Zheshang Securities initiated coverage on AUNTEA JENNY (02589), assigning an "Overweight" rating. The company, which started with its signature "whole-grain milk tea," has since expanded its focus to four major product lines, including fresh fruit tea, launching over 300 new products. It has also established a robust "12+8+15" supply chain system to ensure stable operations.
With a high-retention franchise model, AUNTEA JENNY is rapidly expanding in China’s vast ready-to-drink (RTD) beverage market, which exceeded RMB 510 billion in 2023. The firm’s product innovation, supply chain advantages, and franchise-driven growth position it well to capitalize on industry opportunities. Key insights from Zheshang Securities include:
**Leading Mid-Priced RTD Beverage Player with Steady Expansion** AUNTEA JENNY is a national leader in mid-priced RTD beverages, catering to mass consumers. Revenue grew from RMB 2.20 billion in 2022 to RMB 3.28 billion in 2024, reflecting a 22% CAGR. Cost optimization has supported strong profitability, with average gross/net margins of 29%/9% from 2022–2024.
**Industry Outlook: Double-Digit Growth in a RMB 500B+ Market** China’s RTD beverage market surpassed RMB 510 billion in 2023, maintaining double-digit growth. By segment, freshly ground coffee (36% CAGR) outpaced RTD tea (19% CAGR) from 2018–2023, though RTD tea remains the largest sub-sector (RMB 250B+ in 2023). Per capita consumption in China (22 cups/year) lags far behind the U.S. (323), EU/UK (306), and Japan (172), suggesting an 8x growth potential.
The mid-price segment is the most promising, balancing quality and affordability amid premium-segment pressure and low-end homogenization. By 2028, mid-priced RTD beverages are projected to account for 48% of retail sales, with a 21% CAGR in GMV from 2024–2028.
**Growth Drivers: Product Innovation, Supply Chain, and Franchise Network** 1. **Product Strategy**: Transitioning from its "whole-grain milk tea" identity, AUNTEA JENNY now emphasizes fresh fruit tea and other lines, launching 300+ low-burden SKUs to stabilize supply and refresh brand perception. 2. **Supply Chain**: With 12 warehouses, 4 equipment hubs, 8 fresh goods depots, and 15 forward warehouses, the company delivers ingredients to stores 2–3 times weekly, ensuring industry-leading supply density. Its Haiyan factory’s core production lines (e.g., pearls, tea leaves) operated at over 100% capacity in 2023. 3. **Franchise Acceleration**: Stores surged from 5,307 in 2022 to 9,176 in 2024, with nearly 49% of new outlets opened by existing franchisees—a testament to organic growth. Collaborations like its 2024 crossover with "The Founder of Diabolism" (selling 1M cups in three days) and viral social campaigns (#AUNTEAJENNYxMODAOZUSHI, 200M+ views) further amplify brand resonance.
**Risks**: Food safety incidents and macroeconomic downturns.
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