Nayuki Loses 250 Million in Six Months, Now Invests in Coffee Brands for Self-Rescue...

The boom in new-style tea drinks has fattened up countless suppliers, while the tea brands themselves are left fighting it out in an increasingly crowded arena. Nayuki, billed as the "first new-style tea stock," drew high expectations when it listed — it was the first of its peers to go public. But life after the IPO has not been the triumph many imagined, and the company's stark revenue and loss figures have forced industry watchers to rethink the sector.

Nayuki's financial report for the first half of 2022 shows revenue of 2.045 billion yuan, down 3.8% year-on-year, alongside an adjusted net loss of 249 million yuan — a sharp reversal from the 48.2 million yuan profit posted in the same period last year.

Originally positioned as a premium brand, Nayuki joined the industry-wide "price cut wave" at the start of this year, shifting focus to the mid-price segment by lowering prices and rolling out cheaper new products. The drop in average customer spending has been noticeable to consumers — though, tellingly, the price cuts were met with skepticism about being "insincere." According to media reports, many customers complained that while the per-cup prices fell, the drinks themselves shrank in volume and the quality was not what it used to be.

On top of that, most Nayuki stores are concentrated in first- and second-tier cities. With the pandemic repeatedly flaring up, fewer customers were willing to dine in, and falling order volumes piled further pressure onto the business.

Once-hot new-style tea brands are no longer guaranteed winners, and each has set off down its own path of self-rescue.

Heytea has chosen to cast a wide net across the beverage industry. Its investment portfolio already includes the coffee brands Seesaw and Minority, the plant-based milk brand Wild Plant YePlant, the tea brand Heqitaotaotao, the pre-mixed cocktail brand WAT Cocktail, and the juice brand Yecuanshan.

Expansion and Diversification Strategies

Cha Yan Yue Se, the brand that once seemed "unable to expand beyond" Changsha, has now accelerated its expansion in the name of survival. According to Tianyancha, since 2022 the company has set up 7 new companies focused mainly on supply chain management, restaurant management, and beverages, covering regions including Nanjing, Wuhan, Changsha, and Chongqing. It has also stepped into coffee with "Yuanyang Coffee," opening five stores at once in Changsha's "May 1 Business District" on August 10.

Nayuki, meanwhile, has stayed stubbornly committed to themed cross-over stores, benchmarking itself against Starbucks and chasing the "third space" concept — think the cocktail-bar-style "Nayuki Bla Bla Bar," the bookstore-themed Nayuki store at Tsinghua University's South Gate, and the experiential tea shop "Nayuki Dream Factory." That last one closed in May this year for renovation and reopened as the "Nayuki Life" experiential store on August 31.

Investment Moves and Market Dynamics

Notably, Nayuki founded an investment company at the end of March and formally entered the venture capital world. In mid-June, through a filing its supplier Tianye Co., Ltd. submitted to the Beijing Stock Exchange, Nayuki invested in its own supplier. More recently, Shanghai Aodimei Food Co., Ltd. — the company behind the coffee brand AOKKA — went through a series of business registration changes, adding Shenzhen Pindao Catering Management Co., Ltd., a Nayuki affiliate, as a shareholder with a 21.41454% stake, while the registered capital rose from 2 million yuan to 2.545 million yuan.

New-style tea brands have been investing in coffee at a rapid clip this year. China's coffee market was already worth 381.5 billion yuan in 2021, and as the market enters a period of rapid growth, the country's coffee industry is expected to exceed 1 trillion yuan by 2025.

So can Nayuki — still living under the halo of the "first new-style tea stock" — pull off its own rescue?

Image source: Network

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