The new tea drink unicorn tea Baidao was officially IPO listed, and the indicators such as profit and market value crushed opponents.
On April 23, Sichuan Baicha Baidao Industrial Co., Ltd., the parent company of the well-known new tea drink brand "Tea Baidao", was officially listed on the main board of the Hong Kong Stock Exchange with the stock code of 2555. HK。 This also means that Chabaidao has become the "first share of franchised tea drinks" to land on the Hong Kong Stock Exchange, and it is also the largest IPO of Hong Kong stocks in 2024 so far.
On the morning of the same day, the opening price of Chabaidao was HK$15.74, with a market value of HK$23.26 billion.
Why was Cha Bai Dao able to stand out from the fierce competition in the new tea beverage industry, successfully land on the Hong Kong stock market before many brands, and be so recognized by international investors? The secret is hidden in the prospectus of Cha Bai Dao.
Selling 1 billion cups a year, capital re-understands new tea drinks
In 2008, the first tea Baidao was born in Chengdu. Since its establishment, Tea Baidao has focused on exploring the combination of natural ingredients and Chinese tea, and has continued to develop diversified tea products to improve consumer experience. Behind the brand positioning of Tea Baidao is the presentation of brand strategy and the direction of product research and development. Tea Baidao continues to visit the tea mountain, explore the fresh original leaves, pay attention to every process of tea from growth, picking, production to cupping, establish a global supply chain system, use high-quality tea, select seasonal fresh fruits, and strictly control the quality of each cup.
In terms of retail sales in 2023, Chabaidao ranked third in China's ready-made tea shop market with a share of 6.8%. In 2023, a total of 1.016 billion cups of milk tea will be sold in Chabaidao stores, with a total retail sales of about 16.9 billion yuan. As of April 5, 2024, the number of Chabaidao stores has reached 8,016, covering 31 provinces and cities across the country, achieving full coverage of all provinces and tier-level cities.
Through "picking on good tea and exploring good taste", Tea Baidao realizes "good tea as the base and creates freshness", and finally creates a more palatable and universal new generation of Chinese tea, thus becoming a new representative of oriental tea culture and enterprises, and guiding global investors to re-understand China's tea industry through its excellent capital market performance.
Revenue and profit grew rapidly, and net profit crushed opponents
The first bright spot in Chabaidao's prospectus is its strong financial figures. From 2021 to 2023, the revenue of Tea Baidao will be 3.64 billion, 4.23 billion and 5.70 billion yuan respectively, with a compound annual growth rate of 25.1%. Rapid and consistent revenue growth has enabled the company to successfully establish itself in the highly competitive freshly made tea industry and to become an industry leader.
In terms of profitability, Chabaidao has also maintained high-quality profit growth that matches revenue growth. From 2021 to 2023, the company's gross profit will be 1.30 billion, 1.46 billion and 1.96 billion yuan respectively, with a compound annual growth rate of 22.9%, while the gross profit margin will remain at 34.4%. The strong gross profit growth and stable and healthy gross profit margin reflect that the cost control and pricing strategies of Chabaidao have done quite well, and the company's profitability and market competitiveness have been well maintained while grasping market opportunities.
One of the brightest financial figures in Cha Baidao is net profit. From 2021 to 2023, the adjusted net profit of Chabaidao will be 900 million, 970 million and 1.26 billion yuan respectively, with a compound annual growth rate of 18.2% in net profit, and the adjusted net profit margin in 2023 will reach 22%. This profitability has significantly exceeded the industry average (generally below 15%).
The product research and development is unique, and the drinks are popular
By discovering and exploring the taste and characteristics of various raw materials, Chabaidao develops unique and original recipes, works with upstream suppliers and has them implement production processes in strict accordance with the company's product requirements, and allows consumers to sample and test new products before they are launched. These initiatives have led to the standardization of product development, enabling all stores in the Chamodo store network to offer a uniform product to consumers. Tea Baidao uses the "exclusive secret recipe" to carry out reverse customization to upstream suppliers, which also solves the problem of product homogenization that has always existed in the tea industry, and deepens the moat for the core competitiveness of its products.
