Mixue Ice Cream and Tea's IPO Surges 40%, Outshining Starbucks

Mixue's successful debut highlights its rapid growth, positioning it as a leader in the beverage sector with plans for continued expansion.

Mixue Ice Cream and Tea, a Chinese bubble tea brand that has outpaced McDonald's and Starbucks in the number of outlets, made a significant splash on the Hong Kong Stock Exchange this Monday. As the company's shares surged by an impressive 40% upon debut, it raised $444 million (£352 million), marking the largest initial public offering (IPO) in the financial hub for the year. Originating in 1997 from a side project of student Zhang Hongchao at Henan University of Finance and Economics, Mixue has emerged as a household name in China, selling an array of affordable ice creams and beverages.

With over 45,000 outlets across China and an increasing presence in 11 other countries such as Singapore and Thailand, Mixue is redefining the bubble tea experience. Its name, Mìxuě Bīngchéng, translates to "honey snow ice city," and its locations, often characterized by the Snow King mascot and catchy theme music, resonate strongly with local consumers.

Operating primarily through franchises—unlike Starbucks, which directly manages a significant portion of its locations—Mixue uses a unique business model akin to a raw-materials supplier for its many partners. This strategic approach has not only enabled rapid expansion but also countered challenges posed by ongoing economic difficulties in China, including property market instability and cautious consumer sentiment.

In stark contrast, rival Guming faced a decline in stock value during its market debut earlier this year, highlighting the varying fortunes within the bubble tea sector. As the question looms about whether the bubble tea trend is nearing its end, the future indicators for Mixue appear promising as it plans further growth in a potentially fluctuating market.