A cup of milk tea sells nearly 30 billion yuan annually, Chagee "hardly" enters the US stock market

Author | Wang Erde Editor | Du Zhong Source | TideSight (ID: TideSight)

In 2025, a wave of new tea beverage listings has arrived, and now, the "first new tea beverage stock in the US" is here.

On April 17, Chagee Holdings Ltd. officially listed on NASDAQ, with the stock code CHA. Chagee issued 14,683,991 shares, raising $411 million. Chagee's stock opened with a rise of over 20%, and as of the time of publication, Chagee's stock price was $32.44, with a total market value of $5.954 billion.

Successfully going public in less than 8 years, Chagee's speed is only second to Nayuki among new tea beverage brands. However, compared to Nayuki's "tragic" situation, Chagee's achievements are much better.

According to the prospectus, by the end of 2024, Chagee's GMV (Gross Merchandise Volume) was 29.5 billion yuan, a year-on-year increase of 173%. Based on GMV, Chagee has surpassed Nayuki, Cha Bai Dao, Gu Ming, and Hu Shang A Yi, becoming the second largest new tea beverage brand in China, second only to Mixue Ice City.

At the bell-ringing ceremony, Chagee's CFO Huang Hongfei stated that the IPO is not the end, but a new starting point. "Just like the modernization journey of coffee in the 1970s, we hope to inspire the vitality of tea, a historically rich beverage loved by consumers worldwide, through our modern interpretation."

As the saying on the wall of Chagee's flagship store goes: "How far a cup of tea can go depends on how far the eastern wind blows." Next, we will see how Chagee continues to tell the story of Chinese tea.

A Cup of Milk Tea Generates 12.4 Billion Annually

In November 2017, Chagee opened its first store on Wuyi Road in Kunming.

Positioned as a fresh milk tea brand, from the beginning, Chagee insisted on fresh milk tea as its main offering, keeping the raw materials as simple as possible, retaining only whole leaf tea, high-quality milk, and base milk.

Unlike fruits, which are more troublesome to transport and preserve, the raw materials for fresh milk tea are only tea, milk, syrup, etc., all of which are easy to store and transport. The larger Chagee expands, the more obvious the scale effect becomes.

According to the prospectus, in 2024, Chagee's annual GMV was 29.4577 billion yuan, with an average daily GMV of 80 million yuan, a year-on-year increase of 173%; the average monthly GMV per store grew from 177,500 yuan in 2022 to 511,700 yuan in 2024; net profit was 2.515 billion yuan, a year-on-year increase of 213.32%, with a net profit margin of 20.3%.

In terms of revenue, Chagee's revenue for 2022, 2023, and 2024 was 492 million yuan, 4.64 billion yuan, and 12.4 billion yuan, respectively.

During the same period, Chagee's operating profit was -116 million yuan, 1.074 billion yuan, and 2.887 billion yuan, respectively; net profit was -90.72 million yuan, 800 million yuan, and 2.515 billion yuan, respectively; net profit margin was -18.5%, 17.3%, and 20.3%, respectively In the past two years, Chagee Holdings Ltd. has seen its number of stores increase sixfold. According to the prospectus, the number of Chagee stores worldwide in 2022, 2023, and 2024 is projected to be 1,087, 3,511, and 6,440 respectively (6,284 of which are located in China). Among these, franchise stores account for over 97% (6,271 stores).

In terms of revenue sources, Chagee's income primarily comes from franchise stores, with revenue from franchises expected to reach 11.6 billion yuan (approximately 1.593 billion USD) in 2024, accounting for 93.8% of total revenue; revenue from self-operated stores is projected to be 106 million yuan, accounting for 6.2%.

In 2024, the average monthly GMV per store for Chagee in the Chinese market (including Hong Kong) is expected to grow from 177,500 yuan in 2022 to 511,700 yuan. By the end of 2024, there will be a total of 3,195 franchisees joining Chagee, with an average of 2 stores opened by each franchisee.

By the end of 2024, Chagee will have over 3,000 stores in new first-tier and second-tier cities, surpassing the number of stores in third- and fourth-tier cities.

Chagee's closure rate is relatively low among new tea beverage brands. Data shows that in 2023 and 2024, Chagee's closure rates were only 0.5% and 1.5%, respectively.

The brand's recognition is naturally linked to its marketing efforts. The prospectus indicates that from 2022 to 2024, Chagee's sales and marketing expenses were 73.6 million yuan, 261.6 million yuan, and 1.1089 billion yuan, accounting for 15%, 5.6%, and 8.9% of revenue, respectively. Based on 2024 data, the average sales and marketing expense per store reached 172,200 yuan.

Chagee's Chairman and CEO, Zhang Junjie, is 32 years old. The prospectus shows that Zhang Junjie, as the major shareholder, holds 19.9% of Class A common stock and 38.7% of Class B common stock, controlling the largest voting power in the company. XVC holds 20.29%, and Congbi Qiushi holds 10.56%.

