Shares of Mixue Group, China’s largest bubble tea and drink chain, surged nearly 30% on their debut at the Hong Kong Stock Exchange on Monday, following a highly successful $444 million initial public offering (IPO). The company sold 17 million shares at a price of HK$202.50 each, with shares opening at HK$262, far outperforming the Hong Kong Hang Seng Index’s modest rise.
Mixue’s IPO was one of Hong Kong’s most oversubscribed, with retail investors applying for 5,258 times more shares than available. This overwhelming demand is a testament to the growing popularity of Mixue’s affordable drinks, which include milk tea, iced beverages, and ice cream, sold at an average price of just 6 yuan ($0.82) per cup.
Founded in 1997 as a small ice shop in Zhengzhou, Mixue has grown to over 45,000 stores worldwide, surpassing Starbucks in store count. Its business model, focusing on franchising and vertical integration, has fueled rapid expansion. The company operates with a franchise-heavy approach, with more than 99% of stores run by franchisees. Its success lies in its ability to generate revenue by selling supplies, equipment, and packaging to franchisees.
Mixue’s mascot, Snow King, has also played a key role in bolstering the brand’s popularity, while its expansion continues at a breakneck pace, opening over 8,500 stores in 2023 alone. The company’s vertical supply chain, producing up to 60% of its beverage ingredients in-house, ensures consistent quality and keeps costs low, making Mixue a formidable player in the bubble tea industry.
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