HONG KONG: China’s insatiable appetite for bubble tea has spawned another billionaire.
Guming Holdings’ US$233 million (S$315 million) Hong Kong initial public offering (IPO) bolstered the value of the stake owned by its millennial founder, Mr Wang Yun’an, to US$1.2 billion, according to the Bloomberg Billionaires Index.
The company’s shares rose as much as 4.6 per cent to HK$10.40 on Feb 12, before trimming gains.
Mr Wang joins the growing club of Chinese bubble tea billionaires who have sprouted in recent years amid soaring demand for the drinks – a US$9.6 billion market in 2018 that is forecast to balloon into US$71 billion in three years. But he is also taking his company public at a time investors are becoming increasingly wary about pumping money into such a competitive industry, where vendors regularly engage in price wars.
Take Sichuan Baicha Baidao Industrial, the maker of Chabaidao tea. It was the most recent firm concocting the drinks to list in Hong Kong in April 2024. The company’s husband-and-wife founders Wang Xiaokun and Liu Weihong had a combined net worth of about US$2.7 billion at the time of the debut, but their fortune has shrunk as the stock lost nearly half of its value.
That has not stopped Mr Wang Yun’an and his rivals from seeking to raise funds so they can keep adding to the thousands of stores their chains already have. For example, industry leader Mixue Group has revived plans for an IPO. The company’s founding brothers Zhang Hongchao and Zhang Hongfu had an estimated net worth of about US$1.5 billion each as of April.
Mr Wang Yun’an is betting that Guming, which sells tea under the “Good me” brand, will appeal to investors because of his unique strategy. While others seek to make their fortunes in big cities like Beijing and Shanghai, the company specifically targets smaller cities and townships where bubble tea is not as readily available and where growth outpaces that of large megacities, according to Guming.
He would know. Mr Wang Yun’an opened his first tea shop in his hometown of Daxi – whose population of under 200,000 makes it a tiny place by Chinese standards – in Zhejiang province near Shanghai nearly 15 years ago. His tea chain has caught on and expanded deeper into China’s hinterland to amass nearly 10,000 stores.
After surviving the ultra-competitive landscape, Mr Wang Yun’an’s brand emerged as the second largest among freshly made bubble tea makers in terms of total sales and number of stores by the end of 2023, according to research cited in the IPO prospectus.
Guming’s Good me had a market share of 9.1 per cent as of the end of 2023 among China’s top five bubble tea brands, trailing only Mixue’s 20 per cent, according to the research.
Starting in Taiwan as a sugary, high-calorie comfort drink, bubble tea has evolved drastically in China, with various chains competing to offer healthier versions like tea latte or freshly brewed ice tea blend with fruit compote or juice.–BLOOMBERG
