Naixue’s Tea, one of China’s largest tea beverage chains, is seeking to raise $400 million through a US public offering, according to a Bloomberg report.
Why it matters: Up-and-coming Chinese tea beverage brands like Naixue’s Tea and Hey Tea have attracted viral followings from younger consumers over the past two years. The tea beverage market is attracting big name coffee chains including Starbucks and Luckin as they look to diversify business lines and seek new growth points.
- Data from food delivery platform Meituan show (in Chinese) that milk tea and tea beverage orders reached 210 million in 2018, “far higher” than that of coffee.
- Beverage chains from Starbucks and Luckin to Naixue’s Tea are suffering from a major downturn as a result of the Covid-19 outbreak, which has immobilized China since January.
Details: Naixue’s Tea, also known as Nayuki, has filed confidentially for a US listing and is working with advisers for a share sale that could take place as soon as this year, according to the Bloomberg report citing people with knowledge of the matter.
- The source said that the firm is looking raise $50 million to $100 million in a pre-IPO funding.
- The company denied the news to local media, saying that it is focusing on recovering its operations amid the epidemic.
- The company did not respond to TechNode’s requests on Thursday for further details.
Context: Founded by entrepreneur couple Peng Xin and Zhao Lin in 2015, the Shenzhen-headquartered company is now operating more than 349 stores in upwards of 50 cities across the country, selling fresh-fruit tea and coffee drinks as well as baked goods.
- Similar to Luckin, the company is leveraging online channels for marketing and sales such as delivery platforms and WeChat.
- The company raised its last funding round, a Series A Plus worth hundreds of millions of yuan, in March 2018 from Tiantu Capital at a valuation of RMB 6 billion ($855 million), according to corporate intelligence platform Tianyancha.
- After launching the “Fawn Tea” brand in July, Luckin split off the product line as an independent operation two months later in a bid to focus on the tea beverage market.
- Starbucks launched eight fruit-flavored tea drinks in mid-April in an effort to capture more sales from Chinese consumers.
- In response, tea brands like Naixue’s Tea and Hey Tea have rolled out their own coffee drinks to fend off competition.