The post-80s couple sold milk tea and became a listed company

Red Meal Network

2024-04-24 10:36Posted on the official account of Guangdong Red Meal

A successful listing does not mean that you can sit back and relax, and how to make the brand develop for a long time after listing is the beginning of the test.

This article was originally published by Red Meal Network (ID: hongcan18), author: Jian Yuhao, editor: Jing Xue.

On April 23, Tea Baidao (2555. HK) was officially listed on the main board of the Hong Kong Stock Exchange.

However, the performance on the first day of listing was not ideal. On the morning of the 23rd, Chabaidao opened at HK$15.74 per share, lower than the issue price of HK$17.5. As of the close, Chabaidao recorded HK$12.80 per share, with a market capitalization of only HK$18.914 billion. In the intraday, the share price of Chabaidao once fell to HK$10.80 per share.

Rewind to a week ago. On April 15, the first day of the public offering of Chabaidao, it attracted attention because the public offering was not fully subscribed. In addition, at that time, Chabaidao did not introduce cornerstone investors, and many investors have said that if a company with a valuation of tens of billions does not introduce cornerstone investors, it may mean that the company's valuation is too expensive, or institutional investors are not optimistic about the company's future profit prospects.

Although it successfully rang the bell and went public, there are also different opinions in the industry about the "second share of new tea drinks". On the one hand, the successful listing is a milestone achievement for Chabaidao. However, in the eyes of some industry insiders, listing is not once and for all, and there are still many uncertainties in the future development of tea Baidao in the increasingly competitive new tea beverage track.

01.

The post-80s couple sold milk tea and had a net worth of more than 14 billion

According to public reports, Wang Xiaokun, the founder of Tea Baidao, and his wife Liu Weihong are both post-80s. The two of them have accumulated rich tea knowledge and practical experience in their past work and life, so they started the entrepreneurial experience of a bubble tea shop.

In 2008, near Wenjiang No. 2 Middle School in Chengdu, Sichuan, the first tea Baidao opened. This store, which is less than 20 square meters, is mainly aimed at students with low spending power, mainly in the form of take-out, selling powdered milk tea.

At that time, compared with the popularity of portable brewed milk tea, freshly made tea was basically still in its infancy. The emergence of tea Baidao just fills this gap, and with good products and affordable prices, it has successfully attracted the attention of student consumer groups. The blank market itself, coupled with the advantages of site selection and other advantages, allowed Wang Xiaokun and his wife to successfully earn the first pot of gold. A year later, the two opened a second branch on the campus of Southwestern University of Finance and Economics (Liulin Campus).

In 2010, the trademark "Tea Baidao" was officially registered. In the same year, two major Taiwanese milk tea brands, Yidian and Coco, entered the mainland one after another. In the following years, a number of ready-made tea brands such as Hey Tea, Antler Alley, and Nai Xue's Tea began to rise, and the new Chinese tea officially entered the stage of branding and chain development.

The post-80s couple sold milk tea and became a listed company

△ Image source: Tea Baidao Xiaohongshu

In 2016, Chabaidao opened the franchise in Chengdu for the first time, upgraded the store, and started the brand operation. This year, the number of Chabaidao stores exceeded 100.

On the whole, the development speed of Chabaidao in the early stage is not fast, and the sense of existence is not strong.

It wasn't until 2018 that the situation began to change. This year, Tea Baidao began to aim at the whole country, opened the national franchise expansion, and the high-speed growth of Tea Baidao began to enter the field of vision of investors.

In May and June 2023, Chabaidao has successively obtained two rounds of financing with a total of 970 million yuan, led by Orchid Asia, followed by many well-known investment institutions such as Zhengxin Valley, Grassroots Zhiben, CICC, and Tomato Capital, with a post-investment valuation of 17.6 billion yuan.

According to the latest prospectus information of Tea Baidao, Wang Xiaokun and Liu Weihong hold a total of about 81.75% of the shares of Tea Baidao, and according to the valuation of 18 billion yuan, the net worth of the two is about 14.5 billion yuan. Wang Xiaokun and Liu Weihong have also appeared on the 2023 Hurun Report, becoming the new "dark horses" of the 2023 rich list.

02.

99% of the revenue depends on franchisees,

There is a lot of pressure on the supply chain

Looking back on the development process of Tea Baidao, it can be seen that franchise management is an important driving force for the rapid development of Tea Baidao.

According to the prospectus, as of December 31, 2023, Chabaidao has opened 8,016 stores in China, covering 31 provinces and cities across the country, achieving full coverage of all provinces and county-level cities in China. Among them, the proportion of franchise stores accounts for 99%.

