The Decline of a Domestic Beverage Company: Tenwow Food (天喔集团)
Tenwow Food was a renowned Chinese beverage company known for its iconic honey pomelo tea. It had top celebrities Fan Bingbing (范冰冰), Li Xiaolu (李小璐), Zhang Xueyou (张学友), Li Yuchun (李宇春), Zhou Dongyu (周冬雨) and Huang Xiaoming (黄晓明) as its ambassadors. But now, the company is facing its bankruptcy.
In 2013, its annual revenue was 4.7 billion RMB and successfully filed for an IPO in Hong Kong. From 2014 to 2017, the brand continuously achieved over 5 billion RMB revenue every year. The turning point came in 2018 when its annual income decreased to 1.5 billion RMB, and in 2019, the number became 992 million with 138 million in debt.
What happened to cause this sudden drop in revenue?
Heavy Reliance on One Product
As we mentioned, Tenwow was most known for its iconic honey pomelo tea. When it was first launched, Tenwow hired Fan Bingbing to promote it. The advertisements were everywhere and the slogan is still engrained in many post-85s and post-90s’ memories.
Tenwow knew it was risky to rely only on the honey pomelo tea and launched other drinks to diversify its SKUs but those drinks didn’t perform as well as the honey pomelo tea did.
To make matters worse, seeing the huge popularity of this drink, many other food companies began copying Tenwow or creating their own viral products which ate up market share. Tenwow slowly began losing its advantage in the market.
Focused Too Heavily on Celebrity Partnerships
Partnering with celebrities was Tenwow’s main marketing strategy, and it seems that Tenwow relied on it too much and didn’t pay attention to other emerging tactics that would help it reach younger audiences.
In the age when the Internet was not prevalent, a celebrity advertisement heavy strategy could indeed bring lots of attention to a company. Tenwow also sponsored Hunan TV (湖南卫视), a popular channel whose main audience is young people. Being broadcasted in golden hours at nights, the sales volume of honey pomelo tea grew dramatically.
But the past is the past. Not many people watch TV nowadays. With the heavy use of celebrities, when consumers think of Tenwow, they think of its advertisements, and not about the quality of the product itself.
Similar to Tenwow is the once-popular domestic shoe brand DAPHNE. Check out our previous article to learn about their mistakes and how they are trying to overcome them.
Being Conservative Towards Ecommerce
Tenwow began leveraging ecommerce in 2014, with both JD and Taobao stores. But the management team of the company was conservative towards the trend. Back then, the Chief Financial Officer believed that not every Tenwow product was suitable to sell online.
It was because of this cautious attitude that Tenwow was (and still is) slow to truly leverage ecommerce and missed the golden opportunity to establish themselves early on.
Failed to Understand Consumers’ Needs
Compared with the past, consumers now pay more attention to high-quality service, personalization and how brands can help them gain recognition from society. In recent years, there are many new beverage brands growing, including Nayuki Tea (奈雪的茶), Hey Tea (喜茶), Chayan Yuese (茶颜悦色) and other players.
These brands constantly come out with new products, have beautiful stores and packaging, and produce creative marketing campaigns. They have become social currency for the younger generation.
Founded in 1999, Tenwow was in the advantageous situation where it had a wide consumer base. But failing to catch the trend and make use of its original advantages, Tenwow has been facing a dilemma since 2018 and, unless it starts making dramatic changes, this decline will be very difficult to reverse.
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