On the evening of August 15, the website of the Hong Kong Stock Exchange showed that Chabaidao (Sichuan Chabaidao Industrial Co., Ltd.) officially submitted its listing application.
Red Star Capital noted that Chabaidao is not the first new tea brand to apply for listing. In 2021, Nai Xue's tea (02150.HK) was listed on the Hong Kong stock market, and in 2022, the A-share IPO of "Snow King" Michelle Ice City was accepted, and it is planned to be listed on the main board of the Shenzhen Stock Exchange.
According to the Frost & Sullivan report, in terms of retail sales in 2022, Chabaidao ranked third in China's new tea shop market, with a market share of 6.6%; The first place is Michelle Ice City.
Source: Prospectus
Michelle Ice City, through the "low-end positioning + franchise model" to quickly seize the market, the current number of stores, retail sales, market share are far ahead, and Chabaidao through the "mid-end positioning + franchise model" to occupy the market, currently in the second echelon of new tea drinks, is also in a leading position.
However, the competition in the new tea drinking track is very fierce, what is the competitiveness of the tea baidao seeking to be listed this time? What information does the prospectus reveal?
On average, nearly 8 stores are landed in one day
The number of members exceeds 66 million
According to public information, Chabaidao was established in 2008, and its first store was opened near Wenjiang No. 2 Middle School in Chengdu, targeting students.
From the perspective of time, Chabaidao is regarded as the "old-timer" of the new tea drinking industry. Today's industry leader Heytea was founded in 2012, Naixue's tea was founded in 2015, and the boom that the market called the "first year" of new tea drinks occurred in 2015.
However, in the first nearly 10 years, the development speed of tea baidao was not fast.
According to public information, the number of Chabaidao stores in 2017 has just exceeded 180.
In 2018, Chabaidao officially opened its national franchise, focusing on first- to fourth-tier cities. At that time, Chabaidao also carried out a brand upgrade: as an enterprise born in Chengdu, Chabaidao began to be deeply bound to Panda IP, and its products also began to promote "Chinese tea".
Since then, Chabaidao has gradually entered the field of vision of consumers across the country.
In 2020, Chabaidao officially entered the fast lane of development, and the prospectus shows that on January 1, 2020, the number of its stores was 531, and 1,709 new stores were added in one year.
In 2021, the expansion speed of Chabaidao is also amazing, with 2,835 new stores opened that year, equivalent to nearly 8 Chabaidao landing every day, and the number of Chabaidao stores reached 5,077 at the end of 2021, and now there are more than 7,000 stores.
From the perspective of store distribution, through the 6,597 stores as of March 31, 2023, the number of stores in first-tier, new first-tier, second-tier, third-tier, fourth-tier and below cities accounted for 10.7%, 28.7%, 21.1%, 19.4% and 20.0% of the total number of Chabaidao stores, respectively.
Source: Prospectus
From the perspective of the format of stores, as of March 31, 2023, the number of stores in shopping malls, communities and other business districts accounted for 39.2%, 30.3% and 30.5% of the total number of Chabaidao stores, respectively.
In general, at present, the stores of Chabaidao are relatively uniform in terms of urban selection and site selection, which is mainly due to the positioning of Chabaidao as a mid-end new tea drink, the audience of mid-range new tea drinks is wider, and the acceptance of consumers is relatively high.
Returning to the user level, in February 2021, Chabaidao launched a membership system, and enterprises want to enhance consumer loyalty and increase consumption frequency in this way.
Indeed, as of June 30, 2023, the number of registered members of Cha Bai Dao exceeded 66 million, of which 16.7 million were active members in the second quarter of 2023, and the member repurchase rate in the second quarter of 2023 was 32.8%, higher than the industry average.
It shows that while Chabaidao is expanding rapidly, consumers are sticky and are loved by many users.
The gross profit margin is more than double that of Michelle Ice City Support franchisees, the store closure rate is much lower than that of peersThe expansion of Chabaidao stores relies on franchises, and the profit model also relies on franchises.
In fact, most new tea brands in China now adopt the franchise model for store expansion, and high-end tea brands such as Heytea, Naixue's tea, and Lele tea have also opened up to join in recent years.
For new tea brands, joining this asset-light model can indeed help enterprises better achieve profitability.
According to the prospectus of Chabaidao, from 2020 to 2022, the revenue of Chabaidao will be 1.080 billion yuan, 3.644 billion yuan and 4.232 billion yuan, respectively, with a compound annual growth rate of 97.9%. In the first quarter of this year, revenue increased 53% year-on-year to 1.246 billion yuan.
The revenue of Chabaidao mainly comes from the sales of goods and equipment, and the revenue contributes about 95% to the revenue, followed by the income such as franchise fees, accounting for about 5%.
Source: Prospectus
According to the prospectus, from 2020 to 2022, the net profit of Chabaidao will be 238 million yuan, 779 million yuan and 965 million yuan, respectively, with a compound annual growth rate of 101.3%. In the first quarter of this year, net profit increased by 50.7% year-on-year to 285 million yuan.
It is worth noting that the gross profit margin of Chabaidao is basically maintained at about 35%, and the net profit margin is around 22%.
According to the previous prospectus submitted by Michelle Ice City, in 2019, 2020 and 2021, the net profit margin of Michelle Ice City was 17.2%, 13.5% and 18.5% respectively.
