Brands are working to establish emotional connections with shoppers amid rise in experience-driven consumption
Nearly everything you encounter in life has a story to tell: be it a flight ticket, a used wallet, or even the person sitting next to you in a theater.
The same is true of the food and beverages that people consume.
Business owners in China are waking up to the fact that as disposable incomes rise, widely used terms such as "freshly made" or "locally sourced" are no longer enough to appeal to the palates of a younger generation of diners, who are increasingly drawn to personalized products.
It therefore comes as no surprise that brands are deciding to become storytellers-setting the scene and fleshing out a plot from product invention and storefront design to social marketing campaigns-all in a bid to trigger an emotional investment that resonates with customers.
So when Heytea, a milk tea brand known for its rich cheese-foam topping, introduced its first Heytea Lab in Shanghai's glitzy Grand Gateway 66 mall in June, the idea was to create a multisensory drinking and culinary experience through a string of experimental installments.
Heytea has reinvented the retail concept by introducing novel menus that are updated on a weekly basis. Apart from the regular portfolio, the newly opened Shanghai flagship store allows customers to mix cocktails with their tea drinks.
It has taken inspiration from the local culture, selling ice creams featuring flavors like Shikumen Shanghai Rice Wine, a local liquor brand.
Neo Nie, founder and CEO of Heytea, said he sees Heytea not only as a cheese-topped tea store, but a cool brand that has multiple possibilities.
The seven-year-old brand, which originated in Guangdong province, now has more than 250 stores nationwide and Nie is looking to expand to 400 by the end of this year.
But he believes the winning recipe isn't always about physical expansion, but "the occupation of consumers' mental accounts". Recognizing the importance of immersion and occasion in consumption, Heytea rolls out seasonal delicacies and co-branded side-items with specific themes, such as a Hong Kongstyled vintage eatery.
Such innovative moves are necessary as the growth of the traditional food and beverage segment in China faces stronger headwinds than the overall fast-moving consumer goods. According to consultancy Kantar Worldpanel, the F&B segment maintained a conspicuously slower pace of growth (about 2 to 3 percent) than personal care categories (over 10 percent) in the last quarter of 2018.
"It's a necessary approach as food and beverage consumption has inevitably shifted from function-driven to emotion and experience-driven," said Jason Yu, general manager of consultancy Kantar Worldpanel in China.
"To inspire spending, brands need to create different scenarios, bring shoppers into the embodiment of a brand's ethos and establish emotional connections," Yu said.
Pursuing the same path is Lelecha, a rising player also in the milk tea sector that has just completed Series A funding this month. At the end of July, the Shanghai-based beverage chain opened a 1,000-square-meter store called Bubble Tea-Making Amusement Park.
While no actual roller coasters are installed in what it claims to be its largest outlet in Asia, the level of excitement is comparable to that in an amusement park with consumers lining up for three hours for a cup of cherry milk tea, a seasonal offering.
Lelecha's brand motto is: Made in Asia, enjoyable and artisanal. This storyline was reflected in the invitation to its grand opening of several tea industry luminaries, a Michelin-starred chef and several master bakers-to show that high-quality ingredients, innovative recipes and cultural tales can contribute to a cup of tea.
The shop design features 10 independent stands decorated in different styles, each selling a unique category including raw tea, milk tea, coffee, alcohol, desserts, bread and ice cream, according to a company statement sent to China Daily.
"Food prompts emotional triggers, and eating is a gateway to the mind," Yu said.
Experience-driven and new product trials are the defining characteristics of China's post-1990 population, whose desire for instant gratification is shaping up to be the new norm of consumption, said Michelle Huang, industry analyst of Food and Agribusiness Research at Rabobank's Shanghai branch.
"It's not just quality that customers are paying attention to, it's also product innovation and the speed of new rollouts," she said. "Hence, it's imperative for brands to populate menus with original ingredients and ideas-and they need to do it quickly and frequently."
Huang said unique storefront design and customer experience help stores gain cultural clout.
"It's an investment. For instance, in the case of Heytea, a big chunk of traffic still comes from online orders," she said. "The online ordering app helps streamline business but it is the storytelling that gets the tea brand into people's heads in the first place."
Even established brands are investing in good stories in the hope of triggering emotional responses from customers. KFC China recently added skewers and hotpot to their long list of Chinese menu items, wishing to cash in on the burgeoning midnight snacks market that even the government is encouraging in a bid to spur spending.
Rather than simply placing ads promoting the new offering, KFC used social media to create a buzz. By soliciting and sharing stories related to late-night treats, the firm attracted an emotional response from prospective diners.
"Your curated story needs to grab the attention of your ideal guests and activate their emotions-and that goes for storytelling across all media," Yu from Kantar Worldpanel said.
Co-branding is another effective tool. Coffee chain S.Engine teamed up with e-commerce site Tmall for a brick-and-mortar store to attract attention, while Happy Lemon's tieup with domestic candy brand White Rabbit has generated online discussions on Weibo, China's most-used microblogging service, which is also a gauge of trending topics online.
Heytea's Nie, however, said co-branded products are not a major revenue generator but an avenue to convey and reinforce brand image. "Content does not necessarily trigger consumption or even display any products, the purpose is to convey the style of the brand."
Yu from Kantar Worldpanel agreed and cautioned brands not to let the hype slide into a "one-off sensation".
"Many brands fail to sustain their sales hike once the flash mob or co-branded campaigns cease," Yu said. "So the real differentiator is not to link consumers with a temporary promotional incident organized by the brand, but to establish a longstanding emotional tie with the brand itself, and that requires a consistent branding strategy."
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