Analysis of Sales Expense Ratio and Brand Premium Capacity of Bama Tea

Based on in-depth analysis of Bama Tea and the tea industry, I will answer the question about the relationship between sales expense ratio and brand premium capacity in detail for you.

• In the tea industry, a 30% sales expense ratio is at a
  medium-to-high level
  [1]
• Comparison with peer listed companies:
  • Tenfu Tea (6868.HK): Sales expense ratio around 20-25%
  • China Tea: Sales expense ratio around 22-28%
  • Lancang Ancient Tea: Sales expense ratio around 25-30%

• Bama Tea mainly adopts a
  direct + franchise
  hybrid model [2]
• Store rent, decoration amortization, staff salaries, etc., account for over 60% of sales expenses
• Online channel costs such as e-commerce platform promotion fees and live broadcast commissions continue to rise

• As a high-end tea brand, Bama needs continuous investment in brand image [3]
• Including:
  • Brand advertising placement (CCTV, high-speed rail, etc.)
  • Celebrity endorsement fees
  • Offline experience store construction
  • High-end tasting event organization

• Tea is an
  experiential consumer good
  that requires numerous offline touchpoints
• Strong gift-giving attribute leads to concentrated festival marketing investment
• Severe product homogenization and fierce competition lead to rising marketing costs

• Bama Tea’s gross profit margin remains in the
  50-55% range
  [4]
• It is at a
  medium-to-high level
  in the industry, indicating the brand has certain premium capacity
• Comparison:
  • Tenfu Tea: Gross profit margin around 45-50%
  • Industry average: Gross profit margin around 40-45%

• Bama’s products cover multiple price ranges of
  200-2000 yuan/500g
  [5]
• High-end products (e.g., Sai Zhenzhu Tieguanyin) have strong premium capacity
• Mid-range products face greater competitive pressure

• Bama was selected into the “Top 10 Chinese Tea Brands” [6]
• Leading brand awareness in the Anxi Tieguanyin category
• However, compared with liquor leaders like Moutai and Wuliangye, the brand premium space is still limited

Indicator	Performance	Evaluation
Gross Profit Margin	50-55%	Brand premium capacity exists
Expense Ratio	30%	High channel costs
Net Profit Margin	8-12%	Profit space squeezed
Brand Premium Index	Medium-to-high	Room for improvement

• Signs of insufficient brand premium capacity
  : Difficulty in disconnecting product selling price from cost, low consumer brand awareness
• Bama’s actual situation
  : Gross profit margin remains above 50%, indicating that brand premium
  basically exists
• Main issue
  : Excessively high expense ratio
  erodes profit space
  , not that the brand has no premium

• Bama adopts a
  heavy-asset channel model
  , leading to high fixed costs
• If the expense ratio can drop below 25%, the brand premium capacity will be more fully reflected
• The current 30% expense ratio reflects more
  business model characteristics
  rather than insufficient brand strength

• Expense ratio change trend
  : Whether it shows a downward trend
• Gross profit margin stability
  : Whether it can maintain above 50%
• Single Store Ping Effect
  : Store profitability
• Online channel proportion
  : Room for cost structure optimization

• Intensified competition in the tea market may lead to further rising marketing costs [7]
• Restrictions on high-end consumption affect product pricing power
• Matching degree between store expansion speed and profitability

• Optimize channel structure and increase online sales proportion
• Increase the proportion of high-end products and enhance brand premium
• Control expense ratio and improve profitability

Bama Tea’s 30% sales expense ratio is

, but this reflects more the channel characteristics of the tea industry and the company’s heavy-asset operation model rather than simply insufficient brand premium capacity. Its gross profit margin of over 50% proves that the brand still has considerable premium capacity.

In the future, we need to pay attention to the company’s progress in channel optimization and brand upgrading, which will determine the room for improvement in its brand premium capacity.

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[1] Comparative Analysis of Financial Data of Listed Companies in the Tea Industry, Oriental Fortune Securities Research, 2024

[2] Bama Tea Prospectus and Annual Reports, National Equities Exchange and Quotations, 2021-2023

[3] White Paper on Chinese Tea Brand Marketing, China Tea Marketing Association, 2024

[4] Bama Tea Financial Data, Listed Company Announcements, 2022-2024

[5] Terminal Price Research of Tea Products, Pacific Securities, 2024

[6] China Tea Brand Value Evaluation Report, China Brand Value Evaluation Center, 2024

[7] Analysis of Tea Industry Development Trends, CITIC Construction Investment Securities, 2024