On April 23, the new tea beverage company Chabaidao was listed on the Hong Kong stock market, becoming the second new tea beverage listed company after Nai Xue's tea. At present, Mixue Bingcheng, Gu Ming, and Shanghai Auntie have also submitted prospectuses, and it is more likely to be listed in 2024, which is expected to form a new tea beverage company listing tide.
Nowadays, new tea drinks tend to be saturated in first- and second-tier cities, while the sinking market has become a must for brands to expand due to their greater growth potential. At the same time, the new tea beverage brand pays more attention to cultivating internal strength and building its own supply chain hard power. This is also an important reason why new tea brands are looking to go public.
Tea Baidao landed in Hong Kong stocks
Sichuan Baicha Baidao Industrial Co., Ltd., the parent company of the new tea drink brand "Tea Baidao", was listed on the Hong Kong stock market on April 23, raising a total of nearly HK $2.6 billion, which is the largest IPO (initial public offering) of Hong Kong stocks since 2024. Chabaidao is also the first new tea beverage company to be listed in 2024. Previously, Nai Xue's tea landed on the Hong Kong stock market in June 2021 and became the "first stock of new tea drinks".
On the first day of listing, the tea Baidao broke. As of the close, its share price fell to HK$12.8 per share, with a market capitalization of HK$18.914 billion. On the same day, Nai Xue's tea opened high and went low, closing up 0%, with a share price of HK$2.28 per share and a market value of HK$3.91 billion. Previously, Shen Meng, executive director of Xiangsong Capital, told the Beijing News that it is not difficult for new tea beverage companies to be listed on Hong Kong stocks, but it is not easy to get high valuation and high liquidity.
Founded in 2008, the prospectus shows that in 2023, its stores will sell a total of 1.016 billion cups of milk tea, with a total retail sales of about 16.9 billion yuan. As of April 5, 2024, the number of its stores has reached 8,016, covering 31 provinces across the country.
From 2021 to 2023, Chabaidao's revenue will be 3.64 billion yuan, 4.23 billion yuan and 5.7 billion yuan respectively, with a compound annual growth rate of 25.1%, gross profit will be 1.3 billion yuan, 1.46 billion yuan and 1.96 billion yuan respectively, with a compound annual growth rate of 22.9%, and the gross profit margin will remain at 34.4%, and the adjusted net profit will be 900 million yuan, 970 million yuan and 1.26 billion yuan respectively.
There are also 3 new tea drinks on the market
For the new tea industry, "listing" has been frequently mentioned since 2023. Entering 2024, a number of new tea brands will accelerate the listing process. On January 2, Gu Ming and Mixue Bingcheng submitted listing applications to the Hong Kong Stock Exchange. On February 14, Shanghai Auntie submitted a listing application. In addition, brands such as Bawang Tea Ji and Chayan Yuese have also been listed many times.
Gu Ming and Mixue Bingcheng submitted listing applications on the same day, which is regarded as the starting point of the new tea beverage listing tide in 2024. According to the prospectus of Gu Ming, this new tea beverage company that started in Taizhou, Zhejiang, has exceeded the revenue of the whole year of 2022 in the first three quarters of 2023, and is the second largest freshly made tea shop brand in China. In terms of the number of stores, Mixue Bingcheng is far ahead. As of the first three quarters of 2023, it has more than 36,000 stores worldwide, making it the only enterprise in the domestic ready-made beverage industry with a store scale of more than 30,000 stores.
Industry insiders said that based on the tea listing cycle of Tea Baidao and Naixue, the average time from the submission of the prospectus to the completion of the listing is less than half a year. Gu Ming, Mixue Bingcheng, and Shanghai Auntie are more likely to be listed in 2024.
For the new tea beverage companies to go public in Hong Kong, Shen Meng told the Beijing News reporter that whether it is for the needs of enterprise competition and development, or the consideration of the investor exit mechanism, the current new tea beverage enterprises need to break through the gradually solidified market pattern through listing.
