This is an English adaptation of a FoodBud historical article originally published on November 13, 2021.
On November 11, Heytea completed the acquisition and business-registration change for Yecuishan, taking a combined 65% stake through two companies.
Yecuishan had received its first investment from GSR Ventures in May 2021. Its core team originally came from Heytea, meaning the brand has effectively been bought back by its former parent ecosystem.
FoodBud previously analyzed Heytea's investment strategy in an article on its shift from “inspiration tea” toward “excellent tea.” The Yecuishan deal fits a broader pattern: Heytea has been moving aggressively across adjacent beverage categories, formats, price bands, and supply-chain capabilities.
On October 27, new Chinese-style ready-to-drink cocktail brand WAT Cocktail completed a Series A financing round, co-led strategically by BAI Capital, Tomato Capital, and Heytea.
Beyond low-alcohol drinks, Heytea also invested in Wild Plant YePlant, entering the oat-milk space.
In tea drinks, Heytea acquired Wang Ning Lemon Tea through Xixiaocha, taking a combined 70% stake. It also invested in Heqi Taotao, with a 5.1% stake.
In coffee, Heytea invested in Seesaw Coffee. FoodBud notes that Wild Plant YePlant's largest shareholder is also in coffee.
Based on Heytea's newly established companies, FoodBud observed that the company appeared to be targeting two beverage brands: Yecuishan and Sogood Fresh Tea. Two partnership entities had been established. Yecuishan has now been completed; the open question is whether Sogood Fresh Tea could be next.
Investment by tea-drink chains has become more common.
After Nayuki listed, its first investment was in a core supply-chain company, contributing RMB 38.64 million.
Mixue Bingcheng invested in Huicha, taking a 19% stake.
Chayan Yuese, which had just announced store closures at the time, previously joined Tiantu Capital in investing in Guoyaya. Chayan Yuese's stake in Guoyaya was close to 6%.
FoodBud's view: China's markets for tea drinks, coffee, and juice beverages are already crowded, with regional players holding local positions. For large chains seeking faster growth, investment and M&A are quicker than incubating brands internally.
Meituan Longzhu founding partner Zhu Yonghua told Touzijie that Heytea's investments were preparation for the fading of the milk-tea industry dividend. While growing its main business, Heytea was reinforcing its moat across products, channels, and brands.
At the start of 2021, Heytea released an annual report showing its fruit consumption ranking: grapes, mangoes, coconuts, peaches, and strawberries.
FoodBud's analysis is that Heytea's tea-drink investments are largely fruit-related. They serve as defensive investments while extending the company into new categories, franchise models, and price bands.
FoodBud compares this with Haidilao's earlier detour. Haidilao once believed that to incubate a niche-category brand, each store manager could invest RMB 3 million; if one did not work, investing in 10 might produce a winner. In practice, none broke out. The more successful extensions from hot pot were Yihai, Weihai, and Shuhai, the supply-chain support companies.
Heytea's own sub-brand Xixiaocha had only 27 stores at the time. Internal incubation was slow; investment was faster.
Heytea's tea-drink targets included Wang Ning Lemon Tea, Heqi Taotao, Yecuishan, and Sogood Fresh Tea. Although Sogood Fresh Tea had not completed registration changes at the time, FoodBud considered it worth analyzing.
There had previously been market rumors that Heytea wanted to buy Lelecha, which Heytea later denied. Among premium freshly made tea brands, Lelecha sat behind Heytea and Nayuki. Acquiring Lelecha would mainly have increased concentration in the premium freshly made tea segment.
In August 2021, Heytea acquired Wang Ning Lemon Tea with a 70% stake. Lemon tea was not among Heytea's top five products by sales in the previous year, but Heytea's own lemon-tea series became extremely popular in summer 2021, selling 400,000 cups on launch day. At the same time, several lemon-tea brands had raised large financing rounds, making a direct brand acquisition in the category logical.
Yecuishan focuses on juice. Many of its people came from Heytea, it had already received an initial investment from GSR Ventures, and its pricing was similar to Heytea's. FoodBud reads this as category expansion.
Sogood Fresh Tea, in FoodBud's interpretation, looked like a mid-price “Heytea.” Its franchise system was relatively restrained. It focused on natural fruit tea and zero-additive fruit tea. Its brand materials said it did not take store count as the goal, but store quality; it did not pursue windfall profit, but long-term business.
On product, Sogood insisted on handmade preparation. Founder Wang Biao said in an interview that his definition of standardization differed: “good taste is the greatest standardization.” He cited Sogood's 2017 practice of hand-peeling grapes in stores for Kyoho grape fruit tea. Critics said hand-peeled grapes were not standardized. Wang argued that canned grapes were standardized but did not taste good, and consumers would not pay for that. He preferred to discuss product stability rather than full standardization: not 100% standard, but relatively stable, with a level of variation customers can accept because fresh and handmade inputs meet new consumer demand.
Heytea founder Nie Yunchen had made a similar point in media interviews: extremely standardized products are often mediocre, while products that can be excellent but cannot maintain quality are also problematic. Heytea had been trying to balance the two.
FoodBud therefore saw Sogood Fresh Tea's product philosophy as close to Heytea's. After 10 years, it had only 117 stores, which FoodBud considered restrained. It represented a mid-price extension within similar products.
