From the "Six Little Dragons" to polarization, why has the wealth-creating myth of new tea beverages failed?

Ask AI · Why does the single-product strategy of Bawang Chaji products affect capital market performance?

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Blue Shark Editors’ Note: Song of Ice and Fire

Author | Zhang Erhe

Editor | Lu Xucheng

Recently, Mixue Bingcheng and Hushang Ayi have successively released their 2025 financial reports.

The financial reports show that, as of December 31, 2025, Mixue Group’s total revenue was 33.56 billion yuan, up 35.2% year over year. Annual profit was approximately 5.93B yuan, up 33.1%. Basic earnings per share increased 27% year over year.

Hushang Ayi is no less impressive—total revenue was 4.47B yuan, up 35.96%; profit attributable to shareholders was 501M yuan, up 52.41%; basic earnings per share was 4.81 yuan.

However, behind the seemingly rapid growth in performance, there are very different implications.

Two Fates

In 2025, Mixue, Gu Ming, Bawang Chaji, and Hushang Ayi all listed on the capital markets. Together with the earlier listings—Chatime’s predecessor Cha Baidao and Naixue—the “six little dragons” of the new tea drink industry gathered in the capital markets, and the industry’s scale surpassed 354.7 billion yuan, becoming the most sensational event in the consumer market.

Looking back over the past year, the “six little dragons” of new tea drinks have already begun to diverge—not only in performance, but also in how they have fared in the capital markets.

Mixue and Gu Ming are representative cases where performance and market valuation align relatively well.

Mixue turned in an impressive set of results for 2025: total revenue of 33.56 billion yuan, up 35.2%; annual profit of approximately 5.93B yuan, up 33.1%. And in terms of market valuation performance, Mixue’s market cap rose steadily from 98.79 billion Hong Kong dollars on its first day of listing. On June 5, 2025, Mixue’s total market cap surpassed 230 billion Hong Kong dollars and briefly became the second-largest in Hong Kong’s food and beverage sector, behind Nongfu Spring. As of now, Mixue’s market cap has come off a bit, but it still lives up to its “billion-yuan snow king” title.

Gu Ming has also performed strongly—In the first half of 2025, revenue was 5.66B yuan, up 41.2%; net profit was 3.21B yuan, up a massive 121.5% year over year, exceeding the full-year profit for 2024 in just half a year. In terms of market cap, Gu Ming’s market cap jumped from 23 billion Hong Kong dollars on its first day of listing, and it is currently around 63.2 billion Hong Kong dollars.

（Source: Blue Shark Consumption Chart）

Meanwhile, for Hushang Ayi, Bawang Chaji, Cha Baidao, and Naixue—regardless of their performance—investor appeal has been limited.

Take Hushang Ayi as an example: although its 2025 revenue growth was similar to Mixue’s, and its net profit growth was even higher than Mixue’s, the capital markets did not respond strongly. After listing on the capital markets in May 2025, Hushang Ayi’s market cap reached more than 20 billion Hong Kong dollars on its first day, but today it is around 8.2 billion Hong Kong dollars, down nearly 60% from its first day.

Bawang Chaji’s performance after listing has been less than satisfactory. According to its financial report for the first three quarters of 2025, total revenue was 250k yuan, down 9.4% year over year; net profit was 394 million yuan, down 36.94%. As of now, Bawang Chaji’s market cap is around $2.0 billion, more than 60% lower than at its first day of listing.

（Source: screenshot from Stock Market Tong）

Earlier listed Cha Baidao and Naixue also ran into the same valuation dilemma—Cha Baidao’s market cap was down about 63% from its first day of listing, while Naixue’s market cap fell as much as 95%.

With new tea drink brands, why can Mixue and Gu Ming hold their market valuations, while the other four fall into the strange loop of “revenue up, stock price down” or “revenue down, stock price down even more”?

The answer lies in four dimensions: the density of franchised outlets and sinking (lower-tier market) capabilities, the strength of the supply chain, product diversification strategy, and whether a second growth curve exists.

Four Dimensions

Mixue and Gu Ming’s revenue growth is driven primarily by the continuous expansion of their franchise networks.

As of December 31, 2025, the number of Mixue Bingcheng stores in mainland China increased to 55,356, covering 31 provinces, more than 300 prefecture-level cities, and all county-level cities. By city tier, the proportion of stores in third-tier and lower cities is about 58%, unchanged from the previous year. Penetration depth in sinking markets remains steady.

Gu Ming’s total number of stores is also above 11,000, becoming the second new tea drink brand in China to break the 10,000-store threshold after Mixue Bingcheng. Among them, 81% of stores are in second-tier cities and below, 43% are located in townships, and the share of stores in first-tier cities is only 3%.

