Mixue Bubble Tea Surges on Hong Kong Stock Exchange Debut

Mixue Ice Cream and Tea, a prominent player in the bubble tea market, experienced a 40% increase in shares during its debut on the Hong Kong Stock Exchange, marking the largest IPO of the year amid China's economic challenges.

Mixue Ice Cream and Tea may not be a household name outside of Asia, but it stands as a titanic presence in the bubble tea market, boasting more outlets than both McDonald's and Starbucks combined. On Monday, the popular Chinese beverage and dessert chain made waves as its shares leaped by 40% when they began trading on the Hong Kong Stock Exchange, raising a staggering $444 million (£352 million) in what is considered the largest initial public offering (IPO) of the year.

The rise of Mixue comes at a time when many individuals in China are facing economic difficulties, including a notable property crisis and a decline in consumer and business confidence. The chain offers its products, which include a variety of ice creams and drinks, at an incredibly affordable average price of six Chinese yuan (approximately $0.82; £0.65).

Mixue, fully called Mìxuě Bīngchéng—which translates to "honey snow ice city"—was founded in 1997 by Zhang Hongchao while he was a student at Henan University of Finance and Economics. Initially, it started as a part-time venture aimed at supporting his family's income. The stores reflect the brand's playful identity, featuring its Snow King mascot and a continuously playing theme tune that enhances the customer experience.

The company boasts more than 45,000 outlets not only in China but also in 11 other countries, including Singapore and Thailand. This impressive figure is notable when compared to McDonald's, which has over 43,000 locations, and Starbucks, with 40,576 stores worldwide. Though often regarded as China’s leader in bubble tea, iced drinks, and ice cream, Mixue’s operational model differs significantly; most of its locations are franchised, contrasting with Starbucks, which directly manages more than half of its shops.

Mixue’s successful market debut diverges sharply from the experience of its smaller competitor Guming, whose shares dropped on their first trading day back in February. This underlines the tension in the bubble tea industry, as seen with another market debut last year, where shares of the owner of bubble tea chain Chabaidao also faltered. With the current climate in the beverage sector, one must wonder: Is the bubble tea craze in China reaching its peak?