This is an English adaptation of a FoodBud historical article originally published on October 1, 2021.
Mixue Bingcheng Co., Ltd. planned an initial public offering and listing on China’s A-share market. According to the Henan branch of the China Securities Regulatory Commission, the company was receiving IPO tutoring from GF Securities and filed the tutoring record on September 29, 2021.
Qichacha data cited in the article showed founders Zhang Hongchao and Zhang Hongfu held 47.71% and 47.5975% of Mixue, respectively. Hillhouse Capital, Meituan Longzhu and CITIC Industrial Fund had previously invested in Mixue, but Qichacha showed they exited on April 24, 2021, from stakes of 4%, 4% and 2%, respectively.
Earlier in 2021, media reports said Mixue raised RMB 2 billion from investors led by Meituan Longzhu and Hillhouse Capital, with market estimates putting its valuation as high as RMB 20 billion.
Founded in 1997, Mixue is a national chain focused on fresh ice cream and tea drinks. At the time of the article, it covered 31 provinces, municipalities and autonomous regions in China, as well as parts of Southeast Asia including Vietnam, Indonesia and Laos, with more than 18,000 stores globally.
Mixue’s official materials said Zhang Hongchao started the business in Zhengzhou while at university in 1997, positioning it as a fresh ice cream and tea-drink chain for young consumers with the mission of letting everyone globally enjoy high-quality, affordable products.
The article noted that Mixue had been setting up related companies frequently in 2021, potentially as preparation for listing:
The article grouped these companies into two broad categories. Some supported local operations and supply-chain buildout in markets such as Southwest China and Hainan. For example, Chongqing Xuewang Agriculture’s scope included food and beverage production, procurement of primary agricultural products and fruit wholesale, while Hainan-based Daka International Enterprise Management focused on catering services, enterprise management and marketing planning.
Others were linked to export-related business. Hainan Xianyida and Xuewang International Trade both included activities such as courier services, technology and goods import-export, and food operations.
Mixue had expanded nationally through a franchise model built around low pricing and a single-store model. The article argued that once a chain reaches large scale, maintaining stable growth becomes the central challenge.
According to Jihai Brand Monitoring data cited in the article, Mixue had 17,958 operating stores and 1,089 cumulative closed stores. It had opened 314 stores in the prior month; at that pace, the article projected it could reach 19,000 stores by the end of 2021.
The article compared Mixue with other foodservice chains above 10,000 stores:
Based on those comparisons, the article suggested Mixue might approach its store-count ceiling after passing 20,000 locations.
Mixue had already explored new brands and business lines. Its coffee brand Lucky Cup had 197 stores at the time, but the article argued that even founder-level support had not produced large scale, because coffee consumption habits in lower-tier markets had not yet been fully formed.
Its premium tea-drink brand M+ had ended poorly, according to the article. The author argued that Mixue’s core team was built around value-for-money positioning and cost control, making premium tea drinks a poor strategic fit; product development, brand culture and the shift from franchising to direct operation were also challenges.
Mixue had also launched an ice cream brand, Jilato, and opened franchising for it. Zhaimen Canyan data cited in the article showed Jilato had 19 stores.
The article also referenced an earlier FoodBud piece on the privatization of Hop Hing Group, which disclosed Dairy Queen China store data. As stated in the source, DQ had 193 stores as of “June 60” and contributed RMB 120 million in revenue in the first half of the year.
Media reports cited in the article said a person close to Mixue disclosed that Mixue generated about RMB 6 billion in revenue and around RMB 800 million in net profit in 2019. Against that scale, the article argued that even if coffee and ice cream brands grew gradually, their contribution would remain small.
The article noted precedents for tea-drink brands investing externally: Heytea invested in Seesaw, and Chayan Yuese invested in Guoyaya. In that context, Mixue establishing an investment company was not surprising.
The author argued that as consumer-market investment became more rational, restaurant and beverage investment was also becoming more disciplined. Some investors already believed the tea-drink category had limited remaining opportunity, and even investments in high-profile projects such as Heytea could be more reputational than financially rewarding.
Before announcing its investment in Seesaw, Heytea also said it had rejected an investment in Lelecha. The article said two people from Lelecha’s founding team had already left and that its investors wanted to exit.
The article argued that, going forward, previously financed tea-drink brands would find it harder to raise another round unless they had strong confidence in an eventual listing. Since not every project can go public, selling at the right time could become a viable path.
For Mixue, the author saw buyouts as a possible strategy: acquire suitable tea-drink or tea-related assets as their market value declines, then apply Mixue’s supply-chain cost control and franchise-expansion capabilities to improve those assets and build a multi-brand, multi-category ecosystem. The author noted this would be faster than incubating a brand from scratch, but would test Mixue’s ability to select targets and integrate them.
The article also framed upstream integration as a growth path. It noted that tea-drink companies entering agriculture was not new: Heytea and Nayuki had extended into areas such as strawberry farms to gain stronger control over upstream supply.
Using Nayuki’s prospectus as an example, the article said Nayuki’s revenue was RMB 1.087 billion in 2018, RMB 2.502 billion in 2019 and RMB 3.057 billion in 2020. Nayuki’s material costs included raw materials such as tea, fruit and dairy, as well as packaging materials and consumables such as cups and paper bags.
From 2018 to 2020, Nayuki’s largest supplier was Dongguan Zundao Environmental Packaging Industrial Co., Ltd., founded on October 25, 2017 and identified as a related party of Nayuki. The prospectus showed raw material costs accounted for 28.7% of total revenue in 2020, down from 29.2% in 2018. Packaging costs rose from 6.1% of revenue in 2018 to 9.2% in 2020. Nayuki’s packaging-material costs were RMB 280 million in 2020, including RMB 94 million of packaging purchases from Zundao.
The article did not dwell on possible related-party issues, but used the case to discuss cost control. It argued that Nayuki’s raw material cost ratio fell as the business scaled, while packaging procurement would normally be expected to benefit from stronger bargaining power as scale increased.
For Mixue, the newly established agriculture company could strengthen control of upstream resources. The article cited examples from 2021: many tea-drink brands launched lemon tea products, making fragrant lemon supply a headache for companies, while the popularity of phyllanthus emblica products drove up upstream prices of sweet emblica. Upstream businesses could also allow Mixue to consolidate additional revenue and profit.
The article added that large regional packaging-material companies in China typically generated annual revenue of roughly RMB 500 million to RMB 1 billion. It suggested that if Mixue established a packaging-material company and consolidated that business, it could be another potential path.
Note: IPO, financing, valuation, store-count projections and forward-looking figures above are historical, as reported around October 1, 2021.