Latest news with #Mixue
South China Morning Post
2 days ago
- Business
- South China Morning Post
Out with the old, in with Pop Mart: Gen Z's ‘emotional consumption' lift consumer stocks
Stock investors are capitalising on the spending power of China's Generation Z consumers, who splurge on everything from gold jewellery to low-priced drinks, delivering multifold returns on so-called new consumer stocks. The ascent of Pop Mart International Group , Mixue Group and Laopu Gold is one of the few bright spots in China's sluggish consumer industry, which has been plagued by a weak jobs market and the deflationary trend. The robust performance has come at the cost of traditional industry names, including liquor producer Kweichow Moutai, with traders pulling out of what were once their favourite stocks. Shares of Hong Kong-listed Pop Mart, a Chinese toymaker that owns blockbuster intellectual property (IP) Labubu , have surged almost 600 per cent over the past year, while Mixue, a chain store that sells low-priced soft drinks and ice cream, has seen its stock more than double since its listing in February. Laopu Gold, a jeweller that aims to brand itself as China's Hermès, has seen an even bigger eye-popping performance with a 23-fold surge in stock price over the past 12 months. 'Investors' risk appetite is changing, and the market focus is shifting to those 'new consumer' names that have the potential for valuation expansions and tell 'transition' stories,' said Zhao Wenli, a strategist at CCB International in Hong Kong. 'We haven't seen a clear growth ceiling for new consumption. It represents the new direction for consumption upgrades in the future.' The growth of the Gen Z demographic – referring to those born between 1995 and 2010, and estimated at more than 200 million in number – underscores the impact of China's younger generation on its economy and consumer behaviour. The US had a similar story, with baby boomers propelling the fortunes of a slew of big stocks, including Walmart in the 1980s. Meanwhile, China's neo-consumers have also profoundly affected the investment playbook, prompting fund managers to learn more about their mentality for clues on stock picks.
South China Morning Post
2 days ago
- Business
- South China Morning Post
Gen Z's ‘emotional consumption' fuels surge in consumer stocks as investors dump old names
Stock investors are capitalising on the spending power of China's Generation Z consumers, who splurge on everything from gold jewellery to low-priced drinks, delivering multifold returns on so-called new consumer stocks. The ascent of Pop Mart International Group , Mixue Group and Laopu Gold is one of the few bright spots in China's sluggish consumer industry, which has been plagued by a weak jobs market and the deflationary trend. The robust performance has come at the cost of traditional industry names, including liquor producer Kweichow Moutai, with traders pulling out of what were once their favourite stocks. Shares of Hong Kong-listed Pop Mart, a Chinese toymaker that owns blockbuster intellectual property (IP) Labubu , have surged almost 600 per cent over the past year, while Mixue, a chain store that sells low-priced soft drinks and ice cream, has seen its stock more than double since its listing in February. Laopu Gold, a jeweller that aims to brand itself as China's Hermès, has seen an even bigger eye-popping performance with a 23-fold surge in stock price over the past 12 months. 'Investors' risk appetite is changing, and the market focus is shifting to those 'new consumer' names that have the potential for valuation expansions and tell 'transition' stories,' said Zhao Wenli, a strategist at CCB International in Hong Kong. 'We haven't seen a clear growth ceiling for new consumption. It represents the new direction for consumption upgrades in the future.' The growth of the Gen Z demographic – referring to those born between 1995 and 2010, and estimated at more than 200 million in number – underscores the impact of China's younger generation on its economy and consumer behaviour. The US had a similar story, with baby boomers propelling the fortunes of a slew of big stocks, including Walmart in the 1980s. Meanwhile, China's neo-consumers have also profoundly affected the investment playbook, prompting fund managers to learn more about their mentality for clues on stock picks.
