While people still questioning the CNY 9 billion valuations of HeyTea, the company is marching to the next stage amid the coronavirus crisis and climbdown.
On March 23, 2020, HeyTea – the Chinese ‘new tea’ brand that has bewitched Chinese consumers with a combination of quality ingredients, eye-catching recipes and whimsical branding – was reportedly conducting a new financing at a valuation of CNY 16 billion. Hillhouse and Coatue Management led the investment.
HeyTea did not respond to the query for comment at present.
In January, the company released its operating data to the public, showing that HeyTea added 227 stores in 2019, of which 157 are main stores and 63 Go stores. This brought the total number of stores to 390 across 43 cities by the end of 2019, up from 163 in 2018. The company is set to double its size by the end of 2020.
HeyTea has bewitched younger Chinese consumers in particular with its light-hearted attitude and smooth design. The famous two-hour queues in front of their stores have been reduced during the past year. That’s due to the introduction of the company’s online ordering channel, Go store. The innovative retail approach has become the main purchasing channel, securing over 82% of total orders. Moreover, the Go store attracted an additional 15.8 million users in 2019, three times the number accumulated in the previous year.
Loyal customers of HeyTea will not be surprised by its various co-branded products, since the company aimed to be an international brand from the first day of its inception, according to Neo, founder of the company. But HeyTea’s activities seem to be much busier nowadays. It co-branded with Freshippo (the new retail arm of Alibaba) to launch the famous seasonal Chinese pastries Qingtuan during the spring season. Besides, it also expanded its new channels on Tmall. So far, its online store does not provide any items. But compared with its competitor, Nayuki Tea, which also launched its Tmall store during the past week and started to sell packaged tea leaves, HeyTea is leaning towards differentiating itself as an aspirational brand maker.
Another thing worth mentioning is that one of the leading investors, Coatue Management, is an American investment manager focused on public and private companies in the technology, media and telecommunications (TMT) industry. It has invested in China’s primary market with famous deals, including Didi, Meituan, Xiaomi, VIPKid and others – but seldom in the consumer market before.
This movement shows the migration of China’s primary market investment as well. Not only because the retail & consumer industry appears likely to be one of the recession-resistant industries after China recovers from the coronavirus outbreak, but the consumer market will be playing an increasing crucial role in China’s economy.