（Source: Gu Ming official website）

“Downward expansion” is only the surface. The deeper difference lies in the franchisee entry barriers and the per-store profit model.

Mixue Bingcheng’s opening costs are only just over 200,000 yuan, and the franchise fee is paid on an annual basis. Low barriers bring franchisees rushing in quickly. More importantly, Mixue Bingcheng’s franchisees’ annual average purchasing fees account for as high as 34.11% of each store’s daily average GMV—meaning that for every 100 yuan sold by a franchisee, 34 yuan flows back to the headquarters. This “thin margins but high volume” model forms a stable revenue closed loop.

Gu Ming, in February 2025, changed about 250k yuan in franchise fees and part of the cost of large equipment to installment payments. For new franchisees, the minimum cost to open their first store in the first year is only 230k yuan. This adjustment reflects how intensifying the industry’s competition for franchisees has become, and it has also noticeably accelerated Gu Ming’s store-opening speed.

By contrast, Bawang Chaji’s opening costs have already exceeded 500k yuan. Renovation costs start at 150k yuan, and equipment costs are also substantial. More importantly, its franchisees’ annual average purchasing fees reach as high as 1,675.3 million yuan, far higher than peers. High investment means high risk. When a store’s profitability declines, franchisees have less ability to withstand pressure, and the momentum for expanding stores also becomes easier to weaken.

Originally operating a direct-operated model, Naixue entered the franchise market in July 2023. Although it lowered the investment threshold per store from 980k yuan to 580k yuan, in the context of tea shops becoming increasingly saturated, its franchise business progressed slowly. It added only 81 and 264 franchise stores in 2023 and 2024, respectively. By June 30, 2025, Naixue had 1,638 stores, of which 317 were franchise stores (28 fewer than the end of 2024）.

（Source: Naixue Tea official website）

Notably, as issues such as homogenization among new tea drink outlets and declining operating efficiency have become more prominent, “opening stores blindly” is no longer the industry norm. Many brands have changed their franchisee selection criteria—from favoring “investment-type franchisees” who simply put in capital—to preferring “on-site operation franchisees” who actively participate in running stores themselves. For example, Mixue Bingcheng requires township stores to reference a “husband-and-wife shop” model, and franchisees must actually participate in operating and management.

The supply chain is the key to determining the survival and success of a tea beverage brand. The market valuation divergence among Mixue Bingcheng, Gu Ming, and Bawang Chaji stems largely from differences at the foundational level of the supply chain.

Mixue Bingcheng follows a “heavy-asset” route. By the end of 2025, the company had five major production bases such as in Henan and Hainan. Core ingredients are produced 100% in-house. A logistics network covering the entire country is made up of 28 domestic warehouses and 8 overseas localized warehousing locations. This “origin-factory-store” heavy-asset model keeps its raw material costs 23% lower than the industry average.

（Source: Mixue Bingcheng official website）

Gu Ming’s expansion logic is also different—warehouse placement is prioritized over store expansion, ensuring that 75% of its stores are within a 150-kilometer radius of the warehouses. This strategy is aptly described as “build the roads before opening the shops.” At the same time, Gu Ming has continued to invest in building what is the largest cold-chain warehousing and logistics infrastructure network among brands of freshly prepared tea beverages in China. This has created a “ingredients-logistics-stores” supply chain closed loop, where 98% of stores can enjoy “delivery every two days” cold-chain distribution services. It is the only brand capable of scaling distribution of fresh milk and fresh fruits in lower-tier cities.

Mixue Bingcheng and Gu Ming’s supply chain and store densification strategies unleash enormous energy—not only increasing brand exposure brought by regional density, but also triggering a qualitative improvement in supply chain efficiency. When stores are dense enough, delivery costs are spread and thinned to the extreme, and franchisees’ profit margins expand accordingly.

By contrast, Bawang Chaji’s supply chain layout is relatively weak. Although its customer transaction value is higher and it has more room for gross margin, it lacks deep control over upstream core ingredients. In its Q3 2025 financial report, Bawang Chaji’s R&D expenses reached 53.6 million yuan, mainly used for product innovation and supply chain optimization—indicating that the company has already recognized the problem of supply chain shortcomings.

Hushang Ayi also has similar issues. Compared with Mixue Bingcheng’s model in which more than 60% of core ingredients are self-produced, Hushang Ayi still relies mainly on external procurement. And compared with Gu Ming’s heavy-asset layout of self-operated warehouses and in-house cold-chain trucks, all of Hushang Ayi’s upstream cold-chain warehouses are operated by third parties. In its IPO funds-usage plan, Hushang Ayi placed supply chain capability building at the top priority, but upgrading supply chains toward self-reliance is not something that can be done overnight.

