Mixue’S Sweet Success: The Rise Of $1 Bubble Tea In China

In the vibrant world of bubble tea, where flavors and creativity collide, one brand has emerged as a game-changer: Mixue. This innovative chain has redefined the bubble tea landscape in China, offering delicious drinks at prices that make indulgence accessible to everyone. With milk tea priced at just under 7 yuan (approximately $1) and ice cream for a mere 2 yuan, Mixue has rapidly ascended to the top of the market, boasting over 36,000 stores nationwide.

Historically, bubble tea was viewed as a premium product, often costing between 25-40 yuan ($3.4-$5.5). It was a status symbol among urban dwellers, a treat reserved for special occasions. However, Mixue has disrupted this notion by making bubble tea not only affordable but also appealing to the younger generation eager to enjoy their favorite beverages without breaking the bank. This strategic pricing has resonated particularly well with students and young professionals navigating the bustling cities of China.

The brainchild behind this sweet phenomenon is Zhang Hongchao, who first dipped his toes into the beverage industry while working part-time at a drink kiosk in 1997. After an initial venture into shaved ice that didn’t take off, he launched Mixue Bingcheng in 1999, introducing sugary drinks alongside his icy offerings. The name translates to “sweet snow palace,” perfectly encapsulating the brand’s playful essence. One of his standout creations was an ice cream cone sold for just 1 yuan—significantly lower than competitors’ prices of 4-5 yuan—making it an instant hit among consumers.

Mixue’s growth can be attributed not only to its affordable pricing but also to its innovative approach to business. In 2007, Zhang Hongchao’s brother, Zhang Hongfu, joined the company and established a standardized operational management system that laid the groundwork for a successful franchise model. Unlike many competitors who focused on large storefronts in major cities, Mixue strategically targeted smaller cities with lower income levels. Most outlets are designed for takeout only, catering to a demographic that prioritizes convenience and value.

The franchise model is exceptionally supportive; Mixue provides franchisees with essential equipment and ingredients while maintaining a low franchise fee that constitutes just 2% of revenue. This has resulted in an impressive 99.8% of its stores being operated by around 16,000 franchisees, making it one of the largest franchise operators globally.

Innovation is at the heart of Mixue’s success story. In 2012, the company introduced a centralized factory system that allowed it to produce raw materials efficiently, achieving an annual capacity of approximately 1.43 million tons by September 2023. This system enables Mixue to supply up to 60% of the ingredients used by its franchises while ensuring that all core ingredients are produced in-house.

Additionally, Mixue established its own logistics system in 2014, providing nationwide free delivery to franchisees—a groundbreaking move in the made-to-order beverage sector. This commitment to operational excellence has not only improved product quality but also reduced costs significantly.

The brand’s mascot, “Snow King,” has become a beloved figure across various regions, contributing to its popularity on social media platforms where discussions about Mixue’s theme songs and mascot have garnered billions of views.

Building on its domestic success, Mixue began expanding internationally in 2018 with its first store opening in Hanoi, Vietnam. By mid-April last year, it celebrated the launch of its 1,000th store in Vietnam alone and now operates around 4,000 outlets across eleven countries including Thailand, Japan, South Korea, and Australia. This rapid expansion has positioned Mixue as the leading made-to-order tea beverage brand in Southeast Asia and ranks it as the fourth largest food and beverage brand worldwide.

Despite fierce competition within China’s bubble tea sector—where many brands have struggled with stock declines—Mixue continues to thrive. Analysts note that while others engage in price wars to attract consumers amidst changing spending habits, Mixue retains its first-mover advantage in the low-price milk tea segment.

As the bubble tea market evolves and faces regulatory challenges affecting IPO applications for several brands—including Guming—Mixue stands resilient amid uncertainty. Its founders saw their net worth fluctuate from $1.2 billion in January to $980 million by April; however, recent approvals for IPOs signal potential growth opportunities on the horizon for bubble tea chains.

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