Picture source @Visual China
text | Retailer Finance, author | rbf content group, editor | Hexiang
The first wave of "involution" of the new tea beverage industry in 2024 has officially started, and the "Second Share of New Tea Drinks" in Hong Kong stocks will be held Whose house will the flowers fall on?
html On January 2, Guming Holdings Co., Ltd. (hereinafter referred to as "Guming") submitted a prospectus to the Hong Kong Stock Exchange. The sponsors were Goldman Sachs and UBS.In fact, as early as 2021, after Naixue successfully listed in Hong Kong, Gu Ming was rumored to be listed. Until the middle of last year, it was revealed that Guming would choose Goldman Sachs and UBS to arrange the Hong Kong IPO. The fund-raising amount was approximately US$300 million and it was expected to be listed as early as early 2024.
Judging from the company’s latest disclosed data and quoted third-party reports, Gu Ming’s “status in the world” seems to be stronger than outsiders imagined.
According to the prospectus, in 2023, Guming stores sold 1.2 billion cups of ready-made drinks, and GMV (total transaction volume) exceeded 19.2 billion yuan, a year-on-year increase of 37.2%. Calculated by 2023 gmv, Guming is China's largest chain tea brand in the popular ready-made tea market priced at 10 yuan to 20 yuan, and ranks second in the full price range.
Gu Ming’s business highlights Source: Gu Ming’s prospectus
In terms of revenue and profit, the prospectus shows that in the first three quarters of 2023, Gu Ming’s revenue was 5.571 billion yuan, a year-on-year increase of 33.9%, and adjusted profit (non-IFRS measurement ) is 1.045 billion yuan. For the whole year of 2022, Guming’s revenue was 5.559 billion yuan, and its adjusted profit was 788 million yuan.
Guming’s income Source: Guming’s prospectus
In terms of the number of stores, as of the end of 2023, the number of Guming stores has exceeded 9,000, covering about 200 cities at the city level in China.
Guming is the second largest ready-made tea shop brand at all prices. Source: Guming prospectus
As the second largest tea drinker in terms of number of stores after Mixue Bingcheng, Guming has entered the capital market. It is the only way to go under the current competition in the tea market, but the difficulty lies in whether it can be listed at an ideal valuation.
It is worth mentioning that, following Gu Ming, Mixue Bingcheng also submitted a listing application to the Hong Kong Stock Exchange on the evening of January 2. The sponsors were also Goldman Sachs and UBS Group.
Judging from the store data that the market is paying attention to, Mixue Bingcheng and Gu Ming are the current champions and runner-ups in terms of market size. The successive submissions of may intensify competition in the new tea beverage industry and bring new possibilities to the tea beverage market. .
Cross-border and expansion: seeking store growth
Guming, founded in 2010, first positioned itself as a mid-range tea brand, with product prices in the 14-20 yuan range. In terms of
products, Guming mainly focuses on three types of drinks: fruit tea drinks, milk tea drinks, coffee and others.
The prospectus shows that in the nine months ended September 30, 2023, Guming fruit tea drinks accounted for 51% of the total cups sold.
Among them, the "Super A Cheese Grape" of the fruit tea series is one of Guming's best-selling drinks. From 2021 to the first three quarters of 2023, the total sales volume exceeded 130 million cups; in 2023, in response to market demand, Guming Launched a light milk tea series. Among them, the seasonal drink "Yunwu Gardenia Green" sold more than 2 million cups per week for eight consecutive weeks after its launch.
In 2023, Guming sold approximately 1.2 billion cups of drinks, and the average quarterly repurchase rate for the year reached 53%. According to the Chishi Consulting report, it far exceeded the average repurchase rate of less than 30% for popular ready-made tea shop brands in China.
Among tea brands, Guming has over 9,000 stores, second only to Mixue Bingcheng , which has over 36,000 stores. In addition, Gu Ming also traveled across the ocean and opened a store in Tuscany, Italy.
