This is an English adaptation of a FoodBud historical article originally published on December 29, 2021.
Meituan Longzhu recently invested in Adopt A Cow alongside Guming. The final shareholding update had not yet been reflected at the time of writing, but Qichacha historical investment data showed Guming holding 2.5% of Adopt A Cow, a small stake. Meituan Longzhu was also one of Guming’s shareholders, with an 8% stake in Guming.
Guming began in Daxi and, over 11 years, became one of China’s leading freshly made tea-drink brands. From a single store, it had grown to more than 5,500 stores, and was believed to have passed 6,000 stores, covering 18 provinces and municipalities and 160 prefecture-level cities. The company said it had helped nearly 40,000 people find employment.
According to Lin Lin, chair of Zhejiang Guming Technology Co.’s labor union, Guming had more than 3,000 franchisees nationwide. To protect product taste and consistency, Guming had built 14 warehousing bases, operated more than 300 refrigerated trucks, and worked with several third-party cold-chain logistics partners to complete last-mile material delivery.
The clearest logic behind Guming’s investment in Adopt A Cow was supply-chain reinforcement.
Among China’s mid-priced tea-drink brands, Guming was viewed as one of the strongest in supply-chain capability. It had been relatively restrained in franchising and store expansion, and only recently began expanding more aggressively into northern China.
Founder Wang Yun’an previously described how Guming’s supply chain began. In the early days, franchisees were all in one county town. Stores closed at 11 p.m., and franchisees would pick up supplies from Wang’s home at midnight. Wang said the team concluded franchisees should focus on operating stores rather than collecting goods, so in 2012 they used RMB 140,000 to buy a delivery vehicle and began delivering to stores. The economics were poor at first: charging RMB 120 per month against costs of around RMB 800, while gross margin on goods was only about five points.
That experience shaped Guming’s approach. The article notes that Guming’s supply-chain revenue standard was around five points, while some franchise-chain operators retained 15 points or even 25 points. Wallace was also cited as a chain that left limited margin at the supply-chain level, based on the principle that franchisees must make money for the system to work.
For tea-drink brands such as Guming, the core supply-chain inputs are tea, fruit, milk, and dairy products.
On fruit, brands such as Nayuki and Guming had worked upstream toward orchards. Nayuki invested in Tianye, a company involved in fruit processing. Some fruits, such as strawberries and mangoes, require peeling, cutting, pulping, freezing, or refrigerated handling before reaching logistics centers, which can improve store-level preparation efficiency.
On tea, supply control is not only about tea gardens; blending is central, and major brands all work on this capability.
On milk and dairy, strategies differed. Heytea invested in Wild Plant, an emerging-category product company, and Wild Plant co-branded products were already sold in Heytea stores. Mixue Bingcheng worked with dairy giant Mengniu. Guming chose Adopt A Cow, moving from commercial cooperation into equity participation. Guming and Adopt A Cow had already cooperated on store-level products.
Guming’s disclosed 2020 raw-material usage shows the scale of the issue:
This helps explain why Guming first invested in assets such as perfume-lemon orchards: controlling fresh fruit quality supports product consistency.
Another major input was non-dairy creamer. Jiahe Foods, which listed in 2021, showed in its prospectus that for the first three quarters of 2020, Mixue Bingcheng was its largest customer, Guming was second, and Coco was third.
Guming’s 14 warehousing bases, more than 300 refrigerated trucks, and third-party cold-chain partners supported two-day delivery. In 2020, Guming’s cold-chain trucks made 372,424 store deliveries.
The Adopt A Cow investment could also be viewed as a financial investment, because the dairy company was preparing for an A-share listing.
Adopt A Cow had entered IPO tutoring, with CITIC Securities as the tutoring institution. The tutoring period was expected to run from September 2021 to April 2022.
In the three years ending 2020, Adopt A Cow’s compound annual growth rate reached 110%. By May 2020, through its “partner” recruitment model, the company had accumulated 20 million users, including 5 million senior members, and sales revenue had exceeded RMB 1.5 billion. According to 36Kr, Adopt A Cow’s 2021 revenue was expected to exceed RMB 2 billion.
Because Guming’s stake was small, the article framed the investment as both supply-chain reinforcement and a potential financial investment that could appreciate and become easier to monetize after a listing.
The strategic question was whether Adopt A Cow would expand beyond milk into plant-based milk. The company also faced the challenge of when continued self-building or investment in farms would generate scale effects and reduce costs. As more plant-based products were being combined with tea drinks, Guming would naturally have demand in that area.
The article also considered whether Guming might move into “yogurt +” products or store formats.
China’s tea-drink market was highly competitive, and the direction of product innovation for 2022 remained uncertain. In 2021, brands had already heavily explored niche fruits.
Guming disclosed that in 2020 it developed 79 beverages, averaging one new drink every 0.65 weeks, and made 249 formula adjustments.
A yogurt-plus product line could have market potential. Beijing-based Lanxiong Fresh Milk (兰熊鲜奶) had only 10 stores but had received angel investment from Yunhaiyao and MissFresh, with IDG later participating. Its store-level product reputation was described as good, though expansion had been slow.
A larger example was A Yogurt Cow, acquired by New Hope Dairy in early 2021. It had more than 1,000 stores.
According to New Hope Dairy’s announcement, A Yogurt Cow had been founded around five years earlier, targeted 20- to 30-year-old female white-collar consumers, positioned itself as fashionable and healthy, and focused on differentiated “yogurt +” products. Its stores were concentrated in Chengdu, Chongqing, Xi’an, and other cities. In 2019, it generated revenue of about RMB 240 million and net profit of RMB 35 million.
New Hope Dairy valued the business at RMB 385 million and paid RMB 231 million for a 60% stake, with a net-profit-linked earnout for the management team. The three-year performance commitment required cumulative net profit of RMB 127 million before the management team could require New Hope Dairy to acquire the remaining 40%.
The article’s conclusion was that, for Guming, a 1,000-store yogurt-chain model with this level of valuation may not be especially attractive. It appeared more valuable for Guming to keep investing in product innovation and deepen its supply-chain moat.
At the time, there had been market rumors that Guming was speaking with potential advisers about a Hong Kong IPO as early as 2022, seeking to raise USD 300 million to USD 500 million. Guming later denied those rumors. With Mixue Bingcheng already in IPO tutoring, the article expected Guming’s own path to listing would likely not be far away.
Note: IPO plans, revenue expectations, valuation figures, and forward-looking statements are historical as of the article’s original publication on December 29, 2021.