Bubble Tea Giant MIXUE Targets Hong Kong IPO: Leading a New Wave in the Global Boba Boom

MIXUE Group Launches Second Hong Kong IPO Bid, Leading the Charge in the Bubble Tea Boom

January 3, 2025 — MIXUE Group, a powerhouse in the global bubble tea (boba) industry, has reignited its pursuit of a Hong Kong Initial Public Offering (IPO). This move positions MIXUE at the forefront of a new wave of bubble tea stocks, highlighting the company's ambition to expand its market presence and capitalize on the booming demand for bubble tea worldwide.

Hong Kong IPO Application Details

On January 1, 2025, MIXUE Group Co., Ltd. submitted a fresh IPO application to the Hong Kong Stock Exchange (HKEX). This marks the company's second consecutive year seeking a Hong Kong listing, demonstrating its persistent focus on tapping into global capital markets. The IPO is being jointly sponsored by major financial institutions, including Bank of America, Goldman Sachs, and UBS Group, underscoring strong investor confidence in MIXUE's growth prospects. The company aims to finalize its Hong Kong listing within 2025, strategically positioning itself amid intensifying competition and expanding international ambitions.

Impressive Business Growth

MIXUE Group's latest prospectus reveals remarkable business achievements, underscoring its rapid expansion and robust financial health:

• Global Store Network: As of September 30, 2024, MIXUE operates over 45,000 stores across 11 countries, making it the largest ready-to-drink tea beverage company globally. This extensive presence boosts brand visibility and leverages economies of scale.

• Retail Sales Surge:

  • 2021: Approximately ¥22.8 billion
  • 2022: Approximately ¥30.7 billion
  • 2023: Approximately ¥47.8 billion
  • First Nine Months of 2024: ¥44.9 billion

• Revenue Growth:

  • 2022: ¥13.6 billion, a 31.2% increase year-over-year (YoY)
  • 2023: ¥20.3 billion, a 49.6% YoY increase
  • First Nine Months of 2024: ¥18.7 billion, a 21.2% YoY increase

• Net Profit Rise:

  • 2022: ¥2 billion, up 5.3% YoY
  • 2023: ¥3.2 billion, up 58.3% YoY
  • First Nine Months of 2024: ¥3.5 billion, up 42.3% YoY

These figures highlight MIXUE's ability to sustain high growth rates and profitability, even in a competitive market.

Path to Listing

MIXUE's journey toward a public listing has involved strategic shifts and persistent efforts:

1. 2021: Initial consideration for a Hong Kong IPO, laying the foundation for future applications.
2. September 2022: Redirected focus to the A-share market, filing for a Shenzhen Stock Exchange listing with the Henan Securities Regulatory Commission to raise ¥6.496 billion. However, this attempt did not succeed.
3. January 2, 2024: Submitted the first prospectus to HKEX.
4. July 2024: The initial prospectus expired without securing a listing.
5. January 1, 2025: Resubmitted updated listing materials to HKEX, reaffirming its commitment to going public in Hong Kong.

Competitive Industry Landscape

MIXUE's renewed IPO application arrives amid fierce competition within the bubble tea industry:

• Emerging Competitors: Brands like Heytea (古茗), Hushang Auntie (沪上阿姨), Tea Yan Yue Se (茶颜悦色), and Bawang Chaji (霸王茶姬) are also preparing for their IPOs, intensifying the competitive environment.

• Challenges for Established Brands: Existing players such as Nayuki (奈雪的茶) and Tea Baidao (茶百道) are facing lower valuation multiples and profitability pressures, indicating a tightening market.

• Global Reach vs. Revenue: While MIXUE surpasses Starbucks in store count with over 45,000 locations worldwide, there remains a significant gap in annual revenue between the two giants, presenting opportunities for MIXUE to grow its revenue streams.

MIXUE's success in its Hong Kong IPO will serve as a critical indicator of investor sentiment towards the expanding Chinese bubble tea sector.

The Growing Bubble Tea Market

Global Market Overview

In 2024, the global bubble tea market was valued at approximately USD 2.81 billion. Projections indicate growth to USD 4.21 billion by 2030, driven by a compound annual growth rate (CAGR) of 8.11% from 2025 to 2030. This growth reflects sustained consumer interest and market expansion.

Dominance in China

China's new-style tea beverage market, which includes bubble tea, was valued at around ¥333.38 billion (approximately USD 46.5 billion) in 2023, marking a 13.5% increase from the previous year. The market is expected to grow to over ¥401 billion (approximately USD 56 billion) by 2028. Key drivers include evolving consumer preferences, health-conscious trends, and continuous product innovation.

Market Dynamics

• Consumer Preferences: Increasing demand for flavored tea beverages, including fruit-infused and milk-based options, caters to diverse tastes.

• Health Trends: A shift towards healthier options has led to the creation of bubble teas with reduced sugar content and natural ingredients, appealing to health-conscious consumers.

• Innovation: Continuous product innovations, such as unique toppings and flavors, attract a broader consumer base and enhance the overall appeal of bubble tea.

Leading Market Players

Several Chinese companies hold significant market shares in the bubble tea industry:

• Heytea (古茗): Known for innovative flavors and modern store designs, Heytea has rapidly expanded to over 4,000 stores.

• Nayuki (奈雪的茶): Combines freshly made tea drinks with baked goods, positioning itself as a premium brand.

