Hey Tea Ventures Beyond Tea, Investing in Coffee Brand Seesaw

August 18, 2021August 17, 2021 Kejie Yi

Not long ago, there were rumors saying top Chinese tea brand Hey Tea would acquire LELECHA, who is also one of the competitive players in the new beverage industry. Instead, it recently invested in up-and-coming coffee chain Seesaw. What happened?

Well, we don’t know who started the rumor, but both sides deny that Hey Tea was ever going to acquire LELECHA. LELECHA said it is performing well and had no intention of being purchased. In fact, it is seeking another round of financing. While denying the acquisition rumors, LELECHA also announced it would open up to 140 stores before Chinese New Year in 2022.

On the other hand, Hey Tea, the big boss in the new tea or even the beverage industry in China, is valued at 60 billion RMB. The brand keeps expanding its business by opening more stores and discovering new growth areas, such as seltzer and bread. Recently, it just announced that it has become an investor in domestic coffee brand Seesaw.

Hey Tea Seesaw coffee — Source: Weibo@路西路西.

About Seesaw

Seesaw is a coffee brand founded in 2012 in Shanghai. Currently, it has 33 stores located in Shanghai, Beijing, Shenzhen, Suzhou and Hangzhou. By the end of 2021, it plans to expand to over 100 stores.

Seesaw is different from other coffee houses as it is not making traditional coffee, instead, they are introducing creative coffee. Its drinks are still based on coffee, but they have other unexpected ingredients added, such as soda water, tea, juice and dried fruit. This is regarded as a new growing point for the brand.

Statistics show that from November 2020 to March 2021, the sales volume that those creative coffee contributed grew from 10% to 40%, and the number has surpassed 50% in May this year. The number of its repurchase rate is also very nice, 40%. Gen Z customers make up 17% of repeat consumers.

What Attracts Hey Tea To Invest In Seesaw and the Coffee Industry?

Of course, it is not comprehensive to summarize Seesaw’s success in a few bullet points, but I want to point out what differentiates it from its competitors, and some of the key things that Seesaw has done right.

Opening big offline stores

This reminds me of another coffee house that we’ve covered before, Manner Coffee. The brand is well-known for opening small stores in CBD, making it convenient for white collars to order first and pick up on their way to work.

Well, Seesaw has the opposite opinion on offline stores. It is making them big, many of which are over 200 square meters. The brand wants customers to sit inside the store and have conversations with either friends or colleagues. Big stores are also easier to catch people’s eyes.

Shaping stores as a workplace

While I was doing research and learned that Seesaw has a store at Réel (芮欧), a high-end shopping mall, I was a bit surprise and able to recall that while I was working nearby, I often saw people working in that store.

That’s what Seesaw wants to build, making its store a go-to place for white-collars or whoever working from home and wants to find a decent environment.

It also collaborates with WeWork to consolidate the ambition of shaping its stores as workplaces.

Introducing new business models

Big offline stores may not work in some places due to site limitation. On the other hand, smaller stores can save budgets on renting.

Seesaw opened its first mini store in Nanjing at the beginning of 2021. It is also exploring more sales channels such as the online channels, for example, ordering online and picking up at the store, and the takeaway business as well. Currently, over 60% of Seesaw’s orders are from online channels.

It is also very bold to try out a new mode that serving coffee during daytime and drinks/alcohol in the evening. I am not sure about this idea. After all, consumers come to Seesaw’s stores expecting coffee, not alcoholic beverages. If they want drinks, why don’t they go to bars or restaurants?

Coffee Craze in China

It seems that coffee has blended within Chinese consumers’ daily lives, and it is getting down to lower-tier cities as well.

The industry has gained so much attention that even Internet giants such as Tencent, ByteDance and Bilibili have invested in coffee brands.

Many other industries are joining the craze as well. Tong Ren Tang, a Chinese pharmaceutical company founded in 1669, introduced its coffee line! Sinopec, a Chinese oil and gas enterprise did the same thing. Luxury brands such as Louis Vuitton are joining as well.