Eliza Wong
The Unexpected Challenger in China’s Tea Wars
China’s tea beverage market, long dominated by Mixue Bingcheng (蜜雪冰城) as the undisputed leader, has witnessed a remarkable shift in competitive dynamics. Guming (古茗), once considered a minor player focused on lower-tier cities, has emerged as the industry’s surprising number two contender. With 11,179 stores as of mid-2025, Guming has become only the second tea chain to break the 10,000-store milestone, surpassing even the combined store counts of Nayuki Tea (奈雪的茶) and Cha Bai Dao (茶百道). This development signals a significant realignment in China’s highly competitive beverage sector.
Financial Performance: Outpacing the Competition
Guming’s financial results tell a story of exceptional growth in a market where many competitors are struggling with slowing expansion. The company’s revenue surged 41.2% year-over-year in the first half of 2025, while net profit attributable to shareholders skyrocketed 121.5% – the highest growth rate among six major publicly-listed tea chains.
Comparative Performance Analysis
When placed alongside its competitors, Guming’s performance becomes even more impressive:
– Mixue Bingcheng: 39.3% revenue growth, 42.9% profit growth
– Shanghai Auntie (沪上阿姨): 9.7% revenue growth, 20.9% profit growth
– Cha Bai Dao: 4.33% revenue growth, 37.48% profit growth
-霸王茶姬 (Bawang Chaji): 21.6% revenue growth, -38.53% profit growth
– Nayuki Tea: -14.4% revenue growth, 73.1% profit growth
Guming’s net profit reached 1.625 billion yuan, more than double that of Bawang Chaji’s 713 million yuan, firmly establishing its position as the industry’s second-most profitable player.
Beyond Price Wars: Understanding Guming’s Competitive Edge
Many industry observers initially attributed Guming’s success to the ongoing food delivery platform wars, where increased subsidies might drive volume. However, company management has explicitly stated that delivery platform competition has had “limited impact” on their performance. Instead, Guming’s growth appears driven by fundamental operational strengths.
The Cold Chain Advantage
Guming’s secret weapon lies in its sophisticated低温冷链 (low-temperature cold chain) logistics system. While Mixue Bingcheng excels through standardization and economies of scale, Guming has invested heavily in building a proprietary cold chain network that uses refrigerated trucks instead of more expensive air transport. This allows the company to maintain ingredient quality while controlling costs effectively.
This supply chain advantage enables Guming to transport fresh fruits and vegetables from farms to stores within just 1-3 days, supporting their strategy of frequent new product launches. In the first half of 2025 alone, Guming introduced 52 new beverages, with over 30% featuring fresh-cut fruit or低温奶 (low-temperature milk).
Strategic Positioning: Winning the Lower-Tier City Battle
Guming’s growth story is fundamentally about strategic positioning in China’s vast lower-tier markets. While premium brands like Heytea (喜茶) and Nayuki Tea focused on capturing affluent urban consumers, Guming targeted the underserved markets in third- and fourth-tier cities and townships.
The Down-Market Premium Strategy
Founder Wang Yun’an (王云安) articulated Guming’s positioning strategy clearly: “When Heytea launched its first cheese fruit tea with fresh strawberries, tea base, and milk foam, it immediately became a hit in first-tier cities. I asked my team if we could create exactly the same product for third- and fourth-tier cities? Because people there also want Heytea, but they rarely spend 30 yuan on a drink. So we made it and sold it for 18 yuan.”
This approach has proven remarkably effective. Currently, 81% of Guming’s stores are located in second-tier cities and below, with 43% in乡镇地区 (township areas). Only 3% of stores are in first-tier cities, with an even smaller percentage in central urban districts.
Challenges on the Road to Challenging Mixue Bingcheng
Despite Guming’s impressive growth, significant challenges remain before it can truly challenge Mixue Bingcheng’s dominance. The market capitalization差距 (gap) tells an important story: as of September 12, 2025, Guming’s market cap stood at 50.465 billion Hong Kong dollars, just one-third of Mixue’s valuation.
Financial and Operational Pressures
Guming’s aggressive expansion comes with substantial financial costs. The company’s debt has increased significantly, with the debt-to-asset ratio rising from 23% at the end of 2024 to 40.4% in mid-2025. The company has taken on 1.78 billion yuan in bank borrowings (up from 1.21 billion yuan) and新增 (newly added) 1.488 billion yuan in “other interest-bearing borrowings” – a category that didn’t exist in their 2024 financial statements.
To secure financing, Guming has抵押 (mortgaged) properties with a net book value of approximately 240 million yuan and 1.7 billion yuan in restricted cash, increasing pressure on the company’s liquidity position.
Franchisee Relationship Strains
Perhaps more concerning is the rising加盟商流失率 (franchisee churn rate), which has increased from 6.2% in 2021 to 15.2% in 2024. Guming operates primarily through franchises, with加盟店 (franchised stores) contributing 95.8% of total revenue in the first half of 2025.
The company maintains strict control over franchise operations, requiring owners to be physically present in stores and explicitly rejecting “pure investment型加盟者” (type franchisees). This approach, while ensuring quality control, has created tension with franchisees who report working long hours with limited profitability.
Market Implications and Future Outlook
Guming’s meteoric rise represents more than just another success story in China’s competitive food and beverage sector. It demonstrates the continuing importance of strategic differentiation, supply chain excellence, and precise market positioning in achieving sustainable growth.
Investment Community Perspective
The investment community remains cautiously optimistic about Guming’s prospects. Goldman Sachs China upgraded their profit forecasts for both Guming and Mixue Bingcheng in August 2025, citing better-than-expected results from food delivery platform subsidies. However, the market’s tempered response to Guming’s strong financial results – with shares declining 9.63% over 14 trading days following earnings announcement – suggests investors recognize the challenges ahead.
The Path Forward
For Guming to maintain its momentum and potentially challenge Mixue Bingcheng’s leadership position, the company must address several critical issues:
– Managing the financial pressures of rapid expansion while maintaining profitability
– Improving franchisee economics to reduce churn rates
– Developing stronger brand differentiation beyond operational efficiency
– Successfully expanding into new markets, including potential international expansion
Guming’s remarkable journey from “小镇奶茶” (small town milk tea) to industry contender demonstrates how focused execution on supply chain excellence and precise market positioning can create substantial value in China’s competitive consumer markets. However, the company’s future success will depend on its ability to navigate the complex challenges of scaling while maintaining the operational discipline that drove its initial growth.
For investors and market observers, Guming’s story offers valuable insights into the evolving dynamics of China’s consumer sector and the continuing importance of fundamental business strengths beyond marketing buzz and urban trend-chasing.