That is to say, although there is a certain gap between the current number of Chabaidao stores and Michelle Ice City, in terms of profitability alone, Chabaidao is better.
Chabaidao's support for franchisees is also relatively large.
From the perspective of franchisees, in fact, from the aspects of store site selection, decoration and opening, staff training, store operation, etc., Chabaidao has given support.
For example, on the one hand, Chabaidao provides franchisees with full-cycle professional training from the start-up stage to the mature stage by establishing Chabaidao vocational skills training schools and setting up training centers in regional operation centers; On the other hand, through the establishment of a timely feedback mechanism and experience sharing platform, special personnel are arranged to solve the relevant problems encountered by franchisees in daily management, and provide an exchange platform for franchisees to share excellent store operation experience with each other.
According to Frost & Sullivan, from 2020 to 2022 and the first quarter of 2023, the closure rate of Chabaido franchised stores was only 0.1%, 0.2%, 1.1% and 0.5%, which is much lower than the industry average.
In the three years of greater external challenges, the low closure rate of Chabaidao franchised stores is the result achieved by Chabaidao and franchisees, and it also shows that Chabaidao and franchisees have achieved true mutual benefit and win-win.
The new tea beverage industry entered the second half
Competitiveness mainly revolves around products and brands
We all know that the current new tea drinking track is fiercely competitive, and the industry is very involuted, but the future space of the industry is still there.
According to Frost & Sullivan's report, the compound growth rate of China's new tea shop industry is 24.9% from 2017 to 2022, which is much higher than the overall growth rate of 4.1% in China's soft drink industry, while the compound growth rate of new tea shops is expected to remain at a high speed of 19.0% from 2022 to 2027.
The industry entered the second half, and the competitiveness of new tea drinks mainly revolved around products and brands.
At the product level, it includes product quality, product innovation and other dimensions.
First of all, in terms of product quality, food safety has always been the red line of the operation of new tea drinks, especially under the franchise model, it is more difficult for enterprises to manage franchisees. Therefore, how to effectively avoid food safety problems in franchised stores is crucial.
According to the prospectus, Chabaidao mainly manages franchisees from four aspects: franchise agreement, internal training, operating procedures and inspection system.
For example, when signing a franchise agreement, Chabaidao will stipulate specific food safety measures in the operation of the store. If the franchisee violates the above requirements, the franchise agreement may be terminated and claims against the defaulting franchisee. In the process of franchisee access and operation, Chabaidao will provide training for them, covering applicable laws and regulations, industry standards, internal policies, etc.
In the actual operation of the store, a set of food safety and quality control standards independently developed by Chabaidao will be adopted. Store employees must strictly adhere to procedures and protocols related to raw material storage, shelf life monitoring, store hygiene, employee health and personal hygiene, record keeping and document management.
In addition, food safety is also one of the key inspection contents of the inspection procedures of Chabaidao stores; Conduct regular internal inspections of the operations of franchised stores on food safety issues.
It is worth mentioning that in addition to "managing" franchisees, at the level of food safety, Chabaidao will also strictly manage the upstream supply chain to achieve all-round control from top to bottom.
Secondly, in terms of product innovation, Chabaidao has also been trying.
Low-sugar, low-fat, healthy products have been created to meet the needs of health-conscious consumers. Last year, Chabaidao developed nearly 300 products, including nearly 43 new products, and completed the upgrade of 9 classic product formulas.
Regarding product innovation, Chabaidao said that the company does not just follow popular market trends, but creates a series of new products based on a deep understanding of consumer tastes and feedback. Take inspiration from traditional Chinese teas, global cuisine and ingredients, snacks and desserts.
Back to the brand building level, it determines the tonality of the brand and the vitality of the brand.
Chabaidao has also been constantly optimizing and enhancing its brand power in the past period; Especially in 2023, Chabaidao has undergone a comprehensive brand upgrade and launched the latest brand IP "Chacha".
Given that its main consumers are between the ages of 18 and 35, Chabaidao has built a comprehensive online and offline marketing network, using multi-channel emerging brand promotion and marketing strategies to enhance brand awareness, reach new target groups, and increase existing customer stickiness.
For example, Chabaidao has acquired customers through well-known mainstream social platforms such as Weibo, WeChat, Xiaohongshu, Douyin, Bilibili, Kuaishou, etc., and launched tea marketing activities, and the market response has been good.
Source: Prospectus
In addition, in terms of IP marketing and cross-border cooperation, Chabaidao is also making frequent moves, which further enhances the popularity of Chabaidao and is closer to consumers.
In general, the creation of product power and brand power of Chabaidao has also achieved certain results in continuous and active promotion, and this is actually the key to determining whether a tea brand can "grow red".
Brief summary:
Regarding the next step of Chabaidao, Chabaidao said in the prospectus that the net proceeds from the IPO will be mainly used to improve the overall operating capacity and strengthen the supply chain; developing digital capabilities and hiring and training professionals; branding and promotional activities; Launch and promote self-operated coffee brands and lay out a network of coffee shops throughout China; product development and innovation; and for working capital and general corporate purposes.
However, in the face of competitors such as Gu Ming and Hushang Aunt, the pressure of Chabaidao is still there. At present, Chabaidao also needs to constantly demonstrate the integrity of its business system and the sustainability of making money by scale.
Red Star News reporter Liu Yao
Edited by Xiao Ziqi
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