Thread by @WholePicture_

A great future is forecast for the market for high-quality teas in China. It is expected to increase by an average of 25 percent annually by 2025. One of the market leaders is now going public in Hong Kong.

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Nayuki Holdings, which specializes in the production of premium teas and pastries, has submitted its documents for the IPO in Hong Kong.

The company founded in 2015 by the couple Peng Xin and Zhao Lin is deviating from the original plan to issue the shares on the New York Stock Exchange.

The decision shows once again the importance of the Hong Kong financial center for companies from mainland China.

According to the Bloomberg news agency, Nayuki was valued at $ 2 billion after the last $ 100 million round of funding at the end of last year. Should the company go public with up to a fifth of the shares, it could receive around $ 400 million in fresh capital.

The market research company China Insights Consultancy forecasts that it will grow by almost 25 percent annually to 340 billion yuan, which corresponds to around 47 billion Swiss francs, by 2025.

Nayuki already has more than 500 branches in mainland China.

This year and next, up to 650 additional branches are to be added in China.

The majority of the guests are young Chinese, who associate a new, healthy lifestyle with the tea drinks.

The average value of store orders is just over 43 yuan. Nayuki is thus at the price level of the Starbucks coffee house chain.

The candidate on the stock exchange also felt the consequences of the Covid 19 epidemic last year.

However, thanks to an aggressive expansion strategy, Nayuki was able to increase sales by almost 25 percent to around 2 billion yuan in the first nine months of 2020 compared to the same period last year.

However, the company is still reporting losses due to the high level of investment.

The still young market for premium teas in China is competitive. Nayuki's big opponent, Heytea, already has more than 700 branches on the mainland.

There are also many smaller providers who copy the creations of the market leaders. On the cost side, another complicating factor for Nayuki is that tea leaves, dairy products as well as fruits and juices are expensive, which in turn puts pressure on margins.

In addition, every tea is prepared in the branches; the personnel costs are therefore high.

The Chinese market for premium teas shows once again the typical approach of the companies: They are expanding aggressively with the aim of ultimately being one of the few survivors.

Nayuki has secured a good starting position next to Heytea to emerge successfully from this battle. If this project succeeds, nothing should stand in the way of expansion abroad.