Chinese beverage company plans expansion in the U.S.

Chagee Holdings Ltd., a Shanghai-based teahouse chain with over 6,400 units across Asia, recently filed for an initial public offering (IPO) in the United States, aiming to raise $100 million. While the exact date of the offering is still pending, the company is seeking to list on the Nasdaq under the ticker symbol CHA.

Founded in 2017, Chagee specializes in offering a variety of freshly made tea drinks, including tea lattes, pure tea, iced lemon tea, and tea frappes. The company drew inspiration from the global popularity of coffeehouse chains, leveraging the social aspect of coffee drinking to establish a thriving tea-based brand.

The exponential growth of Chagee is evident in its substantial increase in unit count from 2023 to 2024, reaching 6,440 locations by the end of last year. The majority of these units are situated in China, where Chagee stands as the largest teahouse chain. With just 169 company-owned units and the remainder under franchise agreements, the company also manages around 229 franchised locations.

Financially, Chagee saw remarkable revenue growth, escalating from $344 million in 2023 to a staggering $1.7 billion in the following year. The company plans to utilize the proceeds from the IPO to propel its expansion, including venturing into the U.S. market. The first U.S. outpost of Chagee is set to open in Los Angeles this spring, with additional locations to follow.

Chagee’s foray into the U.S. market aligns with its strategy to capitalize on the growing demand for tea consumption. Unlike Luckin Coffee, its counterpart in the coffee sector, Chagee aims to establish a foothold in the tea market, highlighting the potential for tea to become the second largest non-alcoholic beverage category globally. The company forecasts that the sales of freshly made tea drinks alone could reach $122 billion by 2028.

Tea’s popularity stems from its affordability and healthful profile, making it an attractive option for a broad base of consumers, including former coffee enthusiasts. With a growing trend in tea consumption worldwide, Chagee projects a prosperous future by tapping into the lucrative tea market.

As competition intensifies in the beverage industry, Chagee’s unique positioning as a tea specialist provides a promising avenue for growth and success both domestically and internationally. The company’s IPO filing signifies its ambition to further expand its presence and offerings, signaling a new chapter in the teahouse chain’s journey towards global recognition and market leadership.