CNA
2 days ago
- Business
- CNA
Commentary: Why Chinese F&B companies are expanding in Indonesia
SINGAPORE: In the past decade, China's food and beverage (F&B) firms have started large-scale investments outside China, driven by domestic market saturation and the Xi Jinping government's 'going out' policy. Southeast Asia has become a prime target for this expansion due to its rapidly growing consumer base, underdeveloped F&B industry, proximity to China, and generally open investment environments. Given the variety of F&B industry offerings, mainland Chinese multinational enterprises (MNEs) are targeting market niches like ice cream and milk tea. Prominent mainland Chinese F&B firms founded in cities like Xiamen and Shenzhen are now expanding in the region, such as Mixue Ice Cream and Tea (Mixue Bingcheng), Naixue (formerly Nayuki, also known as Naicow), Joyday (Yili Product), Chagee and Luckin Coffee. However, they face competitors including earlier entrants from the US, Europe, Japan, South Korea and Taiwan, which benefit from strong brand recognition and deep-rooted consumer trust. A DIFFERENT MODE OF ENTRY The mainland Chinese companies' mode of entry is quite different from American business franchise models, such as Starbucks and Coffee Bean & Tea Leaf, which are typically owned by large local conglomerates. Franchisees in local markets bid for franchise outlets from the master franchise holder: for instance, the franchisee is PT Mitra Adiperkasa (MAP) for Starbucks Indonesia. This model is more exclusive and arguably caters to middle and upper-income segments in urban markets. Meanwhile, mainland Chinese F&B firms offer a low-cost franchise model, extending their reach to non-urban areas. This model disrupts the traditional model, which requires high initial capital and can be highly exclusive. With an initial capital of less than US$40,000, a Mixue franchise business is accessible to many aspiring entrepreneurs in the region. Among the incoming mainland Chinese F&B brands, Mixue is arguably the fastest-growing in terms of the number of outlets in Southeast Asia. Founded by Chinese businessman Zhang Hongchao in the late 1990s, Mixue first entered Southeast Asia via Vietnam in 2018 and Indonesia in 2020. Expansion into other Southeast Asian markets has been more modest, but sharp growth has occurred in economies with relatively lower income per capita and a significant young population (Vietnam and Indonesia). Its growth in Indonesia has been striking – in the first two years, Mixue opened 317 stores; within four years, this exceeded 2,000. In Vietnam, Mixue opened approximately 1,000 stores in five years. SIGNIFICANT BARRIERS Initially, mainland Chinese F&B firms sought to enter developed countries' markets but encountered significant barriers. Regulatory complexity, stringent food safety standards, higher entry costs, and the presence of well-established local and multinational brands hindered the Chinese firms' penetration into developed markets, like Australia, South Korea and Japan. In Japan and South Korea, there is also strong "local brand nationalism" or loyalty, making it harder for foreign brands to penetrate their domestic market. In contrast, certain markets in Southeast Asia offer more receptive business environments. Their ice cream and F&B sectors have considerable room for growth. Mixue's rapid expansion in Indonesia can be attributed to three key factors: its efficient supply chain, affordable product pricing, and the ease of launching a franchise. Mixue's model enables rapid expansion by relying on a network of low-cost, standardised outlets that are attractive to local entrepreneurs. As Indonesia has the world's largest Muslim population, halal certification is a prerequisite for most F&B businesses operating there. In January 2023, Mixue faced protests from Islamic groups in Jakarta, who questioned the halal status of its products and asked for a boycott. In response, Mixue's management immediately clarified that their ingredients did not contain lard or alcohol and emphasised that the company had applied for halal certification in 2022. The Majelis Ulama Indonesia (the Indonesian Ulema Council, MUI), the authority in charge, did not initially respond. This prompted public criticism of bureaucratic delays, which can discourage foreign investment. Shortly after, MUI granted Mixue a halal certificate. MANY OTHER PLAYERS Before Mixue's rapid expansion, a few other players had made inroads into Indonesia. Aice Group, established in Singapore in 2014 by new Chinese migrant Wang Jiacheng, founder and CEO, entered