Nayuki's Tea Stock Hits Lowest Point After ¥28,000 Fine! How to Solve Food Safety Issues?

Nayuki's Statistical Violation and Stock Price Decline

On December 1, Beijing Nayuki Catering Management Co., Ltd. was fined 28,000 yuan by the Beijing Xicheng District Bureau of Statistics for providing false "2020 total employee wages indicator," violating the Statistical Law of the People's Republic of China. Following the penalty announcement, Nayuki's stock price experienced a slight decline, falling from HK$9.35 per share to HK$9.25 per share. By December 3, Nayuki's stock price had already dropped to HK$8.84 per share, marking the lowest point since its listing.

Nayuki's Troubles Since Going Public

On June 30 this year, Nayuki was listed on the Hong Kong Stock Exchange. As the first stock in the new-style tea beverage industry, its stock price fell below the issue price on the first day of listing, with a decline of up to 13.54%, dropping to HK$17.12 per share. Since then, due to frequent food safety issues and insufficient profitability, Nayuki's stock price has been in a continuous decline, with a particularly significant drop of 26.8% on July 27. Today, Nayuki's stock price has nearly halved compared to its opening price, and the company also anticipates a full-year loss for 2021.

Industry Challenges and Food Safety Concerns

Observing Nayuki's "dismal performance" since its listing, Heytea is also on the "edge of testing." Heytea, which has repeatedly been rumored to be going public, has迟迟 not taken action, as new-style tea beverages, once favored by investors, are now facing tests and skepticism. The primary reason for this skepticism lies in food safety issues.

Since Nayuki's listing, third-party platforms have frequently seen consumer complaints against Nayuki, including foreign objects in drinks (hair, plastic, paper scraps...), unhygienic conditions at drink preparation counters, and sold food showing signs of mold.

Media Exposure and Public Backlash

By August 2021, Xinhua News Agency reported that several Nayuki stores had issues such as falsified raw materials and unhygienic environments, sparking public concern and attention. The reports indicated that these stores had problems including cockroaches running around, unwiped rags, and inaccurate labeling dates. Following the reports, Nayuki only handled the matter privately without providing an "explanation" to consumers. Consequently, Xinhua continued to "expose" the issue, pointing out that some stores were still using fruits after employees cut off rotten parts... When the news broke, netizens exploded in anger! Nayuki immediately launched overnight investigations and rectifications of the involved stores, while inviting market regulatory departments for inspections and promptly releasing the results.

Brand Reputation and Competitive Challenges

After the exposure incident, Nayuki's food safety issues continued to occur frequently, significantly damaging its brand reputation and reducing consumer willingness to spend, thereby affecting its stock price. Secondly, industry competition has intensified, and Nayuki's Tea lacks significant advantages.

Among the "three giants of new-style tea beverages" - Heytea, Lelecha, and Nayuki's Tea - Nayuki, besides making its to-go cups more convenient for women to hold, does not match Heytea and Lelecha in terms of product update speed, uniqueness, and appeal. Even when launching new products, the flavors are similar to those of Heytea and Lelecha, but the drink presentation and sales methods are not as attractive as the other two.

Business Model and Competitive Disadvantages

Although Nayuki first introduced the "tea + soft European bread" sales model, it failed to stimulate consumers' desire to purchase combinations. Subsequently, Lelecha also launched the same sales model, and due to more attractive products and prices, it quickly captured a significant portion of Nayuki's market. Meanwhile, Heytea has continuously collaborated with other brands to launch milk teas and peripheral products, with brand recognition higher than Nayuki's Tea.

In terms of business model, Heytea and Lelecha's stores are smaller, effectively controlling operating costs. However, Nayuki's Tea needs to bake European bread fresh on-site, making it impossible to reduce costs through central kitchen pre-preparation or store size reduction. Additionally, there are concerns that smaller stores would not meet the needs of users who prefer larger social spaces.

Conclusion

In summary, as long as Nayuki's Tea does not resolve its food safety and profitability issues, its stock price will remain sluggish, potentially experiencing even greater declines.

Image source: Internet

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