On the surface, Chabaidao is a direct-to-consumer business, but in fact, Chabaidao is similar to Mixue Bingcheng, which is also a supply chain company dressed in milk tea, and the core business of Chabaidao is to sell goods and equipment to franchisees.

According to the prospectus, from 2021 to 2023, Chabaidao will achieve revenue of 3.625 billion yuan, 4.197 billion yuan and 5.659 billion yuan through franchise stores, accounting for more than 99% of the total revenue, of which the revenue from the sale of goods and equipment to franchised stores accounts for about 95%, and the gross profit margin of this business is also maintained at about 32%.

△ Chart source: Screenshot of the tea Baidao prospectus

The core of this business model, which is similar to S2B2C, is to reduce the operating costs of franchisees and improve overall profitability through supply chain advantages and standardized processes.

However, unlike Mixue Bingcheng's self-built supply chain, Chabaidao mainly relies on third-party suppliers and other business partners to provide raw materials and services.

According to the prospectus, in 2023, Chabaidao's procurement from its top five external suppliers (including dairy products, sugar, juice and other ingredients, packaging materials, etc.) will account for as much as 36.6%.

△ Chart source: Screenshot of the tea Baidao prospectus

Perhaps it is also aware that there is a lot of risk in relying on third-party suppliers, so in the past few rounds of financing, Chabaidao has repeatedly mentioned that the funds raised are mainly used to improve the overall operational capacity and strengthen the supply chain capacity.

At present, Chabaidao has established a supply chain center covering every key link of supply chain management from product development, procurement, logistics to after-sales service and quality control. At the same time, Sichuan Tea Logistics Distribution Co., Ltd. was also established to provide brand logistics and distribution services.

In addition, Chabaidao also established a joint venture with Bawang Chaji Sichuan Tea Origin New Material Technology Co., Ltd. The Company's business scope includes new material technology research and development, bio-based material manufacturing, standardization services, plastic products sales and manufacturing, packaging materials and products sales, import and export of goods, etc.

It is worth noting that in addition to the continuous strengthening of the supply chain, Chabaidao has also been actively exploring overseas markets and coffee tracks in the past two years.

In December 2023, Chabaidao opened the first store of the coffee sub-brand "Coffee Ash" in Chengdu, making its first foray into the coffee track.

In January 2024, Chabaidao will officially go overseas, and the first overseas store will be selected in Gangnam-gu, Seoul, South Korea, and then it will successively open stores in Hongdae, Seoul and Apgujeong, Seoul. As of April 20, 2024, the number of Chamodo stores in South Korea has reached 3.

At present, in terms of going overseas and coffee business, it remains to be seen whether Chabaidao has explored new increments.

03.

queuing for listing,

The 2024 New Tea Drink Listing Competition has begun

In fact, in addition to tea Baidao, there are also a number of tea brands lining up to be listed.

In January this year, Mixue Bingcheng and Gu Ming submitted prospectuses to the Hong Kong Stock Exchange at the same time. Subsequently, on February 14, the tea brand Shanghai Auntie submitted a prospectus to the Hong Kong Stock Exchange, and the joint sponsors were CITIC Securities, Haitong International, and Orient Securities International.

△ Image source: Photo by Red Meal Network

On April 11, the Hong Kong Economic Times also reported that Bawang Chaji will be listed in the United States as soon as the middle of this year, raising between 200 million to 300 million US dollars (equivalent to about 1.57 billion to 2.35 billion Hong Kong dollars).

In this regard, many industry opinions believe that in the tea beverage category of "rolling out of the sky", whoever can take the lead in a successful IPO will be able to seize the opportunity.

In particular, to deal with the current industry competition such as "franchise war", "sinking war" and "price war" in the tea beverage track, tea brands need a lot of financial support.

In the past year, in addition to Tea Baidao, brands such as Gu Ming and Shanghai Auntie have also announced a sprint to 10,000 stores. To get ahead of this, brands often need more money to roll out their store networks. With the cooling of the new consumer investment market, the primary market's attention to the new tea beverage market has shown a significant downward trend, so listing has become a new way for new tea drinks to obtain funds.

But a successful IPO doesn't mean a brand can sit back and relax. Taking Tea Baidao as an example, it and most of the new tea brands are in the mid-range price band of 10-20 yuan, including the above-mentioned Gu Ming, Shanghai Auntie, Bawang Tea Ji, etc., which are already waiting in line for listing, are also in this price range.

With a large number of competitors, coupled with the increasingly serious homogenization of the new tea drink itself, it is conceivable that the competitive pressure of this batch of new tea brands in the middle price band will still be not small in the future.

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