This is an English adaptation of a FoodBud historical article originally published on January 2, 2024.
On January 2, 2024, Guming submitted its prospectus to the Hong Kong Stock Exchange, with plans to list in Hong Kong.
For the first three quarters of 2023, Guming reported revenue of RMB 5.57 billion, up 33.9% year on year, and adjusted profit, a non-IFRS measure, of RMB 1.05 billion. For full-year 2022, revenue was RMB 5.56 billion and adjusted profit was RMB 790 million.
By the end of 2023, Guming had:
Lower-tier markets were central to the model. In 2023, tier-two-and-below cities contributed RMB 14.7 billion in GMV, while township stores accounted for 38% of the store base.
Guming’s core categories are fruit tea and milk tea. The prospectus also highlighted coffee and innovative beverages. For the first three quarters ended September 30, 2023, coffee and innovative beverages accounted for 11% of cups sold.
Franchised stores contributed about 99% of GMV.
Average GMV per store increased from about RMB 2.2 million in 2021 to RMB 2.5 million in 2023. In 2023, stores in tier-four-and-below cities generated about RMB 2.3 million per store, while township stores generated about RMB 2.4 million per store.
Guming follows a density-led store expansion strategy. As of December 31, 2023, it had a presence in 15 provinces in China.
The company defines more than 500 stores in a single province as “key scale,” indicating a base for visible scale effects. Zhejiang was the first province where Guming reached this threshold, and the network there had grown to more than 2,000 stores.
Guming reached key scale in Fujian in 2019 and Jiangxi in 2020. It later reached the same threshold in Guangdong, Hubei, Jiangsu, Hunan, and Anhui. As of December 31, 2023, Guming had exceeded key scale in eight provinces, which together contributed 87% of 2023 GMV.
According to Guming’s prospectus, as of the end of September 2023, the company ranked second in China by both GMV and store count. Mixue Bingcheng ranked first, and Chabaidao ranked third.
Guming emphasized technology as a driver of its operating model. As of the end of September 2023, it had more than 300 engineers on its technology team, described as the largest IT team in China’s freshly made tea beverage store sector. Its store-location database contained 18,500 sites.
Its product R&D team had more than 110 people as of the end of September 2023. More than 40 team members focused on tea leaves and extraction processes, generally with master’s degrees or higher.
The company also linked technology to procurement and back-end loss control. For example, by processing mangoes near the source and controlling packaging, delivery, and ripening, Guming reduced ripening loss to 9% for the nine months ended September 30, 2023, well below the industry average of about 20%.
Guming’s supply chain capability has long been part of its positioning, and the prospectus disclosed several operating metrics.
In 2022, Guming purchased more than 8,160 tonnes of fresh fruit across more than 30 varieties.
As of September 30, 2023, Guming operated the largest cold-chain warehousing and logistics infrastructure among China’s freshly made tea beverage store brands. This supported cold-chain delivery every two days to more than 97% of its stores.
According to a China Insights Consultancy report, for the nine months ended September 30, 2023, Guming completed more than RMB 3 billion worth of cold-chain raw-material deliveries, the highest level in China’s freshly made tea beverage store industry.
Guming had 21 warehouses with total gross floor area of more than 200,000 square meters, including more than 40,000 cubic meters of cold storage covering different low-temperature ranges.
As of September 30, 2023, more than 75% of Guming stores were within 150 kilometers of a warehouse. Its proprietary logistics system used algorithms to match available resources with logistics demand and optimize delivery routes, reducing delivery costs.
In Zhejiang, as of December 31, 2023, Guming had three warehouses and 53 cold-chain-capable trucks supporting 2,054 stores. In that province, 92% of stores were within 150 kilometers of a warehouse.
Guming was also adding a warehouse in Taizhou, Zhejiang, with expected total gross floor area of more than 39,000 square meters.
Its warehouses support refrigerated zones including minus 20 to minus 15 degrees Celsius, 1 to 5 degrees Celsius, 8 to 13 degrees Celsius, and 10 to 15 degrees Celsius. Guming said these more precise temperature ranges help maintain optimal freshness for many fruits, and that it would be difficult for third parties to provide storage services meeting its business needs at similar cost.
As of September 30, 2023, Guming directly owned and operated 327 transport vehicles for deliveries between warehouses and from warehouses to stores.
China’s freshly made tea beverage store brands typically deliver once every four days and usually do not provide cold-chain delivery support. For the nine months ended September 30, 2023, among China’s top ten freshly made tea beverage brands by GMV, Guming was the only one able to frequently deliver short-shelf-life fresh fruit and fresh milk to stores in lower-tier cities.
Guming’s average warehouse-to-store delivery cost accounted for only about 0.9% of GMV. According to China Insights Consultancy, the industry average was about 2%.
For the years ended December 31, 2021 and 2022, and the nine months ended September 30, 2023, purchases from Guming’s five largest suppliers accounted for 18.1%, 20.9%, and 16.3% of total purchases, respectively.
The prospectus also disclosed related-party transactions involving a packaging supplier. Zhejiang Mingxing Packaging is wholly owned by the uncle of Guming’s founder.
Guming began purchasing packaging materials from Zhejiang Mingxing Packaging in June 2023. From June through September 2023, total purchases from the supplier were about RMB 95.4 million.
For the years ending December 31, 2024, 2025, and 2026, the expected annual caps for related packaging-material purchases were RMB 380 million, RMB 480 million, and RMB 600 million, respectively.
For the first three quarters ended September 30, 2023, Guming’s inventory turnover days were 48 days. As of the end of September 2023, cash and cash equivalents were RMB 1.86 billion.
Note: IPO plans, expected procurement caps, warehouse plans, and forward-looking figures above are historical disclosures from the January 2024 article and prospectus context.