Mixue Ice Cream and Tea, renowned for its extensive franchise network, is making waves in the stock market, signaling a robust debut as it confronts the ongoing economic climate in China.
Bubble Tea Giant Mixue Surges on Hong Kong Stock Exchange Debut
Bubble Tea Giant Mixue Surges on Hong Kong Stock Exchange Debut
Shares of leading Chinese bubble tea chain Mixue experience a 40% spike upon IPO, highlighting significant market strength amidst economic challenges.
Mixue Ice Cream and Tea, though lesser-known in some corners of the world, is a dominant player in the bubble tea industry with greater outlet numbers than even McDonald's and Starbucks. On Monday, the company made an impressive entry into the Hong Kong Stock Exchange, with shares soaring by 40% on their first day of trading, effectively securing the title of the largest initial public offering (IPO) in the financial hub this year, raising $444 million (about £352 million).
Founded in 1997 by Zhang Hongchao while he was still a student at Henan University of Finance and Economics, Mixue has transformed from a humble part-time venture into a leading brand despite growing economic uncertainties in China. In the current climate characterized by a property crisis and lukewarm consumer confidence, Mixue's affordable offerings, with the average price of ice creams and drinks around six Chinese yuan (approximately $0.82 or £0.65), appeal to a wide consumer base.
The company claims to operate more than 45,000 stores across China and additionally spans 11 other countries, including regions like Singapore and Thailand. This impressive number of outlets significantly overshadows the approximately 43,000 locations of McDonald’s and the 40,576 Starbucks stores. Unlike Starbucks, which manages over half of its locations directly, Mixue primarily utilizes franchisees to expand its operations.
The successful debut of Mixue stands in stark contrast to the experiences of its smaller rival, Guming, which faced a share decline on its first trading day earlier this year. Additionally, last year's market entry for the owner of the bubble tea chain Chabaidao was also met with a drop in share values. As the bubble tea industry navigates through the challenges, questions loom whether this segment is on the brink of a potential decline.
