We are a freshly-made beverage company, operating the fifth and fourth largest network of freshly-made tea shops in China as of December 31, 2022 and 2023, respectively according to CIC, with extensive reach into the lower-tier markets and we generated a substantial majority of revenue from our franchising operations, mainly consisting of (i) sales of goods, including ingredients, packaging and other raw materials, as well as equipment, to franchisees, and (ii) franchising services. We are a fast-growing freshly-made tea shop brand in terms of the growth rates of total store count and GMV among the five largest freshly-made tea shop brands in terms of total store count in 2022 and 2023 according to CIC. Our total store count increased by 46.8% from 5,307 stores as of December 31, 2022 to 7,789 stores as of December 31, 2023, and increased by 17.8% from 7,789 stores as of December 31, 2023 to 9,176 stores as of December 31, 2024. Our GMV increased by 60.4% from RMB6,068.0 million in 2022 to RMB9,731.8 million in 2023, and by 10.3% from RMB9,731.8 million in 2023 to RMB10,736.4 million in 2024. According to CIC, as of December 31, 2023, we covered the most cities in China among mid-priced freshly-made tea shop brands in China.
In 2013, we opened the first Auntea Jenny store offering “grainy milk tea” (五穀奶茶) — milk tea with grain toppings. These beverages are best served hot, providing a warm and comforting choice during chilly winters, particularly in northern China. This kick-started our initial expansion of store network in northern China. We then saw the growing demand for fresh fruit tea among consumers across China, especially in the lower-tier markets. In 2019, we began to offer fresh fruit tea which was welcomed by our customers and enabled our nationwide expansion, including the southern regions. In addition, we have expanded our product offerings through Jenny x Coffee and Version Lite to reach a wider range of consumers.
We operate a franchise-focused business model. As of December 31, 2024, 99.7%, or 9,152 of the 9,176 stores in our network, were operated by our franchisees. The products offered under our three brand concepts include freshly-made beverage and freshly-brewed coffee.
As of December 31, 2024, our store network of 9,176 stores covered all four centrally administered municipalities and over 300 cities in five autonomous regions and 22 provinces in China. Our store network spans from Mohe, Heilongjiang province in northern China to Sanya, Hainan province in southern China.
We strategically focus on the lower-tier markets and have achieved a strong market presence in the lower-tier markets in China in terms of total store count among mid-priced freshly-made tea shop brands. We have accumulated a wealth of experience in store operations, personnel management and consumer preferences in the lower-tier markets in China, which enables our franchisees to tap into these markets more effectively. The freshly-made tea shop market in third and lower-tier cities in China is the largest and is expected to be the fastest-growing segment between 2023 to 2028 in terms of GMV, with significant potential for future growth. Our expertise and proven track record of success in this market segment position us well in capturing the significant future opportunities.
Our mutually beneficial franchise system is the foundation for our long-term and stable cooperation with franchisees. As of December 31, 2024, 30.0% or 1,637 of our 5,455 franchisees opened more than one store. In 2024, 48.8% or 1,164 of our new franchised stores were opened by our existing franchisees.
However, according to CIC, the freshly-made tea shop industry in China is highly competitive with the total number of freshly-made tea shops reaching approximately 464 thousand by the end of 2023. The market was historically fragmented and has continued to consolidate. According to the same source, the freshly-brewed coffee market in China is competitive as there are approximately 120 thousand freshly-brewed coffee shops by 2023, and freshly-brewed coffee can also be offered by freshly-made tea shops, bakeries, and restaurants. Our strategy to expand our store network may lead to competition both among the stores within our network and against our competitors. It is possible that the existing stores within our network or our competitors might have already taken up the desired locations for new stores and our competitors may enter into these areas after our existing stores have been established, and our measures to minimize the risk of cannibalization within our network and competition against competitors might have limitations.
In 2024, the growth of the freshly-made tea shop industry and freshly-brewed coffee market in China slowed as compared to 2023, further intensifying market competition. In particular, industry players actively compete for under-penetrated markets, for example, the third and lower-tier cities in China, prime store locations and qualified franchisees, with some introducing more low-priced products to further expand their customer base. As a result of the overall industry slowdown and intensified competition, our average GMV per store decreased from RMB1.6 million in 2023 to RMB1.4 million in 2024, and our average GMV per order decreased from RMB26 to RMB25. Despite those challenges, the total GMV of our store network increased from RMB9.7 billion in 2023 to RMB10.7 billion in 2024. Our revenue remained relatively stable at RMB3,348.2 million in 2023 and RMB3,284.6 million in 2024, with an increasing gross profit margin from 30.4% in 2023 to 31.3% in 2024, primarily due to (i) our continuous expansion of our store network with a total store count from 7,789 as of December 31, 2023 to 9,176 as of December 31, 2024, and (ii) our ongoing efforts to manage our cost. In response to the intensified market competition, we continue to (i) enhance our research and capabilities to upgrade and further improve the quality of our ingredients, (ii) promote brand image and recognition through, for example, increasing the investment in marketing activities on different online platforms, (iii) further penetrate existing markets, expand into more lower-tier markets and grow our online sales channel, and (iv) implement our multi-brand strategy. See “Business — Growth Strategies.” Specifically, we launched Fallstea, our updated Version Lite 2.0 brand concept, with eye-catching logo, upgraded store design and new marketing initiatives to our franchisees since March 2024 to further capture demands from the lower-tier markets. Within nine months of its launch, the number of Fallstea stores has reached 304 as of December 31, 2024, generating a total GMV of RMB73.8 million in 2024. Our online sales grew significantly from RMB4.8 million in 2023 to RMB64.0 million in 2024 as a result of our continuous efforts to explore new sales channels. In the medium and long term, with the expected growth of China’s economy and consumer spending, alongside the projected expansion in the overall size of the freshly-made tea store market and the freshly brewed coffee market in China, we believe that we are well-positioned to capitalize on the industry’s future growth.
Source: Auntea Jenny (02589) Prospectus (IPO Date : 2025/04/28) |