Heytea Takes 15.4% Stake in Soge Fresh Tea as China’s Tea Chains Enter an Investment Era

This is an English adaptation of a FoodBud historical article originally published on February 7, 2022.

FoodBud previously noted in November 2021, when Heytea acquired Yecuishan, that Soge Fresh Tea could be its next target.

On February 8, an investment partnership jointly established by Heytea founder Nie Yunchen and finance head Qiu Yongxian completed an investment in Soge Fresh Tea, taking a 15.4% stake.

The Target: Soge Fresh Tea

Soge Fresh Tea was founded in 2011 around the operating idea of combining taste and health. The brand uses fresh fruit as a core ingredient, pairing tea with a variety of fruits and focusing on both flavor and presentation.

Fruit tea is its main product line. Soge Fresh Tea operates with a product model similar to a fruit supermarket, using a “10+1” new-product strategy: seasonal fresh fruit to drive traffic, and more stable fruit varieties to support repeat purchases.

As of October 2021, Soge Fresh Tea had built a footprint based in Guangzhou and covering 16 regions in China and overseas, with more than 100 stores.

FoodBud’s view is that Soge Fresh Tea sits in the mid-price position that could be described as a lower-priced counterpart to Heytea.

Although Soge Fresh Tea expands through franchising, its growth has been relatively restrained. Its brand materials state that the company does not treat store count as the goal, but store quality; it says it does not pursue excessive profit, but long-term business.

Product Philosophy: Fresh, Handmade, and Stable Enough

Soge Fresh Tea emphasizes handmade preparation. Founder Wang Biao has described the brand’s approach this way: “We may define standardization differently. I think good taste is the biggest standardization.”

He cited the example of Soge Fresh Tea peeling grapes by hand in stores as early as 2017 for its Kyoho grape fruit tea. At the time, many people told him hand-peeled grapes were not standardized and therefore would not work.

The company’s own materials also heavily emphasize control over supply chain and raw materials.

Wang argued that canned grapes may be standardized, but do not taste as good, and consumers will not pay for standardization if the product is not appealing. He said the company prefers to talk about product stability rather than standardization: it may not be 100% standardized, but it can be relatively stable, with a degree of variation customers can accept. That variation exists because the brand uses fresh or handmade elements to meet new consumer demand.

Heytea founder Nie Yunchen has expressed a similar tension in media interviews, saying highly standardized products are often mediocre, while products that can be excellent but cannot maintain quality are also problematic. Heytea, he said, has been trying to maintain a balance between the two.

This makes Soge Fresh Tea’s product philosophy relatively close to Heytea’s. After 10 years of development, data from Narrow Door Dining Eye showed Soge Fresh Tea had only 120 existing stores, reinforcing the view that its expansion pace had been restrained.

Why Heytea May Be Investing

Heytea had recently simplified product ingredients and shifted add-on choices to customers. This allowed the brand to lower the price of base products and reach a broader consumer group. It also gave customers more control over customization, helping Heytea collect individualized preference data and potentially increase customer stickiness by raising the switching cost of repeat beverage purchases.

By investing in mid-priced, franchise-led tea brands such as Soge Fresh Tea and Heqi Taotao, Heytea may be trying to understand and access more price tiers while also learning franchise-system playbooks. Direct-operated chains and franchise chains differ in subtle but important ways: direct operation emphasizes control, while franchising places more emphasis on open cooperation.

China’s tea-drink market was already moving toward a more stable competitive structure. Leading tea brands had raised large amounts of financing, while regional leaders still held strong positions in different local markets.

For top tea-drink brands seeking continued rapid growth, industrial investment or M&A offered a faster route. Heytea had already acquired Wang Ning Lemon Tea and Yecuishan, and invested in Seesaw Coffee, YePlant, and WAT cocktails. The longer-term challenge is how to create industrial synergies after these investments and acquisitions.

Note: investment, ownership, financing, store-count, and market-position figures are historical as of the original 2022 article.