Chagee tea sets its sights on US expansion after an impressive NASDAQ debut. Photo credit: Diana Jendoubi
New style tea chain Chagee Holding’s NASDAQ listing generated $411 million on April 17, marking the most successful Chinese consumer company IPO since 2021. Chagee was valued at $6.2 billion as shares topped $33.75 post-IPO, a 21% increase over the initial public offering.
Shares of Chagee’s IPO were priced at $28 under the ticker CHA. The company, founded in 2017, generated $1.71 billion (¥12.41 billion) in revenue in 2024, up from ¥10.8 billion in 2023, according to required SEC filings. Net income grew by 213%. Newly minted billionaire founder Junjie Zhang, 32, retains 89% of the company’s voting rights.
The successful IPO attests to “sustained investor confidence in Beijing’s promises to boost domestic consumption and support capital markets,” writes Reuters. According to investors, the domestic appeal of premium specialty tea is relatively isolated from tariff-linked disturbances. Approximately 515,000 new-style tea shops operate in mainland China, with another 100,000 overseas, including 6,500 in the US and 3,500 in Europe. Analysts forecast that the number of small-format storefronts could exceed 600,000 by 2026. Kiosk-style takeaway outlets are 80-100 sq. ft. The standard store with limited seating is 300-1000 sq. ft. typically located in malls. The most prominent locations are 1000-2000 sq. ft. flagship stores in major cities.
Chagee operates 6,284 mainly franchised stores in China, with 156 additional locations in Malaysia, Singapore, Thailand, and, most recently, Los Angeles. There are 169 company-owned locations worldwide. The best-selling teas are milk tea lattes, which account for 91% of sales.
Based in Yunnan, Chagee offers fresh-brewed raw-leaf oolong lattes. The most popular is a jasmine latte, Boya Juexian. The company has sold 600 million cups of the tea since its introduction in 2021.
Major competitors include Mixue (45,000 stores), Naixue (1,350), ChaPanda (8,100), and HeyTea (4,100). In 2023, the segment generated $20 billion in sales.
Customers in Singapore line up around the block to try Chagee’s innovative fresh-brewed raw-leaf oolong lattes. Photo credit: Diana Jendoubi
Chagee writes that the IPO will lead to expansion in the US, Thailand, Singapore, and Malaysia. Chagee currently operates 6,440 teahouses globally, with 97% located in mainland China. Revenue last year was $1.71 billion, about triple that of the previous year. The Southeast Asian market was valued at $3.7 billion in 2021, with Indonesia generating an estimated $1.6 billion in sales and Thailand $749 million. According to Custom Market Insights, the US market was $1.42 billion in 2024 and is projected to grow to $3.46 billion by 2033.
China requires companies seeking overseas initial public offerings to obtain approval from securities regulators first. Until recently, securities regulators have restrained the pace of IPOs by tea companies due to poor performance. Chagee’s IPO application was approved in March for either the New York Stock Exchange or NASDAQ. The lead underwriters are Citigroup, Morgan Stanley, CICC, and Deutsche Bank.
The US market attracts a broader base of registered investors, and its capital pool is deeper than that of Hong Kong. Expectations of interest rate declines in the US have fueled optimism.