Heqi Taotao, by contrast, focuses on peach-flavored tea drinks. FoodBud guessed Heytea's valuation was low. Based on Heqi Taotao's external PR language of “several million yuan in angel investment,” FoodBud used RMB 5 million as an estimate, implying a valuation of around RMB 100 million.
Heqi Taotao had more than 300 stores, but they were scattered: 60 in Jiangsu, 46 in Shanghai, and 41 in Zhejiang. Jiangsu, Zhejiang, and Shanghai together accounted for nearly half of stores, but the rest were widely dispersed, reaching as far as Heilongjiang and Gansu. FoodBud saw risks in store control and supply-chain coverage.
In foodservice, scale effects first come from city-level density, then national scale. Many brands therefore first open densely in one city to test the model, train teams, build organizational capability, sharpen the store model, and support faster expansion with supply chain.
FoodBud criticized Heqi Taotao's franchise expansion as disorderly, spread across the country, with likely instability in store quality. The franchise recruitment was apparently outsourced to third parties: after submitting a mobile number, the author received calls from multiple quick-franchise milk-tea companies. FoodBud argued a steadier approach would be to restrict franchise regions even when using third parties, for example a Beijing company first opening only in Hebei and Tianjin.
Overall, FoodBud saw Heytea's strategy as buyouts for clearly defined subcategories and teams, and small minority stakes where the company was still exploring category, price-band, or franchise-model extensions. Heqi Taotao was harder to understand; FoodBud speculated Heytea may have valued upstream resources from Chasandai.
Looking at Wang Ning Lemon Tea's WeChat account and mini program, FoodBud found that its design style and in-store uniforms were similar to Heytea's stores, and that the mini-program template appeared consistent.
Reusable capabilities include digital systems, data middle platforms, and upstream supply-chain procurement, including ingredients, packaging, logistics, and cold-chain transport. Design teams can also be reused.
FoodBud compares this with Jiumaojiu, which has repeatedly reshaped front-end store experience and design to appeal to younger consumers, expanding new brands in more certain categories and looking for the next growth curve after Tai'er Sauerkraut Fish.
A recent episode of the podcast “Crazy Investment Circle” compared Heytea to Europe's Medici family, funding creative people to innovate products and brands.
A front-end multi-brand strategy can strengthen back-end supply-chain capabilities and improve reuse of back-end resources, deepening the moat.
In 2020, Heytea began exploring retail products built on its offline brand power, including fast-moving consumer products, tea leaves, and merchandise. This met consumption needs across different occasions and could also lift store transaction value.
A LatePost report made a similar point: a person close to Chayan Yuese said Chayan Yuese's per-square-meter efficiency improved meaningfully only after it began bundling new retail goods such as tea bags and gifts. Previously, even reaching RMB 1 million in daily sales for a single store was difficult. On Chayan Yuese's Tmall flagship store, a single cold-brew tea bag cost about RMB 18, roughly the price of a cup of milk tea. FoodBud said this was also why Nayuki and Heytea bundled central-kitchen bakery products and ready-to-drink sparkling water.
Heytea's Tmall flagship store launched in March 2020, and its JD self-operated flagship store launched in July 2020. In 2021, Heytea began placing sparkling-water products widely in convenience stores such as 7-Eleven and FamilyMart, pushing both online and offline retail channels.
FoodBud made a speculative comparison with Genki Forest. Because Genki Forest had strong capability in sparkling-water retail products and distribution, FoodBud imagined an endgame similar to Starbucks and Nestle: Heytea could sell its retail business to Genki Forest, collect brand fees, and let Genki Forest handle non-store distribution. FoodBud noted that Heytea and Genki Forest shared Sequoia Capital as an investor, which might not be decisive but could create room for some facilitation.
Beyond tea-drink investments and retailization, Heytea continued to invest in adjacent beverages: Seesaw Coffee, Wild Plant YePlant, and low-alcohol brand WAT.
Public materials did not disclose how much Heytea invested in YePlant or WAT. For Seesaw, FoodBud estimated based on public data: when Baitou invested in Seesaw, it contributed RMB 45 million at a valuation of RMB 180 million. Four years later, the valuation had risen by more than 6 times, implying more than RMB 1.08 billion. If Heytea entered for 5% at a valuation of about RMB 1.1 billion, the investment would be about RMB 55 million. Seesaw's revenue was RMB 74.6 million in 2019 and RMB 71.1 million in 2020, implying a roughly 15x price-to-sales multiple at an RMB 1.1 billion valuation.
FoodBud saw coffee, especially offline coffee-store businesses, as worth longer-term investment by Heytea.
For Wild Plant YePlant, its founder was also the founder of Minority Coffee. The company also had its own coffee roasting factory and coffee-bean brand, Torch Coffee. FoodBud suggested that Torch Coffee's brand philosophy may have made it less suited to heavy commercialization, while oat milk and other plant-based products offered a more commercial path.
YePlant externally claimed it had become China's second-largest B2B oat-milk supplier. FoodBud expected a normal extension from oat milk into coconut milk, especially because Heytea would prefer this part of the supply chain to be controlled by partners.
For low-alcohol drinks, FoodBud said it remained to be seen whether Heytea's investment would develop into retailized products or into experiments such as daytime coffee and milk tea with nighttime bar formats.
Note: all financing, valuation, IPO/listing, stake, and forward-looking figures above are historical as of the original November 13, 2021 article.