Over the weekend we had our 9th community meetup, it was fun to see many of you face-to-face and interact with you directly. We hope you had a good time as much as we do.

We did an IPO analysis on CHAGEE together, covered the evolution of the beverage industry, conducted a valuation analysis on CHAGEE and also shared some market updates with all of you. Some of you cannot make it to the meetup, so we will share a summary of what was discussed here.

CHAGEE Background, History & Founder

CHAGEE is an interesting company, because of the speed of its growth in China, and also their global strategy to further expand out of China. People say companies always IPO at their best, CHAGEE is the textbook example of IPO at their best.

CHAGEE was founded in 2017 by Zhang Jun Jie (JJ). Interestingly, the inspiration for JJ to start CHAGEE was when he visited Malaysia and Korea in 2016-17, he saw first-hand of the boba milk tea craze here.

But that's not his first experience getting involved in the milk tea business. JJ did not study university and joined a Taiwan milk tea chain when he was 18 years old in 2013. Within 2 years, he got promoted from a normal boba tea store employee, to regional deputy manager and ultimately became a franchise partner of that boba tea chain.

In 2017, JJ went back China to start CHAGEE, copying the most famous milk tea chain in China, Cha Yan Yue Se. Cha Yan Yue Se is so famous that the China people are willing to queue few hours for it because the taste is so good. However, the founder of Cha Yan Yue Se has no interest in scaling up the business at all, so this gave CHAGEE a chance.

CHAGEE grew slowly for the first 4 years, from 1 store in 2017 to 214 stores in 2020. You might think, “How can you say opening 214 stores in 4 years as slow?”. It’s important to remember that CHAGEE mainly operates in China with 1.4 billion population and China is a hyper-competitive market, so 200 stores in 4 years are considered to be slow in China.

CHAGEE Turning Point

2021 is the turning point for CHAGEE. Covid Zero hit the business badly, so CHAGEE needs to get funding just to survive. CHAGEE had 3 rounds of fund raising, mainly coming from XVC Fund which is ultimately controlled by Mr. Boyu Hu.

After getting new funding, 8 new experienced partners joined CHAGEE, with experiences spanning from Huawei, Coca Cola, Samsung, Chapanda, Shuyi Tea etc. These 2 changes coincide with CHAGEE’s explosive growth in the subsequent 3 years, from 2022 to 2024.

Before 2021, CHAGEE started with mostly self-owned stores and their growth was gradual. After getting funding and bringing in new partners post-2021, CHAGEE grew substantially with a new business model of Franchising and Supply chain management.

CHAGEE Business Model

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