Indonesia in 2015. Aice gained popularity by selling low-cost ice cream products tailored to Indonesian tastes. By 2022, Aice had become one of the largest F&B firms in Indonesia, operating with three large-scale factories in Cikarang, West Java; Mojokerto, East Java and North Sumatra. Meanwhile, Yili Group, a major Chinese player, entered the market through its Joyday Ice Cream brand, thus directly competing with Aice and Mixue. The regulatory climate in Indonesia has largely supported F&B investment, particularly for firms able to adapt to local requirements, such as halal compliance and pricing sensitivities. SHAPING PERCEPTIONS OF CHINA While competition is fierce, some of the Chinese firms have localised their supply chains and adapted branding and distribution models to align with Indonesian consumer preferences. As Chinese F&B brands gain popularity, they might be shaping perceptions of China. In July 2023, a piece in The Jakarta Post commended Mixue's contribution to Indonesia's economy, noting its job creation, affordability, and resilience during economic downturns. The article argued that while 'negative perceptions of China may not be entirely eliminated by popular cheap food', brands like Mixue demonstrate that local communities can view positively aspects of China's presence. This reflects the broader soft power potential of Chinese consumer brands, particularly in a culturally sensitive sector like F&B. The sustainability of the Chinese low-cost franchise model remains to be seen. It is effective for quick market penetration, as evidenced by the rapid growth of retail outlets. However, there is no openly available evidence that such growth is associated with profitability. The Chinese F&B business model will face serious tests related to quality control and market saturation as competition heightens.
Yahoo
04-06-2025
- Business
- Yahoo
A 21-year-old asked his grandmother for money to open a street-food stall. Now, it's the world's largest fast-food chain, eclipsing McDonald's
It may surprise you to learn that the world's largest fast-food chain isn't an American staple like McDonald's or Starbucks. It's actually Mixue, an ice cream and boba shop founded in 1997 that has exploded in popularity in China and throughout Asia. Zhang Hongchao was a university student when he created the first Mixue stall; now he's a billionaire. McDonald's was founded 85 years ago in San Bernardino, Calif. It's the world's second-largest private employer—behind only Walmart, No. 1 on the Fortune 500 again this year—and has over 40,000 locations worldwide. Yet, McDonald's still falls behind one company in terms of footprint: Mixue Ice Cream & Tea. Mixue, as of March, is currently the world's largest fast-food chain by store locations, with over 46,000 sites across Asia, Australia, the Middle East, and South America. Roughly 40,000 of its total locations exist in mainland China, meaning the company has even more room to run globally. And the company's performed well since its March debut on Hong Kong's stock exchange, soaring from its opening price of $290 HKD per share to $584.50 HKD as of Monday morning. Zhang Hongchao probably didn't expect to be the founder of such a behemoth when he opened his first street-food stall 28 years ago. Zhang was attending the Henan University of Economics and Law when he had the idea to open a food stall, mainly to sell beverages like cold drinks and shaved ice. He asked his grandmother to borrow 3,000 yuan—around $362 back then, or $417 today—to open up a small stall on the streets of Zhengzhou, the capital of China's Henan province and a major international transport hub. The stall was successful, even early on. According to a lengthy profile about Mixue in China's state-run outlet Sina News, Zhang was able to sell products worth up to 1.5 yuan for more than 100 yuan; in other words, he could make a drink that cost around 21 cents and sell it for more than $14. Unfortunately, Zhang's inexperience, and the rapid modernization of Zhengzhou, would become obstacles. The villages of Zhengzhou were constantly subject to demolition efforts as the area grew more urban, which resulted in Zhang's store getting demolished three times in a single year, according to Sina News. And he learned the hard way how difficult it is to sell cold treats during the winter season, which forced him to sell mandarin oranges for extra cash. Despite the setbacks, Zhang kept at it. He bought more machines, added more sugary drinks to his menu, and notably introduced a soft-serve ice cream cone for just 1 yuan, or roughly 14 