"Back Against the Wall" Plans Hong Kong IPO? LELECHA Expands Into South China Market!

Anyone following the development of the new-style tea beverage industry is likely aware of how intensely competitive this market has become. Thousands of brands compete across the high-end, mid-range, and low-end segments. High-end brands include Heytea and Nayuki; the mid-range features brands like Yidiandian; and the lower-tier market is largely dominated by Mixue Bingcheng.

In South China, new-style tea beverages are largely dominated by brands like Heytea and Nayuki that have long established a presence. However, Lelecha, a new-style tea beverage brand headquartered in Shanghai, entered Guangzhou in 2017. Despite surviving for just over five years in this popular first-tier city, Lelecha's Guangzhou Link World Plaza store officially closed on February 23, 2022.

In July 2021, Heytea founder Nie Yuncheng stated that he would "thoroughly, completely, and resolutely" abandon the acquisition of the Lelecha brand, sparking discussion. Lelecha subsequently closed stores in cities such as Chongqing, Xi'an, and Guangzhou during the second half of last year and found itself mired in negative controversy. The company closed its Huachenghui store in April and its Lefeng store in August of that year.

With the official closure of Lelecha's Guangzhou Link World Plaza store, the shutdown of its last location in Guangzhou signified that Lelecha has completely withdrawn from the South China market.

Lelecha's official Weibo posted on February 23 that the Guangzhou Link World store was operating its final day, and expressed that Lelecha was only temporarily bidding farewell to the South China market, hoping to return by the end of this year or early next year.

On January 6, 2022, Lelecha launched a poll letting netizens choose from 12 cities where they most hoped the brand would establish a presence, with the scope covering Central, South, and East China, of which the South China region accounted for 6 cities. This suggests that the Lelecha brand has a considerable number of enthusiasts in South China, and that this farewell may only be temporary.

Some Lelecha enthusiasts from the Guangzhou area commented that they would wait in Guangzhou for the brand's return and expressed hope that Lelecha would come back to the Pearl River Delta region soon. Other fans said they greatly missed the tea beverage brand's bread offerings.

Lelecha's last store in Guangzhou drew considerable sympathy from many local residents on its official closing day, with long queues forming on-site and even scalpers reselling products.

Lelecha originated in the East China region in 2016, using "dirty" as a visually striking selling point. With the popularity of its dirty mochi buns and dirty tea, the brand successfully elevated its status to become the third-largest high-end freshly made tea beverage brand, surpassed only by Heytea and Nayuki.

In December 2021, Lelecha announced the opening of 22 stores in succession. However, with rising raw material and labor costs, the brand faced increasing cost pressure. Today Lelecha is no longer blindly pursuing coverage in terms of store numbers, but instead increasing its presence in key cities, thereby reducing certain costs.

In mid-September last year, reports emerged that Lelecha might go public in Hong Kong as early as 2022, planning to raise $300-500 million through an IPO. In response, a responsible person from Lelecha stated, "The company will focus on business development at this stage, with no clear IPO plans for now." The response subtly suggests that Lelecha does have intentions to go public.

This closure of all stores in the South China region to focus on developing the East China market is likely intended as a "do-or-die" strategy. Do you think we'll see Lelecha return to the South China region in a year?

Image source: Lelecha Official Weibo, Internet

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