Relying on the company's industry-leading R&D capabilities, Chabaidao has formed a rich product matrix composed of classic tea, seasonal tea and regional tea, which can meet the diversified consumption needs of different types of consumers. The five classic products listed in the tea Baidao prospectus together account for nearly 40% of GMV, and a total of 350 million cups will be sold in 2023, which can be described as "a hot model", of which "Jasmine Milk Green" sells 110 million cups a year, and "Yangzhi Manna Dew" has a retail sales of nearly 1.8 billion yuan a year. Seasonal products such as "Black Lacquer" and "Green Jasmine" and regional products such as "Yellow Peel and Lemon" have maintained a high-frequency new rhythm.
Taking 2023 as an example, Chabaidao has developed a total of nearly 250 products, including 48 new products, and completed the upgrading of 13 classic product formulas. In other words, almost all year round, it can achieve "new products every week" and continue to bring fresh experiences to consumers. Chabaidao's product strategy of "seasonal tea plus regional tea" ensures that consumers can get surprises in time and space, and together with its classic tea product matrix, it constitutes a very solid product fundamentals.
Members and live broadcasts have exceeded 100 million young people
As a brand mainly for young people, Chabaidao has also established a positive image in the minds of consumers, and has won the recognition and love of young people. In the 2023 joint event with miHoYo's otome game "Book of Undetermined Events", Chabaidao gave consumers full respect and recognition with practical actions through intimate measures such as honoring consumers as "lawyers" (the profession of the protagonist in the game), memorizing the name of the male protagonist of the game, and properly keeping the co-branded peripherals of the event, which was widely praised by consumers, and the co-branded event was also a great success and was rated as a benchmark case of cross-border co-branded activities by the industry.
The love of young people will be very directly reflected in sales. An intuitive example is that Tea Baidao has established an absolute advantage on the Douyin platform, ranking first in many industries such as "National Group Buying List with Goods", "GMV of Tea Beverage Live Broadcast", "Brand Special Conversion Rate" and so on. Among them, on March 10, 2023, the GMV of its Douyin live broadcast exceeded 100 million yuan in a single day, and the number of fans increased by about 230,000 in a single day, setting a new GMV record for the special live broadcast of the Douyin life service brand.
At the same time, the number of members of Chabaidao has grown rapidly, and the number of registered members has exceeded 100 million. In the fourth quarter of 2023, the number of active members reached 20.4 million, and the repurchase rate of members reached 35%, which is higher than the industry average.
Fully empower franchisees, organize efficient and strong supervision
On the basis of chain operation, Chabaidao focuses on the small store model and takeaway business, which has more cost advantages and leverages more young consumers, which can not only meet the needs of consumers in terms of quality and price ratio, but also better guarantee the growth of business performance. The small store model can save store costs to a great extent, with lower expenses in terms of rent, decoration, and personnel costs, and at the same time can support takeaway business and window pick-up to improve operational efficiency. Among the Chabaidao stores, 44.3% of the stores are between 30 and 49 square meters, and 42.8% are between 50 and 100 square meters.
Behind the small store model, Chabaidao fully supports and empowers franchisees through the whole life cycle, so as to achieve a stable franchisee system. Chabaidao has set up 16 training centers across the country. The training center not only conducts continuous training for franchisees and their employees, but also helps new franchisees through old franchisees, provides support for online operation and continuous operation, and improves store operation efficiency through digital system system.
At the same time, Chabaidao has set up a regional supervision team composed of about 570 people across the country, in addition to conducting routine inspections of stores 3 to 4 times a month, as well as daily random inspections by headquarters and regional inspection teams, as well as special inspections of food safety by third-party organizations. It is also under such a combination of punches that Chabaidao has achieved a store closure rate far below the industry average from 2021 to 2023.
Laying the national supply chain and strengthening the "last mile"
Chabaidao has formed an industry-leading national supply chain capability, and plans to continue to optimize this capability to promote a complete layout. At present, Chabaidao has established a nationwide warehousing and logistics network through self-management and third-party cooperation to achieve high-frequency and timely distribution services, and ensure the supply of fresh and high-quality materials with the help of digital empowerment such as the establishment of an order management system (OMS) and a transportation management system (TMS).
By the end of 2023, Chabaidao has 21 multi-temperature warehouses across the country, including 20 central warehouses and 1 front warehouse, with a total area of about 80,000 square meters. Through a distribution fleet of 300 multi-temperature transport vehicles, Chabaidao has achieved delivery to 97% of its stores twice a week or more, and has opened up 41 night delivery routes in Beijing, Chengdu and other places.
At the same time, Tea Baidao has deepened the layout of the production area, strengthened the "last mile", and created a "resource + technology" supply chain system.