• CoCo Fresh Tea & Juice (CoCo 都可): With a strong global presence, CoCo offers a wide range of bubble tea flavors and maintains a robust foothold in the Chinese market.

Bubble Tea's Global Phenomenon

United States

Bubble tea has become a mainstream beverage in the United States, with major chains like Gong Cha, CoCo, and Kung Fu Tea expanding aggressively across major cities and suburbs. Initially popular among Asian-American communities in cities like Los Angeles, San Francisco, New York, and Seattle, the trend has now spread nationwide. Social media platforms like Instagram and TikTok have significantly boosted its popularity, with visually appealing and customizable options driving high engagement among younger, diverse audiences. Health-conscious trends and the proliferation of franchise models have further cemented bubble tea's presence in the U.S. market.

Europe

In Western Europe, including the UK, France, and Germany, bubble tea is experiencing slower but steady growth. Cosmopolitan cities with significant Asian populations, such as London, Paris, and Berlin, have seen the strongest adoption. Challenges such as traditional European preferences for coffee and plain tea, along with high production costs and supply chain issues related to tapioca pearls, have initially limited growth. However, large chains like Chatime and The Alley are expanding, emphasizing sustainability through eco-friendly packaging and the use of local ingredients to cater to European market preferences.

Cultural and Market Impact

Bubble tea is transitioning from a niche trend to a staple offering in urban areas across the U.S. and Europe. Its integration into diverse settings like food trucks, cafes, and malls signifies its mainstream acceptance. Social media continues to play a crucial role in maintaining consumer interest, with viral trends and unique drink offerings sustaining its global popularity. The North American bubble tea market, valued at approximately $640 million in 2023, is expected to grow at a CAGR of over 9% in the coming years. Similarly, Europe's market, though smaller, is rapidly catching up with increasing demand for innovative and healthier beverage options.

Future Potential

Bubble tea is poised for continued growth, with potential mainstream presence alongside traditional coffee and tea in many cafes. Cross-industry integrations, such as boba add-ons in Western food chains and bubble-tea-inspired desserts, are likely to enhance its ubiquity. The cultural diffusion of bubble tea, akin to sushi or ramen, is expected to solidify its status as a global food staple, driven by its customizability and social appeal.

Analysis and Future Predictions

MIXUE’s IPO Strategy

MIXUE's second attempt at a Hong Kong IPO underscores its ambition to dominate the global bubble tea market. The company's impressive financial performance, with continuous revenue and profit growth from 2021 to 2024, signals operational efficiency and strong consumer demand. Operating 45,000 stores globally provides MIXUE with unparalleled distribution and brand visibility, crucial for achieving economies of scale and market dominance. Strategic timing, amidst other Chinese tea brands' expansion and IPO plans, positions MIXUE to potentially influence investor sentiment towards the broader Chinese bubble tea sector.

Challenges Ahead

Despite its strengths, MIXUE faces significant challenges:

1. Market Saturation in China: Rapid domestic expansion may encounter diminishing returns due to intense competition and a slowing market growth rate.

2. Global Expansion Risks: Entering foreign markets involves navigating cultural differences, regulatory hurdles, and competition from established local brands.

Ambitions of Chinese Tea Brands

Chinese brands like Heytea, Nayuki, and MIXUE are reshaping the global bubble tea landscape through:

• Localized Offerings: Adapting flavors to regional tastes and preferences.

• Premiumization: Promoting high-end experiences to differentiate in saturated markets.

• Tech-Driven Operations: Utilizing data for supply chain optimization and enhanced customer engagement.

Market Impact and Stakeholder Insights

• Investors: A successful MIXUE IPO could attract global institutional interest, driving valuations and potential mergers and acquisitions within the sector.

• Consumers: Increased competition will lead to better quality, diverse offerings, and competitive pricing, particularly in underserved markets.

• Suppliers: Rising demand for tea, tapioca, and other ingredients offers opportunities but may also pose supply chain challenges.

• Regulators: International expansion requires compliance with varying food safety standards, labor laws, and data privacy regulations.

Key Industry Trends

1. Health Consciousness: Growing demand for low-sugar, natural, and functional beverages.

2. Digital Transformation: Enhanced customer engagement through mobile ordering, gamification, and social media integration.

3. Sustainability: Adoption of eco-friendly packaging and ethical sourcing practices, especially in Europe and North America.

4. Franchise Models: Essential for rapid global scaling, with a focus on maintaining quality and brand consistency.

Future Predictions

1. Global Leadership: MIXUE could surpass Starbucks in store count globally by 2030, though it may face challenges in matching revenue due to lower price points.

2. M&A Activity: Chinese brands may engage in acquisitions or collaborations with Western beverage brands to accelerate market entry and credibility.

3. Cultural Diffusion: Bubble tea is likely to become a permanent fixture in Western markets, similar to sushi or ramen, driven by sustained Chinese brand presence and consumer adoption.

Conclusion

MIXUE Group's renewed pursuit of a Hong Kong IPO marks a pivotal moment in the global bubble tea industry. With robust business performance, strategic expansion plans, and a strong presence in both domestic and international markets, MIXUE is well-positioned to lead the next wave of growth in the bubble tea sector. However, navigating market saturation, global expansion risks, and intense competition will be critical for sustained success. As MIXUE and other Chinese tea brands continue to innovate and expand, the global bubble tea market is set to undergo significant transformation, offering exciting opportunities for investors, consumers, and stakeholders alike.