Additionally, DCM, RWC Asset Management, Allianz Group's Allianz Investment, and Orix Asia Asset Management have agreed to subscribe to 205 million USD of Chagee's ADR (American Depositary Receipt), accounting for approximately 51.7% of this IPO offering.

Star Product, Annual Sales of 300 Million

Zhang Junjie once stated: "The fruit tea sector seems full of opportunities, but considering my own strength and resources, I realized that I cannot compete with leading brands in this field and do not want to overconsume resources. The logic behind Starbucks selling coffee worldwide is 'coffee + milk', while focusing on 'original leaf tea + fresh milk' is Chagee's direction in the tea beverage market."

It can be said that the star product supports Chagee's "territory."

Chagee's main product currently is the "original leaf fresh milk tea" (Tea latte) category. Compared to other tea beverage brands, Chagee's menu is much more streamlined. The prospectus reveals that there are only 19 core products, with the number of new products launched from 2022 to 2024 being 14, 22, and 15, respectively These core products contribute to the majority of revenue. The prospectus reveals that in 2024, 91% of the GMV of Chagee Holdings Ltd. in the Chinese market (including Hong Kong) comes from the sales of fresh milk tea made from original leaves. Among them, about 61% of the GMV comes from the top three best-selling products of Chagee Holdings Ltd.

Public information shows that as of August 2024, its star product "Bo Ya Jue Xian" has sold over 600 million cups, with sales exceeding 300 million cups in 2024 alone.

Image source: Internet

No seasonal fruits, no hand-peeled pomegranates, no hand-squeezed lemons, and no Anchor cream or American walnut pieces... The combination of tea + milk as a major product means a simpler supply chain, requiring only three raw materials: tea, milk, and packaging.

Chagee Holdings Ltd. also stated in its prospectus that focusing on a simple core menu makes its supply chain management more streamlined and efficient, and the tea preparation process can achieve a high degree of automation, thereby improving the operational efficiency and service quality of its store network.

Upstream, Chagee Holdings Ltd. operates 2,700 acres of tea gardens in Yunnan and Anxi; midstream, it has established tea processing plants in Lihu Town, Chaoshan, and Jiangmen City; in terms of packaging materials, it has chosen to establish a supply chain company in joint venture with Tea Baidao.

Data shows that in 2024, the logistics cost of Chagee Holdings Ltd. accounted for less than 1% of the total global GMV, lower than the industry average of 2% as reported by ZhiShi Consulting. Meanwhile, the inventory turnover days are 5.3 days, which is the lowest among tea beverage companies with over a thousand stores according to iResearch Consulting.

In addition, Chagee Holdings Ltd. stores widely use standardized automated tea-making machines, reducing manual operations by staff through standardized equipment and operations, ensuring consistency in products across different locations.

It is reported that the average serving efficiency of the new generation of automated tea-making equipment at Chagee Holdings Ltd. has improved to 8 seconds per cup, with the flavor error rate reduced to 2‰. Prospectus data shows that the average monthly cup output per store of Chagee Holdings Ltd. increased from 8,981 cups in 2022 to 25,099 cups in 2024.

In a previous conversation, Zhang Junjie told GuanChao New Consumption: "We practice the logic of major products, and the development of major products must revolve around repurchase. The key to repurchase is to drink a cup every day without getting tired of it; such products need to be refreshing. Therefore, our milk content is not higher than the tea content, and the sugar content is also relatively low. In addition, tea has a very strong addictive nature, and the repurchase rate for tea will be higher."

He emphasized, "For Chagee Holdings Ltd., the core competitiveness is consumer mindset, which is also the ultimate battlefield for all consumer goods competition. User mindset needs to be accumulated over the long term, so doing consumer goods requires patience and self-restraint."

A more unified and standardized major product strategy has greatly enhanced the profit level of Chagee Holdings Ltd.

Data shows that the gross profit margin of Chagee Holdings Ltd. increased from 40.77% in 2022 to 51.5% in 2024, leading the entire industry In comparison, the gross profit margins of Mixue Ice City and Gu Ming in the first three quarters of 2024 were 32.4% and 30.5%, respectively, while the net profit margins were 18.7% and 17.4%.

Currently, Chagee Holdings Ltd. is still developing its own tea extraction technology and equipment for the expansion of new product lines. It is reported that in 2025, Chagee Holdings Ltd. will launch a series of fresh tea products internally referred to as "Second Cup Tea," which has already been tested in the Shanghai area. Specifically, the Tea latte, Teaspresso, and Teapuccino product lines of Chagee Holdings Ltd. correspond to latte, Americano, and cappuccino in the coffee sector.