What is worth paying attention to is that Bawang Chaji’s predicament largely comes from a “biased” product strategy. Since 2025, the company has launched only 8 new products, and two of them are low-caffeine and flower-fragrance versions of Bóyá Gū Xián (伯牙绝弦). Meanwhile, in the same period, Gu Ming launched 52 new products, and Cha Baidao launched more than 40.

The slow pace of new product launches directly led to continuous declines in same-store GMV. Starting from Q4 2024, Bawang Chaji’s same-store monthly average GMV began to show negative growth. By Q3 2025, it had dropped to 378.5k yuan, down nearly 30% from 528k yuan in the same period of 2024.

Mixue Bingcheng chose the opposite path: while maintaining classic products such as fresh lemon iced water and fresh ice cream, it continuously rolled out new items such as hawthorn series, blueberry series, and Longjing tea series, enriching its product portfolio. More importantly, Mixue Bingcheng has built emotional barriers beyond products through IP-derived merchandise—ranging from the “Snow King Wobble Doll” to the summer limited edition “tanning Snow King.” Its blind-box product pricing is below 30 yuan, creating a misaligned competitive relationship with Pop Mart.

In addition, a key variable is whether there is a second growth curve.

Mixue Bingcheng has gone the farthest in this regard. In September 2025, the company invested 297 million yuan to acquire a 53% stake in Fresh Beer Lucky Lu Family, officially entering the freshly tapped craft beer segment. Fresh Beer Lucky Lu Family continues Mixue Bingcheng’s people-friendly approach—its 500ml price is only 9.9 yuan, which aligns highly with the main brand’s sinking-market strategy.

In the coffee segment, Mixue Bingcheng’s sub-brand “Lucky Coffee” had already surpassed 8,200 global stores as of September 2025, expanding rapidly in sinking markets with its ultra-low price of “5 yuan per cup of Americano.” China Securities Co., Ltd.’s forecast predicts Lucky Coffee still has expansion room of 0.9 million to 1.7 million stores.

Gu Ming may not have spun off and incubated a standalone new brand, but by introducing coffee products, it has effectively built a dual-category model of “tea drinks + coffee” within its existing store network. In the first half of 2025, more than 8,000 Gu Ming stores were equipped with coffee machines, and 16 new coffee beverages were launched.

Naixue, whose performance and market valuation have declined, has been exploring new store formats. In the first half of 2025, the company gradually opened 30 “Naixue green” light drink and light food stores, targeting white-collar customers’ needs for “low calorie,” “healthy,” and “everyday” options. It offers products such as light meal energy bowls and grain bagels, broadening consumption time slots. But whether it can become a true second growth curve remains to be seen.

By contrast, Bawang Chaji and Hushang Ayi lag relatively in setting up their second growth curves. Bawang Chaji’s overseas expansion is worth noting—its overseas stores reached 262 in Q3 2025, and GMV grew 75.3% year over year—but overseas revenue accounts for only 3.8% of total GMV, making it difficult in the short term to offset a slowdown in domestic growth. Hushang Ayi has introduced a sub-brand “Tea Waterfall,” focused on light milk teas, but its investment in product strength and supply chain is relatively limited and it has not yet formed a scale effect.

Brief Summary

The divergence among China’s six new tea drink “little dragons” in 2025 essentially reflects the industry shifting from “scale expansion” to “value deepening.”

The reason Mixue Bingcheng and Gu Ming can hold onto their market valuations is that they have built a complete capability closed loop: store density in sinking markets forms a scale advantage; their self-built supply chain system locks in the cost floor; continuous product innovation maintains consumer stickiness; and the layout of a second growth curve opens up room for growth.

The tea-drink predicament of Hushang Ayi, Bawang Chaji, Cha Baidao, and Naixue, however, exposes different shortcomings: Bawang Chaji relies too heavily on big single products, and its new product launch pace cannot keep up with market changes; Hushang Ayi’s franchisees’ purchasing amounts are too low, so the headquarters’ revenue elasticity is insufficient; Cha Baidao has some groundwork in supply chain and product innovation, but the scale effect has not been fully released; Naixue’s direct-operated tea-drink model carries a heavier burden, and the profitability inflection point still needs to wait.

As of the end of 2025, the total number of milk tea beverage stores nationwide reached 426k, but the industry saw an annual net decrease of 39k stores. The industry has entered a stage of competition in existing market share. Growth can no longer be sustained solely by opening stores to expand. In the future, only brands that can strike a balance between cost control and brand premiumization, build global operational capabilities, and truly implement a second growth curve will have a chance to establish dominance in the next round of shuffling.