cents, which solidified the brand among budget-conscious consumers. The company also got stronger operational chops when Zhang brought in his younger brother, Hongfu, to help run the company in 2007. Since so many of Mixue's franchisees were run by friends or family, few enforced Zhang's rules or regulations; that changed when Hongfu, who now acts as the company's CEO, took the reins. (Elder brother Hongchao Zhang, the founder, serves as chairman.) One of the most important things Hongfu did was introduce store managers, which ultimately helped the two brothers avoid disputes with family members who operated some of their franchises. As Mixue added hundreds of stores over the years, the company grappled with quality and consistency issues, as well as supply-chain woes when fruits or milk powder ran in short supply. But sales rebounded as Zhang pushed for new products like boba tea, and supply issues were ameliorated when Zhang decided to establish a storage base in 2014 that would collect raw materials from farmers, and produce its own materials like powders and snacks, essentially consolidating a large portion of its supply chain. In 2022, Mixue reported having warehouse and logistics bases in 22 different provinces, and the company has stepped up quality-control efforts to avoid store closures. Mixue controls site selection, store decoration, personnel training, raw material supply, and food safety to ensure the success of its franchisees. In 2024, Mixue reported 4.4 billion yuan ($615 million) in profit, up 22% over the year before, on 24.8 billion yuan (about $3.43 billion) in revenue, which was a near-40% jump year over year. Its earnings per share, 12.3 yuan ($1.71), was also up 41% from 2023. The company's vertically integrated supply chain and proprietary logistics network have helped keep costs low at just 30% of its sales revenue, compared to the industry average of 45%–55%, according to a recent study published in the Journal of Fintech and Business Analysis. Crucially, the company continues to expand. It added 4,192 new franchisees in 2024 and opened over 10,000 new stores, with a closure rate of just 3.5%. While over 99% of its 45,000-plus stores are franchised, franchise fees only make up a small percentage of its revenue. According to the company, the bulk of its income comes from selling merchandise and equipment to franchises, which are required to buy these items directly from Mixue. Earlier this year, Mixue celebrated a successful initial public offering, one of the biggest IPOs of Hong Kong's Stock Exchange this year so far, raising $3.45 billion HKD, or $444 million. As for the Zhang brothers, Hongchao and Hongfu maintain relatively low profiles, but reportedly have a combined net worth of $8.1 billion. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
South China Morning Post
03-06-2025
- Business
- South China Morning Post
China's fresh-drink stocks leave investors thirsty for returns amid heated competition
A recent thirst among investors for Chinese makers of fresh drinks – after a slew of share offerings including the blockbuster Hong Kong listing of Mixue Group – could mean that too much money is chasing the same growth story, according to S&P Global Ratings. 'China's demand for fresh-made drinks is growing fast as marketing, innovation and supply chains strengthen for this segment,' credit analyst Sandy Lim said in a report on Tuesday. The trend could 'ratchet up competitive spending and strains', pressure margins and even dim the growth prospects of similar categories, Lim said. The mainland market for fresh-made beverages – which includes juices, tea, milk, ice cream and coffee – could expand by close to 18 per cent a year between 2023 and 2028, the rating agency said, adding that the segment could reach 1 trillion yuan (US$139 billion) in sales by 2027. Investor interest in the booming but increasingly competitive sector has been reflected in four initial public offerings (IPOs) by fresh-drink companies this year: Good Me operator Guming , Mixue, Chagee , and Auntea Jenny . Since 2021, mainland Chinese fresh-drink brands have raised more than US$2.5 billion via IPOs or private-equity funding rounds, according to S&P. However, investor confidence quickly tumbled for beverage chains that lacked a clear edge in the fiercely competitive industry, where supply-chain capacity is of paramount importance. Shares in Auntea Jenny have lost 21.3 per cent from their May 8 debut. Naixue has plunged more than 92 per cent since its July 2021 listing, and US-listed Chagee is down over 5 per cent since April.
