Summary of Key Points
Hengzhou, Guangxi (the source of 60% of the world's jasmine flowers and the heart of the new tea drink jasmine ingredient supply) has been hit by floods caused by a typhoon. Tens of thousands of acres of flower fields have been submerged, paralyzing the processing industries, which directly affects new tea drink brands such as Luckin Coffee, Wangba Chaji, and Mixue Ice City that rely on these ingredients. This disaster not only exposes the losses of growers and processors but also reveals deeper issues such as the over-reliance on a single production area, the high timeliness requirements for raw materials, and the inadequacy of emergency response plans in the new tea drink supply chain.
1. Why Hengzhou is the “Jasmine Lifeline” for New Tea Drinks?
The jasmine milk green and Boya Juexian you drink are almost exclusively sourced from Hengzhou, known as the “Home of Jasmine in China.” It is a global “superfactory” for jasmine flowers:
- Production Monopoly: Hengzhou grows 180,000 acres of jasmine, producing 150,000 tons of fresh flowers annually, accounting for 80% of China's and 60% of the world's total (meaning that 6 out of every 10 jasmine flowers come from here).
- Brand Affiliation: More than 150 leading tea drink brands (including Mixue Ice City, Wangba Chaji, and NaiXue) have established direct supply bases here, and even Starbucks and Master Kong use jasmine from this region.
- Irreplaceability: Hengzhou’s “double-petaled small-flower jasmine” has a sweet, odorless fragrance that blends perfectly with green tea to create the familiar jasmine taste; in contrast, Indian large-flower jasmine has a fishy smell and is only suitable for use in perfumes. Additionally, the decades-long fermentation process (mixing flowers with tea to allow the tea to absorb the aroma) is unique and cannot be replicated elsewhere.
- Time Sensitivity: Jasmine must be used on the same day it is harvested; once the buds open, the fragrance fades, so processing plants must be located near the flower fields. Hengzhou’s scale and location make it an irreplaceable core of the supply chain.
2. The Impact of Floods: A Complete Shutdown from Flower Fields to Tea Cups?
The floods have dealt a devastating blow to the entire jasmine industry chain:
- Growth Side: Tens of thousands of acres of flower fields have been flooded, with some growers losing 60,000 to 70,000 yuan per 4-acre plot. For those who lease hundreds of acres, the losses are even more substantial. If the water does not recede, the flower roots will rot within a week, potentially resulting in a complete crop failure for the second half of the year.
- Processing Side: Over 170 processing plants have had their warehouses flooded and drying facilities damaged, causing the already harvested flowers to become damp and spoiled. Road closures prevent the transportation of fresh flowers, rendering them unusable for fermentation (equivalent to direct waste).
- Brand Side: Once inventory is depleted, problems arise—jasmine takes a month to recover from flooding, and prolonged waterlogging can lead to permanent crop failure. Even if production resumes, the flavor and quality may be compromised. However, consumer demand for jasmine products remains strong; for example, Wangba Chaji’s Boya Juexian continues to sell well.
3. Brand Responses: Donating Money and Goods, but Is There Enough Supply?
In response to the disaster, brands have taken consistent actions by donating money and goods, yet they avoid discussing their inventory levels:
- Luckin Coffee donated generators and emergency kits; Wangba Chaji activated disaster relief funds; Mixue Ice City donated 10 million yuan specifically for the reconstruction of the jasmine industry.
- No brand has mentioned how long their inventory will last. This silence suggests that while there is still stock in the warehouses, what if it runs out? After all, jasmine cannot be stored for long, and a broken supply chain means a disruption in production.
4. Three Major Weaknesses in the Supply Chain: Were These Issues Expected?
The floods have exposed several vulnerabilities in the jasmine industry:
- Over-reliance on a Single Production Area: With more than 150 brands concentrated in Hengzhou, the entire industry is at risk if one area is affected.
- Lack of Buffer Stock: Jasmine must be used immediately after harvest, with no buffer period; any disruption in the harvesting process leads to immediate supply shortages for processors.
- Inadequate Emergency Plans: Most brands do not have multiple supply locations or post-disaster procurement plans. They focus on controlling costs upstream but fail to consider extreme weather events.
5. Lessons Learned: How to Make the Supply Chain More Resilient?
This disaster serves as a reminder that supply chain security is more important than cost-cutting:
- Diversify Production Locations: Relying solely on Hengzhou is risky; alternative regions suitable for jasmine cultivation (such as Fujian and Yunnan) should be explored to spread risks.
- Establish Emergency Reserves: Although fresh jasmine cannot be stockpiled, pre-stocking processed products (e.g., jasmine concentrates) or signing emergency supply agreements with processors can help.
- Emphasize Resilience: Beyond scale and profit, the ability to withstand disruptions should be a key consideration in supply chain management—do flower fields have flood protection facilities? Do processing plants have backup warehouses?
Farmers are waiting for the water to recede, and brands are awaiting the flowers to bloom, but even if the water goes away, the flowers may not bloom again. This flood is not the last; extreme weather events will become more frequent in the future. The new tea drink industry must prioritize enhancing the resilience of its supply chains.
Conclusion: This flood is a “stress test” that reveals the vulnerability of our prideful new tea drink supply chain. While brand donations to rebuild flower fields are positive, it is crucial to address fundamental issues such as over-reliance on a single source and the lack of buffer stocks. Otherwise, the next typhoon will still cause panic. After all, if consumers cannot get their jasmine milk green, the loss goes beyond just a cup of tea—it also affects brand trust.