Picture source: Guming's official website
The "2023 China New Tea Drink Industry Panorama" released by the Forward-looking Industry Research Institute shows that the total number of new tea drink stores in operation at the end of 2022 will be approximately 486,000; the chain rate of new tea drinks will increase from 2020 to 2020. 41.2% increased to 55.2% in 2022; the new tea drink market size in 2022 is expected to be 104 billion yuan, basically the same as in 2021.
Picture source: Qianzhan Industry Research Institute
In terms of store opening strategy, Gu Ming adopts a regional encryption strategy.
Gu Ming believes that having more than 500 stores in a single province means that the region has the basis to highlight the scale effect, which is called "key scale". With the help of the experience and advantages accumulated in provinces that already have key scale, strategically into neighboring provinces.
As of the end of 2023, Guming has established a store network exceeding key scale in eight provinces. These eight provinces will contribute a total of 87% of GMV in 2023, and will maintain positive same-store GMV growth in each of the three years from 2021 to 2023. . Among them, Gu Ming has more than 2,000 stores in Zhejiang Province.
In fact, the industry status of being the second largest store in the industry has not alleviated Guming’s growth pressure. In addition to launching new cross-border businesses, Guming also announced at the beginning of this year that it would open 3,000 new stores, exceeding the 10,000 store scale. It is a pity that This number eventually stayed at 9,000+.
Source: Guming’s prospectus
The prospectus shows that, except for a few stores, Guming’s stores are all operated by franchises, and their income mainly comes from selling goods and equipment to franchisees, and providing franchise management. Serve.
In order to maintain a stable and good relationship with franchisees , Guming attracts franchisees with relatively stable "hardware" strength. Its integrated supply chain management includes raw material procurement, processing, warehousing, and logistics.
In terms of infrastructure construction , Guming has the largest cold chain warehousing and logistics infrastructure among China's current tea shop brands. More than 75% of its stores are located within 150 kilometers of the warehouse, and more than 97% of its stores are located within 150 kilometers of the warehouse. Provides cold chain distribution service with two-day delivery. In the first three quarters of 2023, the value of raw materials distributed through cold chain is approximately 3 billion, which is the highest level in China's ready-made tea shop industry.
In terms of product development and , Guming claims that the average research and development speed of the 100-person R&D team is 0.65 weeks per new product. The store side can achieve new products every month, and the products have their own traffic. The prospectus shows that Guming currently has a product research and development team of more than 110 people, as well as a quality control team of more than 100 professionals and a supervision and audit team of more than 360 people. In terms of
franchise fees, according to the franchise fees shown on the official website, the initial budget starts from 230,000 yuan, plus brand licensing fees, various service fees, decoration, equipment, security deposits and other fees. If you want to open an ancient tea, you will need at least It will cost 560,000.
Franchise fee estimate Source: Guming official website
In comparison, the total franchise fee of Mixue Bingcheng is about 400,000.
Franchise fee Source: Mixue Bingcheng official website
In terms of brand image, Gu Ming lacks a distinct visual image and brand recognition, and is not as "magic" as Mixue Bingcheng. Although ancient tea has popular products, it is not concentrated. It was previously called "Hi Tea".
In the early days, Gu Ming had been developing the second-tier and below-tier markets. Now that it is taking steps to expand, it is bound to step out of the comfort zone of the low-tier market, move into first-tier and new first-tier cities, and compete with a number of familiar new tea brands. For fierce competition, or to expand to northern cities, open up new battlefields.
's entry into high-tier cities means high rents and labor costs, which test Guming's profitability and brand power; reaching new areas means that the brand must further strengthen supply chain construction and logistics distribution.
How to better serve consumers and franchisees? Guming faces not only the game of the stock market, but also the improvement of its own refined operation capabilities.
Behind the pursuit of listing: Anxiety about module volume and external competition
Before the rumors of listing in mid-2023, some people believed that Guming would not seek listing in the short term. The biggest reason was that investors Sequoia China and Meituan Longzhu Will withdraw from Guming in September 2022.