Aim for the sinking market
Looking at the new tea beverage market, the first- and second-tier markets are close to saturation, while the sinking market has a good growth rate.
According to the data, Dazhong Freshly Made Tea Shop is the largest and fastest-growing segment in China's ready-made tea shop market, with GMV (gross merchandise transaction) reaching 86.5 billion yuan in 2022 and expected to increase to 244.4 billion yuan in 2027, with a compound annual growth rate of 23.1%. Among them, second-tier cities and below are expected to grow at the fastest rate from 2022 to 2027, contributing most of the market growth.
Mixue Bingcheng disclosed in the prospectus that as of the first three quarters of 2023, its store network has spread to 1,700 counties and 3,100 townships, covering all tier-level cities.
Shanghai aunt also mentioned in the prospectus that the "sinking market" is its important advantage. It strategically focuses on the sinking market, and is in a leading position in the market among the mid-priced freshly made tea shop brands in the sinking market in terms of the number of stores in the whole system. As of the first three quarters of 2023, 49% of Shanghai Auntie's stores are located in third-tier cities and below, and 50.4% of the new stores opened during the year are located in third-tier cities and below.
Shanghai Auntie plans to increase the store network density of the "Shanghai Auntie" brand in second- and third-tier cities in the next five years, and will leverage its understanding of consumer preferences, location selection methods and experience to capture potential growth opportunities. Combined with the upgrade of the "Light Enjoyment" brand concept, the company will expand its store network to cover more cities below the third tier, including cities at the county level and below.
According to the prospectus of Chabaidao, as of the end of 2023, the number of its stores in first-tier, new first-tier, second-tier, third-tier, fourth-tier and below cities accounted for 10.6%, 26.9%, 20.9%, 19.4%, and 22.2% respectively. Chabaidao believes that there is a large market space in lower-tier cities, and plans to further encrypt stores in second-tier cities and below to seize the sinking market.
Scaling up the supply chain
From the brutal development of the industry, to the number of competing stores, to focusing on the construction of the supply chain, the new tea beverage industry is entering a new stage of development. Wang Hongtao, executive deputy secretary general of the China Chain Store & Franchise Association, once said in an interview with a reporter from the Beijing News that for the entire chain operation industry, including new tea drinks, the supply chain is the infrastructure.
Nowadays, new tea beverage companies are accelerating the construction of supply chains. For example, Tea Baidao plans to continue to optimize its national supply chain capabilities and promote a complete layout. 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. In addition, Chabaidao has a "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. The factory was put into operation in 2021 and has an annual production capacity of 13,952 tons in 2023.
The prospectus also shows that Chabaidao will further explore the country's high-quality production areas, increase the category and proportion of directly picked fruits, and plan to carry out counterpart support plans for fruit producing areas with large procurement scales to strengthen cooperation with local suppliers.
According to the CIC Consulting report, as the first enterprise in the domestic ready-made beverage industry to set up a central factory, the supply chain system covers core links such as procurement, production, logistics, R&D, and quality control, and has built a complete industrial layout integrating agricultural technical support, centralized procurement, product research and development, central factory production, self-built logistics system, store operation management, and consumer services.
The prospectus also mentions that part of the funds raised will be used to invest in warehouses and processing plants, and it is expected to operate new warehouses with refrigeration and freezing capabilities in provinces that plan to have a dense store network in the next three to five years. Guming also plans to invest in smart warehousing facilities to support automated storage, packaging, inventory management and information tracking. At the same time, we will invest in processing plants to continuously strengthen our raw material processing capabilities.
Zhu Danpeng, an analyst of the food industry, believes that 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 supply chain capacity building, and brands need to pay enough attention from a strategic height and invest real money to lay a solid foundation.
Beijing News reporter Wang Ziyang
Edited by Li Yan
Proofread by Liu Baoqing