Increasing Differentiation in the New Tea Beverage Industry

Over the past five years, China's freshly made tea beverage industry has experienced rapid growth, with particularly fierce competition.

It took Mixue Ice City 20 years to grow from 0 to 10,000 stores, but only 1 year to reach over 20,000 stores, now exceeding 46,000; Gu Ming has nearly 10,000 stores; Cha Bai Dao and Hu Shang A Yi have nearly 9,000 stores; Chagee Holdings Ltd. has over 6,440 stores...

As of the close on April 17, Nayuki's Tea had a total market capitalization of HKD 1.688 billion; Gu Ming had a total market capitalization of HKD 42.094 billion; Cha Bai Dao had a total market capitalization of HKD 13.018 billion; and Mixue Ice City had a total market capitalization of HKD 177.1 billion, during which its stock price reached a historical high, with a total market capitalization exceeding HKD 181 billion at one point.

In terms of performance, Chagee Holdings Ltd. had a revenue of RMB 12.406 billion in 2024, which is half of Mixue Ice City's (RMB 24.829 billion) and 1.5 times that of Gu Ming (RMB 8.791 billion); Chagee Holdings Ltd.'s net profit in 2024 was RMB 2.515 billion, which is 56.47% of Mixue Ice City's (RMB 4.454 billion) and 1.68 times that of Gu Ming (RMB 1.493 billion).

In 2024, the net profit margins of Mixue Ice City, Chagee Holdings Ltd., and Gu Ming were all between 16% and 20%, achieving dual growth in revenue and net profit.

Data source: Company financial reports

On the other hand, Cha Bai Dao saw a year-on-year decline in both revenue and net profit in 2024, achieving revenue of RMB 4.918 billion, a decrease of 13.78% year-on-year; and a net profit of RMB 472 million, a decrease of 58.55% year-on-year.

Cha Bai Dao stated in its financial report that the reasons for the decline in performance were mainly: first, due to increased discounts and subsidies for franchisees, leading to a decrease in gross profit margin; second, increased spending on marketing, brand building, and market promotion, resulting in sales expenses doubling compared to 2023.

Nayuki's Tea is "more bitter." In 2023, Nayuki's Tea just achieved its first annual profit after five consecutive years of losses since going public, but in 2024, it was pushed back, with revenue of RMB 4.921 billion, a decrease of 4.7% compared to the previous year, and a massive net loss of RMB 917 million Cha Bai Dao is striving to catch up, while Nayuki appears fatigued and powerless. It can be seen that the tea beverage industry has reached a watershed moment. After completing the Chinese market, everyone is now targeting the global stage.

With over 44,000 brand stores, Mixue Bingcheng firmly holds the position of the largest new tea beverage brand globally and is also a pioneer in going overseas. In September 2018, Mixue Bingcheng opened its first overseas store in Vietnam; since January 2022, its overseas expansion has accelerated. As of the first three quarters of 2024, Mixue Bingcheng's store network has covered 11 overseas countries, including Indonesia, Vietnam, Malaysia, and Thailand, with approximately 4,800 stores.

Chagee Holdings Ltd. also ventured abroad relatively early. In August 2019, Chagee opened its first store in Malaysia; by August 2024, Chagee opened three stores in Singapore. By the end of 2024, Chagee will have a total of 156 overseas stores, covering regions including Malaysia, Singapore, and Thailand. In 2025, Chagee plans to open 1,000 to 1,500 new stores in China and globally.

However, to become a global brand, a strong international supply chain, digital support, and brand IP development are essential. Transitioning from local expansion to a competition for global efficiency, tea beverage brands need to put in more effort.

Over the past decade, the Chinese new tea beverage industry has rapidly taken off in terms of models, brands, and supply chains, and now it faces coffee head-on, heading towards larger international markets.

Conclusion

Tea and coffee are two major addictive consumables internationally, with a wide audience. Although the current international trade situation is complex and volatile, and amidst the escalating US-China trade war, the trend towards healthier, lower-burden, and more cost-effective consumption is a common pursuit among global consumers.

According to data from iResearch Consulting, as the world's second-largest non-alcoholic beverage category, the global tea beverage market's GMV is projected to be USD 467.1 billion in 2024, and it is expected to reach USD 601.9 billion by 2028.

Driven by the increase in per capita income, the expansion of the tea consumer base, and the affordability and health benefits of tea attracting more coffee drinkers, the global ready-to-drink tea market is expected to reach USD 122 billion by 2028, with a compound annual growth rate of 18.9% from 2024 to 2028.

From 30 yuan for a cup of milk tea to 9.9 yuan for affordable tea drinks, from small shops with long queues to thousands of new stores added each year, from small towns to big cities and overseas, from imitating Starbucks to surpassing with national trends and then using tea culture to connect with the world. The business model of new tea beverages is becoming clearer, and the curtain on the era of Chinese tea beverages is slowly being drawn back.

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