Chinese bubble tea brand ChaPanda (also known as Cha Baek Do in Korea) / Provided by Hanwha Galleria
Bloomberg reported on the 22nd (local time) that the popularity of bubble tea in China has consecutively created billionaires.
According to the report, the stocks of Sichuan Baicha Baidao, the third-largest bubble tea chain in China (hereafter referred to as ChaPanda), are set to trade on the Hong Kong stock market starting from the 23rd.
ChaPanda aims to raise more than $300 million through this, which could make it the largest listing in Hong Kong since November of last year.
According to Bloomberg’s Billionaires Index (BBI), if this happens, the founding couple, Wang Xiaokun and Liu Weihong, who hold a 73% stake, are estimated to amass a net worth of $2.7 billion.
ChaPanda started in a small store near a middle school in Chengdu in 2008. The store was about 215 square feet (20 square meters).
They experienced tremendous success by selling half-liter bubble teas, typically priced around $5, for just over $2. This was a cost-effective strategy.
Last year, their sales increased by 56% from two years ago, reaching 5.7 billion yuan.
They have over 8,000 stores across China, and in January, they opened their first store outside of China in Seoul.
The net assets of Zhang Hongchao, who founded another bubble tea specialty store, Mixue Ice Cream & Tea (hereafter referred to as Mixue), in Henan Province in 1997, have also grown to $1.5 billion each.
In 2020, Mixue, which received investment from large Chinese food delivery companies Meituan and Hillhouse Investment, was valued at 23.3 billion yuan.
Mixue, which also owns a coffee brand, claims to be the second-largest beverage chain in the world after Starbucks.
They have about 32,000 stores in China alone and 4,000 in 11 other countries.
Guming, which ranks second in the industry in China with 9,000 stores, and Auntea Jenny, which ranks fourth, have also applied for an Initial Public Offering (IPO) on the Hong Kong stock market.
However, due to the industry’s overheated competition, some small and medium-sized companies risk being squeezed out.
The low-priced alternatives significantly impacted Nayuki Tea & Bakery, a premium brand with 1,800 stores that went public three years ago.
When Nayuki lowered the price of bubble tea to approximately $2.5 per cup, its stock price dropped by around 90%.
As a result, the wealth of the founding couple, Zhao Lin-Peng Xin, shrunk from $2.2 billion in 2021 to less than $300 million.
Bubble tea originated in Taiwan in the late 1980s before gaining popularity in Hong Kong and mainland China during the 1990s. Today, it is a highly contested market with thousands of brands vying for consumers’ attention worldwide.
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