrived—some brands will stand out, some will fall behind, and some will be eliminated, as the tea industry moves from high fragmentation toward limited concentration.
3
Increasing premium vs. Dimensionality reduction strike, brands enter a low-margin era.
The tea industry is a vital industry for rural revitalization, bearing the heavy responsibility of making agriculture strong, villages beautiful, and farmers prosperous. National strategies are pushing tea from scale-driven to value-driven, and from category-led to brand-led transformation and upgrading. Increasing premiums is a fundamental principle of brand building, and all production areas are striving in this direction in 2024.
In 2024, under the leadership of top brands such as Zhuyeqing, Bama, China Tea Haidi, Chuanhong, and Wuyi Xing, a wave of “dimensionality reduction strikes” has begun—aggressively entering the lifestyle tea market. This year, leading brands have taken lifestyle to new heights: first, more categories, covering almost all categories; second, aggressive promotions, such as Zhuyeqing’s buy-one-get-one-free activities; third, strategic upgrading, where lifestyle tea was previously a defensive product but is now upgraded to a primary track.
The aggressive entry of brands into the lifestyle tea market is not entirely “friendly,” as it will drive even more intense competition (involution). Brand-building for low-end products will also raise entry barriers, driving brands into an era of low margins. From then on, both operation and management of tea brands must be prioritized, further increasing the difficulty!
4
Commonality vs. Differentiation, brand personality wins the market.
The goal of regional public brand construction is to prosper an industry and a region; it must be centered on “publicness,” using universal concepts, values, and standards to accommodate more business entities. Regional public brands establish a consensus on categories and a system of universal values, while product brands find differentiation based on these universal principles as their leverage. The staggered competition between various brands has become a highlight of the 2024 tea industry.
Differentiation establishes brands, and tea enterprises performed remarkably well in 2024. For example, when promoting the same type of tea, Huaxiangyuan established the concept of “Guibicha” (Guest Tea), Zhengshantang played its “family craftsmanship” card, and Bama utilized the “Good Chinese Tea” angle. In terms of creating tea spaces, Bama launched a new generation of business tea space concept, the “City Living Room,” while Huaxiangyuan fully implemented its Tea Warehouse Experience Centers, and Zhuyeqing created tea concept stores—each brand raised the flag of differentiation, establishing a unique and vivid personality that is both eye-catching and heartfelt, firmly hooking brands into users’ minds to become market winners.
(II)
Problems existing in tea brands in 2024:
Four major deficiencies; brand growth still faces significant hurdles.
The tea industry progressed steadily in 2024, with brands moving forward and leading brands performing quite brilliantly. However, this does not mean brands are flawless; far from being perfect, there are four major deficiencies. These four deficiencies are critical flaws in brand growth and the hurdles that must be overcome for long-term prosperity!
1
Insufficient brand innovation capability; old trees have not bloomed with new flowers.
Tea is a traditional industry that needs to bring in new growth points through innovation. In 2024, innovation slogans in the tea industry were loud, but only two things were actually done: product brands shouted about “grabbing the youth and the future,” while regional public brands focused on deep processing, talking about “extending and supplementing the chain.” These two things were not only “new” but also lacked significant implementation; in 2024, old trees did not bloom with new flowers.
Innovation is a technical task and a systematic engineering project, yet there are few key points. The key point for regional public brands is cultivating new tea varieties; the pre-eminent key point for product brands is creating new products and business models. Only innovation based on these key points can bring new growth points to the industry.
2
Insufficient brand marketing; weak driving force for progress.
Insufficient brand marketing has always been a weakness of the tea industry. Regional public brands are driven by administration, where institutional factors place more emphasis on planting and production; in 2024, due to structural adjustments, marketing promotion at the regional public brand level further weakened. At the enterprise level, the performance during the spring tea season was not very good, seriously affecting the confidence and judgment of the tea industry. This year, brand marketing in the tea industry focused heavily on defense and lightly on offense; there were few performers on the stage, the methods of performance were relatively monotonous, and the voices emitted were relatively small, resulting in insufficient driving force for brand progress.
Inaction in industry marketing leaves gaps in the market—low marketing costs and less market interference mean that even a slight move can lead to standing out in the competition. The public brand Chuanhong Kungfu and the product brand Heishanhong discovered this gap, applied reverse force, and achieved soaring success, rapidly growing into powerful brands!
3
Outdated brand concepts; top-down output.
The tea industry is relatively closed, and brand concepts are outdated—this point has not seen fundamental improvement in 2024. The industry (regional public brands and enterprise product brands) uses industrial thinking as its foundation, treating resources like tea mountains and fields as core competitiveness, with brands outputting from the top down through centralized media to make the loudest noise, aiming to awaken users and gain their recognition and acceptance of the brand.