In 2023, Chabaidao has directly signed procurement agreements with high-quality fruit producing areas across the country for some core fruits, such as peaches, Tainong mangoes, summer black grapes, etc., and strengthened cooperation with leading suppliers around core raw materials such as dairy products, tea, and frozen freshly squeezed juices, so as to lock in high-quality production areas and supply of upstream raw materials. The prospectus also shows that Chabaidao will further explore the national high-quality production areas, increase the category and proportion of directly harvested fruits, and plan to carry out counterpart support plans for fruit producing areas with large procurement scales, so as to strengthen cooperation with local suppliers and support local farmers and local economic development.
In addition, the prospectus of Tea Baidao also discloses that Tea Baidao has a factory "Senmian Factory" in Chengdu, Sichuan Province that produces environmentally friendly new material packaging materials, with a total area of more than 10,000 square meters, which will be put into operation in 2021. The plant has an annual production capacity of 13,952 tons in 2023, and the biodegradable straws, packaging bags and other environmentally friendly packaging materials produced can not only be used by Chabaidao's own products, but also can be used for external procurement needs.
Zhu Danpeng, an analyst of China's food industry, pointed out: "The competition in the new tea beverage track has gradually entered the second half, and the moment has reached the moment when the top players need to compete for the basic skills of the supply chain. There is no shortcut to the construction of supply chain capabilities, and brands need to pay enough attention from a strategic height and invest real money to lay a solid foundation bit by bit. ”
Sinking + going to sea + coffee, the future imagination space is abundant
By the end of 2023, the number of Chabaidao stores in first-tier, new first-tier, second-tier, third-tier, fourth-tier and below cities will account for 10.6%, 26.9%, 20.9%, 19.4% and 22.2% respectively. In the prospectus, Chabaidao believes that there is a large market space in lower-tier cities, so it plans to further carry out store encryption in second-tier cities and below to seize the sinking market.
Zhu Danpeng, an analyst of China's food industry, believes that among the leading new tea brands in China, there are more or less problems of uneven distribution at the regional and urban levels. If the distribution of stores is too concentrated in one area, it will reduce the brand's influence on a national scale. However, if the distribution of stores in high-tier cities is small, it is not conducive to improving brand awareness and communication volume. "But Chamodo strikes a reasonable balance in this regard. Its stores have spread to all provinces in the country, especially in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen. In the competition in the sinking market, the attraction of this high-tier city brand to consumers in counties and towns is very large, and it is likely to form a dimensionality reduction blow to regional brands. Zhu Danphong said.
Due to the huge space of overseas markets, tea drinks going overseas have been the common choice of Chinese tea enterprises for a period of time.
In overseas markets, since its official opening in January this year, Chabaido's first branch in Korea has exceeded expectations. On the 19th of this month, Chabaido's second store in South Korea, Apgujeong Galleria, officially opened. Potential overseas markets also include Thailand, Vietnam, Malaysia, Australia, etc. Zhu Danpeng, an analyst of China's food industry, said: "Southeast Asia, as a region with tea culture and tradition, will be much more receptive to tea products than European and American countries. At the same time, due to the geographical proximity, the construction of the supply chain is relatively easy, so domestic tea brands often choose Southeast Asia as their first stop when going overseas. “
It is worth mentioning that the prospectus of Tea Baidao also mentions that 5% of the funds raised will be used to promote the self-operated coffee brand "Coffee Ash" and set up a network of coffee shops across China. In the next three years, 15 coffee shops are planned to be opened, and the coffee brand will adopt both direct operation and franchise models, including large coffee shops of more than 50 square meters and small coffee shops of less than 50 square meters for quick pick-up and takeaway.
Industry insiders generally believe that the coffee track seems to be a small market scale at present, but it has huge growth potential in the future. On the one hand, the competition in the coffee market is relatively small, and there are not many brands that have formed a real scale advantage in China; on the other hand, the "price war" of the coffee track since last year is completing the cultivation of consumers, and the future market space is broad. The action of going overseas to the Southeast Asian market and entering the coffee track also provides greater imagination for the future development of Chabaidao.
For Chabaidao, the listing is a milestone, and it is also the starting point to open up a broader development space in the future. Through the help of the capital market, Tea Baidao has a greater chance of winning in the face of the fierce "involution" of the domestic tea market, and has more confidence in exploring the Southeast Asian market and entering the coffee track, so as to continue to maintain a leading position in the industry and promote the company's value curve to further climb.