Bubble tea — a combination of tea, milk, sugar and chewy tapioca pearls — has been around since the 1980s. Yet among younger Asians, the drink is a modern necessity. Endless variations from strawberry white chocolate to passion fruit keep interest levels high.Markets have not shown the same enthusiasm for the listing of Chinese bubble-tea maker Sichuan Baicha Baidao Industrial Co — widely known as Chabaidao. It plunged more than 38 per cent on its Hong Kong debut on Tuesday. The flop is not just the tea maker’s fault, though.
The first day fall means its listing will go down in history as one of the worst performances in a decade for flotations of a similar size or bigger. Chabaidao raised $330mn through the IPO.
Yet, China’s domestic coffee and tea chains are fast growing and lucrative industries. Chabaidao, which is China’s third-largest maker of fresh tea drinks, has recorded spectacular growth. Store numbers have grown more than 10-fold to more than 8,000 in the past four years. Sales increased more than a third to Rmb5.7bn ($786mn) last year. Local coffee chain Luckin, whose revenues nearly doubled last year to a fresh record, is another example of a broader trend of consumers favouring local brands.