Introduction
At the beginning of March 2025, Chinese milk tea brand Mixue Ice Cream & Tea officially went public, with an IPO price of HKD 202.5 per share. As of today, its market capitalization has surpassed HKD 160 billion, once again setting the record as the most valuable freshly made tea beverage company in the world. It seems Mixue Ice Cream & Tea continues to generate wealth, but is it merely the peak of “poor man’s economy,” or has it become Starbucks’ biggest competitor?
Development Journey: From 1-Yuan Ice Cream to the King of the Tea Beverage Supply Chain—How Did Mixue Ignite the Market?
In 2007, after a decade of entrepreneurial struggle, Zhang Hongchao introduced the now-iconic “1-yuan ice cream,” providing an affordable alternative for consumers who couldn’t afford the 18-yuan imported soft serve. This strategy quickly opened up the market and became a turning point in his business, leading to the establishment of the first Mixue Ice Cream & Tea store and the successful implementation of its franchise model. From that moment on, “low price” became the brand’s core development principle.
Over the past decade, while housing prices in China’s top-tier cities surged nearly 20 times and pork prices quadrupled, Mixue Ice Cream & Tea has managed to keep its product prices remarkably low—its ice cream has only increased from 1 yuan to 3 yuan, lemon water has risen from 3 yuan to 5 yuan, and milk tea remains at around 7 yuan. This extreme cost-effectiveness perfectly aligns with the core needs of China’s consumer market. According to data, China has around 2,000 county-level administrative divisions, with a total population of nearly 900 million—this is precisely Mixue Ice Cream & Tea’s target consumer base.
Financial reports reveal that 99% of Mixue’s stores operate under a franchise model, with 97.6% of its revenue coming from supplying raw materials and equipment to franchisees. Notably, 57.2% of its stores are located in lower-tier markets. To mitigate supply chain risks, Mixue Ice Cream & Tea began establishing its own raw material supply system in 2012, covering key ingredients such as lemons and fruit jams. Additionally, the company built a nationwide logistics and warehousing system to ensure efficient distribution, providing franchisees with free nationwide delivery.
Competition in the supply chain is fierce, with many competitors making significant investments. For example, Gu Ming (another Chinese tea brand) has been cultivating Taiwanese Fragrant Lemons in Xishuangbanna, Yunnan since 2016 and invested CNY 1 billion (approx. USD 139 million) to build a raw material production base in Zhuji, Zhejiang. However, “Snow King” (Mixue’s mascot) is not so easily surpassed. Of the funds raised in this IPO, a staggering 66% will be used to further strengthen its supply chain system, ensuring its continued market dominance.
Are Mixue Ice Cream & Tea and Starbucks Competing for the Same Market?
The two brands, while both part of the food & beverage industry, operate on entirely different business models, with only some areas of overlap.
First, their business models are fundamentally different. Mixue Ice Cream & Tea relies on a franchise model, generating revenue by selling raw materials to franchisees and collecting franchise fees. In contrast, Starbucks operates on a direct-owned store model in China, focusing on large-format stores centered around the “third place” concept.
Second, in terms of core products, target consumers, and pricing, the two brands have some overlap but distinct focuses. Mixue Ice Cream & Tea specializes in freshly made tea beverages and ice cream, with product prices mainly ranging from 4 to 6 yuan. Starbucks, on the other hand, primarily offers freshly brewed coffee, targeting coffee enthusiasts with an average spending per customer exceeding 30 yuan.
Lastly, when looking at revenue and market valuation, Mixue Ice Cream & Tea is still catching up. According to Starbucks’ 2024 financial report, the company generated USD 36.176 billion in global revenue, with its China market contributing USD 2.958 billion (approximately CNY 21 billion). In contrast, Mixue Ice Cream & Tea’s IPO prospectus reported CNY 18.7 billion in revenue for the first nine months of 2024. Currently, Starbucks’ market capitalization has surpassed USD 110 billion, whereas Mixue Ice Cream & Tea’s valuation now exceeds HKD 130 billion.
However, there is one key area where both brands overlap: third-tier and lower-tier cities.
In recent years, China’s consumer market has shifted from a “consumption upgrade” trend to a “price war” era. Many new tea beverage brands initially targeted the mid-to-high-end market, with product prices even exceeding those of Starbucks. However, as competition intensified, brands engaged in fierce price wars, ultimately benefiting cost-effective brands like Mixue Ice Cream & Tea.
At the same time, Starbucks has been aggressively expanding into lower-tier cities, which happens to be Mixue Ice Cream & Tea’s stronghold. Surprisingly, Starbucks’ new stores in lower-tier cities have outperformed expectations, with some locations generating sales figures on par with first- and second-tier cities. Additionally, the investment payback period for Starbucks stores in these markets has shortened to less than two years. This suggests that lower-tier markets not only have immense spending potential but also a growing demand for high-quality coffee. Starbucks, with its strong brand influence, continues to attract professionals such as white-collar workers, doctors, and teachers in these areas.
Today, whether in first- and second-tier cities or lower-tier markets, consumer choices have become more diverse—people can enjoy a Starbucks coffee just as easily as they can pick up a Mixue Ice Cream & Tea drink. This trend has now become a normalized consumption pattern.
Conclusion: Who is Defining the Future—Mixue Ice Cream & Tea or Starbucks?
Although both Mixue Ice Cream & Tea and Starbucks belong to the food & beverage industry, they have completely different business paths. One thrives on extreme cost-effectiveness, dominating lower-tier markets; the other capitalizes on brand prestige and premium pricing, firmly entrenched in the high-end consumer segment. While the two are difficult to compare directly, their intersection in third- and fourth-tier cities is undeniable.
As the consumer market continues to evolve, price wars and increasing competition among new-style tea brands are shaping the future landscape, offering consumers more choices than ever. From supply chain integration to store expansion, whether Mixue Ice Cream & Tea represents the pinnacle of “poor man’s economy” or Starbucks remains the symbol of the “third place”, both brands are defining the future of the beverage market in their own way.
Ultimately, the winner won’t be a single company, but rather the brands that can precisely capture market demand and continuously optimize their business models.
Disclaimer: The above content represents an analysis of relevant developments and does not constitute investment advice. The information is sourced from public materials, expert opinions, and BCC research. The authors are not responsible for any losses resulting from the use of this analysis. Investments involve risk, and caution is advised.