Bama Tea Industry, can't keep going anymore

Tea is no longer selling well, and it has nearly become a market consensus. The 2025 annual performance disclosed by Lancang Ancient Tea and Tianfu have both confirmed how tough this industry is at the moment.

Recently, Ema Tea Industry has released its first annual results after listing on the Hong Kong stock exchange, and issues such as growth momentum stalling and slower store operating efficiency have gradually come to light.

With its listing less than half a year ago, the company’s stock price has continued to fall, fully reflecting the capital market’s stance.

Growth stalls

The market opened on March 30. After Ema Tea Industry (06980.HK) opened higher, it traded with volatility and moved downward. During the day, bulls and bears battled for control, with the stock showing a downward trend throughout the session. It finally closed down 5.75%, with a total market cap of HK$2.01B.

On October 28 last year, after the company listed on the Hong Kong stock exchange, its market cap once nearly approached HK$10 billion. Now, in less than half a year, it has fallen to this level. To a certain extent, this trend reflects the market’s view of the company’s development prospects.

On the evening of March 27, Ema Tea Industry disclosed its 2025 annual results, which also corroborated this point. For the full year last year, it achieved operating revenue of approximately RMB2.196 billion, up 2.5%, while net profit attributable to shareholders was approximately RMB222 million, down 0.93% year over year.

In 2025, Ema Tea Industry’s growth is close to stagnation, continuing the trend of the past few years. From 2023 to 2024, the company’s operating revenue was RMB2.122 billion and RMB2.143 billion respectively, with growth of 16.72% and 1.0%. In the same period, net profit attributable to shareholders increased by 23.92% and 0.99%.

Offline channels remain an important source of the company’s revenue. In 2025, revenue from this channel was approximately RMB1.482 billion, up slightly by 2.63% year over year, accounting for 67.4% of total revenue; in the same period, revenue from online channels was approximately RMB706 million, up 1.88% year over year.

After nearly 30 years of building, Ema Tea Industry has formed a 3-brand matrix led by the Ema brand, with Xinjihao and Wanshanhong as supplements. Among them, Ema remains the absolute core. In 2025, the brand’s revenue was approximately RMB1.956 billion, up 3.93%, accounting for 89.07% of total revenue. Its growth rate has already fallen sharply compared with previous years.

To maintain growth, the Ema brand has adopted a market strategy of trading price for volume. From 2022 to 2024, the brand’s tea average price decreased from 674 yuan per kilogram to 643 yuan per kilogram. Sales rose from about 2.0366 million kilograms to about 2.5843 million kilograms. In the same period, the average price of its non-tea products fell from 40 yuan per kilogram to 32 yuan per kilogram, while sales increased from about 5.7995 million kilograms to about 6.7816 million kilograms.

Like Lancang Ancient Tea and Tianfu, Ema Tea Industry promotes scale expansion through a直营+加盟 model.

In 2025, the company continued to adjust its directly operated stores and pushed to develop franchise stores. During the period, directly operated stores decreased by 14, while franchise stores increased by 283. As of the end of last year, there were 235 directly operated stores and 3,538 franchise stores.

It can be seen that the franchise model is increasingly becoming the business focus of Ema Tea Industry. At present, the company has 1,250 franchisees supporting the development of franchise business. Franchisees that operate加盟 stores with more than 100 stores, 50 stores, and 10 stores are 3, 10, and 50, respectively.

However, in today’s market environment, it will place extremely high demands on the operational capability of stores. From 2023 to 2024, revenue from the company’s franchise stores was approximately RMB1.073 billion and RMB912 million respectively. The average annual revenue contribution per store was about RMB351.3 thousand and RMB353.6 thousand, with growth nearly stagnating.

Overall, store revenue shows a downward trend. Based on preliminary estimates, in 2022 its average annual revenue contribution per store (directly operated + franchise) was about RMB448.0 thousand; in 2025, it was about RMB392.5 thousand.

Accelerating into lower-tier markets

Over the past few years, while the advertising slogan “Pick the right horse—drink good tea from Ema” has spread rapidly, many people have also, without noticing, seen Ema Tea Industry’s stores appearing frequently in prefecture-level cities and county towns. Different from traditional “husband-and-wife” tea shops, Ema adopts a combined model of a tea room plus a product display hall, paired with a unified visual identification symbol system, to shape an image of a premium tea product brand.

As of the end of last year, the company had 1,493 stores in third-tier cities and below, net adding 113 stores from the previous year. This accounted for 39.60% of total stores, up 0.2 percentage points from the previous year.

It’s actually not surprising that nearly 40% of Ema Tea Industry’s stores are located in lower-tier markets. The reasons are twofold: first, the company’s industry position has continued to rise, and it has a brand foundation for nationwide expansion; second, the company is in the transition from a regional leader to a nationwide comprehensive brand, and it needs to fill in blank markets by moving downward, balancing scale expansion with deep brand cultivation.

Although compared with higher-tier cities, opening stores in lower-tier markets has many advantages—such as lower renovation, rent, and labor costs—consumer purchasing power is also relatively weaker.

Ema Tea Industry’s product pricing and customers’ average transaction amount are not low, and because these are non-essential products, the mainstream buyers are mainly owners of small and medium-sized enterprises—these are what the industry commonly calls “familiar customers.”

In fact, the “familiar customer” group is also tightening their wallets. The average annual amount spent by members of Ema’s offline directly operated stores fell from RMB2,860.4 in 2022 to RMB2,469.6 in 2024.

Last year, before the company listed on the Hong Kong stock exchange, in its prospectus it proposed to steadily advance the “thousand cities, ten thousand stores” strategy, expecting to open a total of 1,500 new stores over the next 3 years.

Given the current softness in the tea consumption market, the slowing of store operating efficiency, and doubts about the acceptance of premium products in lower-tier markets, combined with the capital market’s cautious attitude toward the company’s development prospects, the difficulty of achieving this goal is high. The earlier plan was perhaps too optimistic.