We have entered the information society; industrial thinking is OUT. Elements like tea mountains are now in motion, and the relationship between users and brands has changed. Brands must change accordingly, reshaping tea brands using the thinking and methods of the information society. In this regard, both the administrative and enterprise levels must keep pace.
4
Unsmooth brand channels; prominent “dam-like” accumulation risks.
Regional public brands build momentum, while product brands drive market conversion—this is the fundamental model for the progress of the tea industry. The core interface of conversion is the channel. Most tea brand channels rely on regional agency or franchise models; the relationship between brands and channels relies heavily on connections, and inventory loading is a basic marketing move. Product flow is not smooth, creating a significant risk of “dam-like” accumulation. In 2024, as growth slowed, the dam effect became apparent: many disharmonious scenes appeared in the market, with brands opening and closing stores simultaneously, product price inversion occurred, and malicious dumping through unauthorized distribution was prominent—in short, market risks are large, and the relationship between brands and channels must be taken seriously.
(III)
Fix shortcomings to move forward without falling behind.
Tea is a very optimistic industry with incredibly resilient vitality, moving forward for thousands of years. Tea brands must fix their shortcomings and form systematic advantages to keep pace with the industry’s progress without falling behind, always moving forward.
1
Integrated marketing communication; shaping powerful brands.
Branding is continuous communication. The tea industry must transform its thinking, shifting from an emphasis on planting and production to an emphasis on marketing. Establishing an integrated marketing communication system is the key to building powerful brands.
In the internet era, media is diversified and consumer attention is dispersed. Brands must revolve around a core goal and main line, utilizing multiple levels of different media to construct an integrated marketing communication system that creates a seamless, two-way connection with users, subtly influencing their purchasing decisions so that brands can win people’s hearts.
2
Digital reconstruction; brand platformization.
In the information society, everything is digital, and the universe is a series of connections. Tea brands must abandon industrial thinking and use the connectivity-based thinking and technology of the information society to reconstruct brands in order to win in the future.
Connection is not about control or output, but rather everyone working together to establish a platform of mutual trust, mutual affection, and mutual benefit. Use digital technology to open brand boundaries and make brands “platformized,” allowing users to participate fully in brand building—from providing suggestions to construction, from standards to acceptance, and from concepts to realization. By making everything follow the customer’s needs—making products beautiful, culture warm, and relationships comfortable—brands can take root in the hearts of users.
3
The new “1+1” model: preserving tradition while embracing innovation.
Tea is a native industry; tradition is its root and soul, which must be upheld. This is yet another era of change, and only through innovation can we embrace it. The “1+1” model has become the only choice for continuous brand growth.
Upholding Tradition: Remain steadfast in protecting original leaf tea. At the regional public brand level, clearly define the boundaries of premium teas to avoid generalization and homogeneous competition. At the product brand level, carefully nurture star products, extending their vitality through product iterations and product families, and use integrated marketing communication to hook brands into users’ minds, maintaining a favorable market position.
Exploring Innovation: Pursue progressive innovation. At the regional public brand level, focus on cultivating new tea varieties to introduce new species, expand user groups, increase tea-drinking frequency, and drive industry expansion. At the product brand level, actively integrate new technologies to launch new products, use new concepts to create new business models, lay the groundwork for the future, and achieve long-term prosperity.
4
Rebuilding brand channel relationships; stimulating synergistic creativity.
The future battle of tea will be a competition between supply chains. Connecting the entire industry chain from regional public brands to users and building an ecological closed loop is the key to success or failure. The relationship between product brands and channels is the locking point of this closed loop. By upgrading the brand-channel relationship from transactional to strategic, one can win in the future.
The new relationship uses the category consensus of regional public brands as its banner, the value of product brands as its bond, and the principle of synergistic resource complementarity as its guide. It completely breaks away from traditional party-A and party-B cooperation models to build a strategic partner model of “one family, one chessboard, one integration”—highly unified values, highly unified thinking, and unified market pace—to stimulate collective synergistic creativity so that everyone can create the future together.
Task Group
Chief Planner
An Mingxia
Members
Zhang Xinzhong
Chen Hao
Xiao Qiang
Tian Youlong
Wang Jing
Liang Yan
Deng Zengyong
An Mingxia
Copyright Statement
The 2024 China Tea Industry Observation Report is published by China Cooperation Times & Tea Weekly Full Media,
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Author: Lam Sam (LamSam), the Old Tea Head
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