As China's ready-to-drink tea market becomes increasingly competitive, brands are accelerating innovation to secure stronger market positions. Facing emerging competitors and shifting consumer trends, established player Xiang Piao Piao demonstrates how strategic transformation drives sustained growth.
Financial Performance: Steady Growth Through Strategic Transformation
Xiang Piao Piao reported total revenue of 3.98 billion yuan ($550 million) in 2019, a 22.4% year-over-year increase. The company's product portfolio consists of traditional instant brew products and rapidly growing ready-to-drink beverages.
Instant Brew Products: Maintaining Market Leadership
The instant brew segment generated 2.94 billion yuan ($406 million) in 2019, growing 4.7% annually. As the pioneer of cup-style milk tea, Xiang Piao Piao has maintained market leadership for eight consecutive years with over 60% market share. However, this mature market faces challenges from product saturation and intensifying competition.
Ready-to-Drink Products: The New Growth Engine
Ready-to-drink products (including bottled milk tea and juice tea) achieved 1.01 billion yuan ($139 million) in revenue, surging 140% year-over-year and increasing from 12.9% to 25.3% of total revenue. Juice tea products particularly excelled with 868 million yuan ($120 million) in sales, growing 332% annually and becoming the primary growth driver.
Key Financial Highlights:
- Gross profit reached 1.6 billion yuan ($221 million), with margin improving to 40.3%
- Net profit attributable to shareholders grew 10.4% to 347 million yuan ($48 million)
- R&D investment increased 251% to 31 million yuan ($4.3 million)
- Cash reserves reached record 1.65 billion yuan ($228 million)
Product Strategy: Dual Growth Engines
Xiang Piao Piao employs a "dual-engine" strategy - consolidating its instant brew foundation while aggressively developing ready-to-drink products.
Instant Brew Innovations
To revitalize the mature instant brew market, the company implemented several strategic initiatives:
- Brand rejuvenation: Targeted younger demographics through celebrity endorsements and entertainment marketing
- Product upgrades: Launched new "Pearl Double Mix" series to expand price points and consumer appeal
- Market penetration: Expanded into county-level markets covering 60% of China's population
Ready-to-Drink Breakthrough
The Meco juice tea line has emerged as a standout success since its 2017 introduction:
- Positioned as premium product with "real tea, real juice" formulation containing over 10% fruit content
- Implemented youth-focused marketing combining digital campaigns and campus activations
- E-commerce sales skyrocketed 907% in 2019 alone
Channel Strategy: Omnichannel Expansion
Xiang Piao Piao executes a comprehensive distribution approach:
- Offline: Built nationwide network covering major cities and county markets
- Online: Achieved 161.5% compound annual growth in e-commerce from 2014-2018
Future Outlook: Diversification and Innovation
To maintain market leadership, Xiang Piao Piao focuses on:
- Expanding into adjacent categories like light meals and meal replacements
- Continuous product innovation to meet evolving consumer preferences
- Strengthening engagement with younger demographics
The company's ability to balance core product maintenance with new category development demonstrates how traditional brands can successfully adapt to dynamic market conditions.