Do Sinking Stocks Mean the End of Bubble Tea?
Emerging from Taiwan in the 1980s, bubble tea's popularity has spread across Asia and around the world.
Combining cold, flavored tea with balls of tapioca called "boba" or "pearls," sitting down for bubble tea with friends has become a staple social activity not just in places like Taipei and Beijing, but as far away as Los Angeles and Paris.
In China alone, there are believed to be half a million bubble tea shops. One estimate valued the total market there at about $20 billion in 2023, up from around $9 billion in 2019.
But in April this year, when China's third largest bubble tea chain debuted on the Hong Kong stock market, it tanked.
Shares in Sichuan Baicha Baidao Industrial — better known as Chabaidao — opened at about $2.24. But they dropped nearly 40% on their first day, and then as low as $1.30 by May 29.
This followed the disastrous June 2021 listing of Nayuki Holdings, a Shenzhen-based bubble tea chain. Hailed as the world's first stock market listing by a milk tea company, it briefly made its owners billionaires — but the stock has since lost over 80% of its value.
So is bubble tea on its way out?
If so, China's first and second largest bubble tea chains don't seem too perturbed. Both Mixue Group — with over 36,000 global stores — and Guming Holdings applied to be listed on the Hong Kong Stock Exchange in January.
Market analysts told the BBC the real problem might be weak market sentiment in Hong Kong, where money raised from new stock listings has fallen to a 15-year low in 2024.
However, others say increased competition is slurping away value from the big bubble tea chains, which maintain growth by opening new stores, but are actually taking in less revenue per store as they're forced to lower prices to stay competitive.
So while it may be harder for the big chains to make money — and get the big stock openings they're hoping for — it looks like bubble tea itself is doing just fine.