Picture source: Tianyancha Sequoia China and Meituan Longzhu withdrew from the ranks of shareholders
Guming received financing from Sequoia China and Meituan Longzhu in July 2020. After that, there was a listing rumor in August 2021, that is, Nai After Xue successfully listed in Hong Kong, there was no substantial progress in the end.
Also in 2021, Gu Ming was exposed for tax evasion and was fined 11.61 million yuan by the Taizhou Municipal Taxation Bureau.
After this incident, Gu Ming's brand image suffered a major blow.
Source: Qichacha
In September 2022, Sequoia China and Meituan Longzhu withdrew their shares from Guming, which triggered many speculations in the industry.
It is rare for investors to withdraw their shares before a company goes public. Perhaps the investors do not see the hope of going public, or perhaps Guming simply does not have the comprehensive strength to go public at the moment. We don’t know what the inside story is, and since then, the industry has no longer associated Gu Ming with “listing”.
However, only 9 months have passed since the "withdrawal incident", and Gu Ming was rumored to be listed for the second time. This is most likely related to the recovery of the tea drinking industry. In June last year, Chabaidao received a 1 billion yuan investment from Lanxin Asia, with a valuation of 18 billion yuan. Some people in the industry described Chabaidao’s round of financing as “a long drought brings a sudden burst of rain”.
companies often introduce a large amount of investment before going public, and then there is market news that Chabaidao is preparing to go public in Hong Kong. Comparing
with Gu Ming’s two financings, Qichacha shows that on November 6, 2020, Sequoia China, Meituan Longzhu, Chongying Capital, and Koutu Capital subscribed a total of 14.347827 yuan; in May 2022 On the 24th, Koutu Capital increased by another 33.942044 yuan. Compared with Chabaidao, the two financing amounts of Guming are just a drop in the bucket.
Picture source: Qichacha
In the tea market, the high-end price range has been occupied by head brands such as Heytea and Naixue, while the low-end price range is almost dominated by Mixue Bingcheng, which only costs 15-20 yuan for the waist. This price range has yet to produce an absolute king.
In terms of brand positioning, Chabaidao and Guming have the same number of stores, similar product categories and market layouts. Whoever goes to market first is likely to surpass the other. Therefore, Guming has sufficient motivation to go public. It is not enough for both of them to be rumored to be on the market. No surprise.
Today, Cha Baidao, Gu Ming, and Mixue Bingcheng have submitted listing applications to the Hong Kong Stock Exchange. Bawang Cha Ji, Shanghai Auntie, etc. were also rumored to have listing plans. Although Mixue Bingcheng, Guming and Chabaidao are not currently listed, all three have established ties with listed companies. For example, Mixue Bingcheng and Chabaidao are customers of Jiahe Food, and Guming and Miaokelanduo are partners.
Of course, looking at the entire new tea market, Gu Ming is also facing more external competitive pressure.
First of all, Heytea opened its doors to franchises, which was almost a dimensionality-reducing blow to Guming’s franchise business in the low-tier market.
Although many consumers think that with the opening of franchising, Heytea in a small town in Pian'an County has lost its original brand tone, but for young people in small towns who follow the trend, Heytea will still be the leader in the county milk tea market in the short term. famous brand.
Therefore, franchisees are still flocking to it, which has caused Gu Ming's franchise priority to drop.
Secondly, in high-tier cities, the price cuts of brands such as Heytea and Naixue have plunged Gu Ming, which lacks brand power, into a new round of price-performance competition. When the price of Heytea reaches the level of Guming, consumers who came here because of the "Hitea Pingtai" name will naturally return to Heytea.
Source: Guming Prospectus
In the face of fierce market competition, it is normal for companies to plan to go public. Before Naixue's successful IPO, 's number of stores had always been lower than Heytea's, and it was only after its listing that it overtook Heytea.
However, judging from the current market situation, what is the probability that Gu Ming can successfully go public? Will the early exit of Sequoia China and Meituan Longzhu be the right decision?
