On 14 August, the Chinese tea and bakery chain Nayuki Tea (or Naixue, 奈雪的茶) launched its latest campaign to commemorate the sales of its jasmine tea and jasmine milk tea reaching over 230 million cups. Nayuki released a short film, made by artist Chen Man, for the jasmine tea. It is the second time Chen has collaborated with Nayuki, and jasmine tea has a special place in Beijingers’ hearts such as Chen, whose grandmother used to serve jasmine tea in the hutong. The chain has also realised a jasmine tea ice cream set and a jasmine tea bag gift box.
Despite the impressive sales numbers of the specific tea, data hasn’t been kind to Nayuki recently. Earlier this month, the company made a profit warning stating that in H1 2024 Nayuki had made a loss between 420 and 490 million RMB (58.55 and 68.30 million USD), with revenue between 2.4 and 2.7 billion RMB (334.55 and 376.36 million USD). The news sent Nayuki’s share prices tumbling down, plummeting 15.9% on 5 August and reaching their lowest point in history the next day at 1.45 HKD (0.19 USD, currently at 1.43 HKD). Share prices have dropped 92% over the past 3 years, leaving Nayuki’s market value at 2.5 billion HKD (320.68 million USD).
Not only is the profitability facing difficulties, but Nayuki’s expansion is also slowing. In its report for Q2 2024, Nayuki opened 48 directly operated branches and closed an equal number of directly operated branches. As of 30 June, there are 1,597 directly operated Nayuki Tea locations and 297 franchised branches. It only grew 23 in the past 6 months, compared to the 126 in H1 2023.
Pundits find the brand is struggling because it’s facing competition from both new-style Chinese tea brands and bakeries but it is keeping up on either front with no viral beverages and straggling bread. The “third space/third place” strategy hasn’t been working either. The limitation Nayuki imposed on itself of keeping the brand image, such as the requirement of franchise branch size has also slowed its franchising. Faced with the likes of CHAGEE, Sexy Tea and lower-priced competitors like Mixue Bingcheng, Nayuki cannot effectively enter the lower-tiered cities and towns. With the prices of freshly made tea drinks dropping to the 9.9 RMB (1.38 USD) level following coffee, we might see more brands struggle in the new competitive landscape.
