Have you collected a CHAGEE bag? I’m sure we all know someone who has!
CHAGEE’s branding and designs are a work of art. It’s unique and eye-catching. The company is out here creating a branding with Chinese culture. Since its incorporation, the company has released various limited-edition merchandise that have garnered widespread demand.
From Yunnan to the World
Founded in 2017 in Yunnan province, CHAGEE operates globally with over 6,000 locations, including international presence in countries like Malaysia, Singapore, and Thailand. The company is known for its diverse milk tea menu and culturally inspired branding. CHAGEE competes in the milk tea industry with the likes of Mixue, but its target audience is the middle to high income market.
Personally, I feel that CHAGEE is positioning to become the next Starbucks in the tea market. CHAGEE’s store designs are grand while also creating a community-friendly feeling similar to Starbucks. Furthermore, its selling of CHAGEE-designed umbrellas and tumblers has a strong effect in creating brand influence.
The business incorporates technology in its productions to keep up with consumers’ grab and go indulgences. Baristas now only need to scan a QR code on its special Teapresso machine to dispense the exact formulation for specific drink orders. Additionally, consumers can easily pre-order their beverages through the CHAGEE app and ollect them only when they’re ready, further streamlining the grab-and-go experience. Beyond convenience, CHAGEE’s embrace of international flavours with the rolling out of Teaspresso Latte and Frappé series suggests its desire to position itself as a globally accepted brand.
From Teacups to Trading Floors
Recently, CHAGEE Holdings, a prominent Chinese tea-drink maker, has received approval from China’s market regulator to proceed with an initial public offering (IPO) in the US. The company plans to issue up to 64.7 million ordinary shares, with the listing venue undecided between Nasdaq and the New York Stock Exchange, according to the China Securities Regulatory Commission (CSRC).
Meanwhile, Chagee’s competitor, Mixue, achieved a successful IPO in Hong Kong on March 3, raising US$444 million. Mixue, known for its bubble tea offerings, saw its shares surge over 43% on the first trading day, with retail investors subscribing to shares 5,258 times more than offered, making it one of Hong Kong’s most popular IPOs. Chagee’s product also has high demand with multiple store openings in Singapore garnering queue time of many hours. Chase’s IPO could achieve a similar effect like Mixue.
Explosive Financial Growth
CHAGEE has experienced significant growth, driven by strategic expansion and increasing consumer demand for high-quality tea beverages. This expansion includes 6,284 teahouses across 32 out of 34 province-level divisions in China and 156 overseas locations. Of these, 6,271 teahouses operate as franchises, while 169 are company-owned. The company directly manages 398 teahouses.
CHAGEE’s financial growth has also been remarkable. The total Gross Merchandise Value (GMV) generated in China and overseas surged by 172.9% to RMB29,457.7 million in 2024. In 2024, net revenues reached RMB12,405.6 million (US$1,699.6 million), representing a 167.4% year-over-year increase.
Furthermore, in 2024, net income increased by 213.3% to RMB2,514.6 million (US$344.5 million). The company also recorded a working capital surplus of RMB3,141.7 million (US$430.4 million) as of December 31, 2024, up from RMB1,193.3 million the previous year. Its net income margin is 20%, almost double that of Starbucks margins. Furthermore, the business is also free cash flow positive, allowing for sustained expansion across the globe.
In addition, CHAGEE’s financial position remains strong, with a cash-to-liabilities ratio of 1.6x. The majority of its liabilities and equity is derived from retained earnings (41%) and convertible preferred shares from previous fundraising rounds (14%). This structure reflects a well-balanced and sustainable financial strategy.
Tapping Into a Booming Market
The company’s strong performance aligns with the broader growth of China’s freshly-made tea drinks market. According to iResearch, the market, the premium freshly-made tea drinks segment, characterized by an average selling price of RMB17.0 (approximately US$2.5) and above, has grown from 10.9% of the overall market in 2019 to 25.9% in 2024, driven by consumer preferences for higher-quality products, diverse consumption scenarios, and health-conscious choices. The premium segment is projected to reach RMB167.1 billion by 2028, representing 31.7% of the total market.
On a global scale, the tea drinks market is also witnessing robust growth. The global market for freshly-made tea drinks is expected to grow at a CAGR of 18.9% from 2024 to 2028, reaching US$122.0 billion. Freshly-made tea drinks are gaining popularity worldwide, supported by rising per capita income, an expanding tea consumer base, and tea’s affordability and health benefits compared to coffee. This provides a large room for Chagee to expand.
Efficient, Scalable Operations
What makes the business remarkable is its asset light model and ability to achieve rapid expansion. CHAGEE has maintained exceptional operational efficiency through strategic supply chain management. With warehousing services in 37 locations across China, the company ensures seamless cold chain transportation and next-day delivery across its teahouse network. This highly efficient logistics system operates with minimal capital expenditure, keeping logistics costs below 1% of the company’s total GMV in 2024. Moreover, CHAGEE achieved an industry-leading inventory turnover rate of approximately 5.3 days—the lowest among freshly made tea brands with over 1,000 stores in China.
Furthermore, its successful global expansion is driven by its strong control over its raw material supply chain. The company sources premium tea leaves directly from its own organic Tea Farm in Lincang, Yunnan, situated 1,588 meters above sea level—an ideal environment for tea cultivation. This farm has been recognized as the world’s largest organic oolong tea farm.
A Health-Conscious Product Line
For its products, the company also prioritizes product quality and health benefits. By eliminating non-dairy creamer and trans fats, CHAGEE offers consumers a purer, more natural taste while promoting cardiovascular health. Transparent calorie and ingredient information further support consumers in making informed dietary choices.
The brand’s products are expected to attract greater demand from health-conscious consumers. In 2023, the company improved its formulations by removing artificial flavorings from tea bases, eliminating creamers from milk, and ensuring its beverages contain zero trans fats. CHAGEE also introduced innovative features such as the Product ID Card and Health Calculator and became the first in the ready-to-drink tea industry to publish calorie and nutrient content reports. In early 2024, the company further strengthened its industry leadership by launching the Nutritional Choice label at its Shanghai locations, introducing the first nutritional grading system for tea beverages. These initiatives position CHAGEE as a preferred destination for health-conscious consumers seeking healthier beverage alternatives.
Celebrity Collaborations Fuel CHAGEE’s Brand Appeal
In addition, CHAGEE have many partnerships with influencer that had been successful. Its partnership with Lee Chong Wei in Malaysia, Minnie of (G)I-DLE and with Zheng Qin Wen in China are successful illustrations. These advertisements heavily emphasize sustainability and healthy living which will help create its brand image and attract this group of consumers.
A Taste That Speaks for Itself
Regarding the taste of its products, I feel that they are delicately balanced, creating a light, silky texture which glides smoothly on the palate. Furthermore, each blend is crafted to highlight a rich, aromatic tea essence, its subtly layered with natural notes that enhance the depth of flavor. This is an experience that will definitely delight tea lovers while achieving convenience.
Final Thoughts: A Brand with Momentum
While I am not sponsored by CHAGEE to write about its products or IPO, I am a fan of its drinks, and I certainly have friends who are equally “addicted” to its milk tea series. We believe that CHAGEE’s products are well-liked by many. The brand has certainly generated a strong clout, setting it up as a force to be reckoned with. Looking ahead, CHAGEE plans to expand its teahouse network by an additional 1,000 to 1,500 locations globally in 2025. There is strong growth potential for CHAGEE.