The new tea beverage track continues to "roll IPO" at the beginning of the year
Gu Ming has received two financings, both of which were concentrated in 2020. In the first half of the year, it received investment from Sequoia China, Chongying Capital, and Meituan Longzhu, and in the second half of the year, it received investment from Kou When Tu Capital invested, the investment logic of the capital at that time was , "bet on the track, not on a single company" , said Sun Qian, a partner at Sequoia Capital.
Picture source: Qichacha
We have seen that the capital “alignment” of high-end tea drinks has ended, and the mid-range tea drink brands are also full of eager investors. Behind Shanghai Auntie is Jiayu Capital, Chabaidao is Lanxin Asia, Shuyishao Xiancao is behind Siyiwu Fund, etc.
Specific to Guming, its good supply chain capabilities and store scale are key factors for investors. The franchise-based business model can quickly achieve store expansion and build brand reputation. After
Naixue, Mixue Bingcheng also actively promoted the listing process. In September 2022, the A-share listing application of Mixue Bingcheng Co., Ltd. was accepted, and the prospectus was officially pre-disclosed, and it plans to be listed on the main board of the Shenzhen Stock Exchange.
With the implementation of the comprehensive registration system, many IPO companies under review have moved to the Shanghai and Shenzhen stock exchanges to be accepted. However, as of March 4, the shift time window was closed, and Mixue Bingcheng, which was originally planned to be listed on the main board of the Shenzhen Stock Exchange, was “absent” from the list of companies applying for the shift. According to relevant regulations, if Mixue Bingcheng wants to continue sprinting for an IPO, it may need to resubmit application materials. After the failure of
's listing, there were rumors that Mixue Bingcheng would switch to the Hong Kong stock market, and there were market rumors that Gu Ming and Cha Baidao would also list on the Hong Kong stock market. After all, Nayuki, who chose to be listed on the Hong Kong stock market, was the first tea drink brand to be successfully listed. example, and the only one so far.
However, Naixue's performance after listing was not ideal. It broke the stock price on the day of listing. Since then, the stock price has been falling, from the opening price of HK$18.86/share on July 1, 2021 to HK$3.13/share (as of the close on January 3) , the market value has evaporated by more than 10 billion Hong Kong dollars since the first day of listing.
Picture source: Snowball
Different from the current mainstream franchise business model of tea drink brands, Naixue has always insisted on direct operation. Under the direct operation model, brands have stronger control over stores and products, but even so, Naixue still has food safety loopholes.
Looking back at Guming, the franchise model was determined in the early stages of the business, using capital and speed in exchange for market size, but subsequent store management was not implemented , and its own food safety problems also emerged one after another.
During March 15 last year, the Guming Store in Jianghan District, Wuhan City, produced and sold ingredients with poor sensory properties and changed the shelf life without authorization. The Market Supervision Bureau confiscated illegal gains and imposed administrative penalties in accordance with the law. Afterwards, some staff members posted photos on the Internet, claiming that they would secretly eat part of the fruit while preparing ingredients. Many netizens were worried about the hygienic condition of the ingredients.
Stores subject to administrative penalties in Jianghan District, Wuhan City Picture source: Qichacha
According to the author’s incomplete statistics, in the past two years, a total of 22 existing stores under Guming have been subject to administrative penalties, with a total fine of 176,500 yuan, which involves food safety The fine amount for problems exceeds 100,000 yuan, including expired raw materials, rotten food, etc. On the Black Cat complaint platform, Gu Ming received a total of 1,266 complaints.
Source: Black Cat Complaint Platform
In general, food safety, product homogeneity, lack of competition barriers, etc. are still issues that need to be solved urgently by major tea brands.
As a service catering company, tea drink brands should put food safety issues first. Whoever has better quality, better prices, and more solid franchise policies will become the brand preferred by consumers, franchisees, and the capital market.
As for the problem of inconsistent store quality control caused by the franchise model, Gu Ming still needs to strengthen the supervision and management of stores and provide unified training for staff so as not to lose consumers easily.
Trends are fleeting and quality is hard to find. Doing things that most brands are not good at may be a new breakthrough for Gu Ming's future development with both strength and charm.
