How Two Chinese Brothers Became Billionaires From $1 Bubble Teas

Forbes

At age 21, Zhang Hongchao started peddling shaved ice treats. A quarter of a century later, he and his younger brother Hongfu have made a fortune selling soft-serve ice cream, coffee drinks and its super popular bubble tea and lemonade.  Read the full story on Forbes: https://www.forbes.com/sites/zinnialee/2024/01/08/how-two-chinese-brothers-became-billionaires-from-1-bubble-teas/?sh=76bafc674a6c  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 Here's your Forbes Daily Briefing for Wednesday, January 10th.

00:05 Today on Forbes, how two Chinese brothers became billionaires from $1 bubble teas.

00:12 When he was just 21 years old, Zhang Hongchao borrowed money from his grandmother to open

00:17 a small stall selling shaved ice treats in the central Chinese city of Zhengzhou.

00:23 That first store didn't make it, but two years later he tried again with a second shaved

00:27 ice stall, this time named Mishui Bingcheng, meaning "sweet snow palace."

00:33 Over time, the business took off as he shifted to selling ice cream and later bubble tea,

00:37 lemonade and coffee drinks at dirt cheap prices.

00:42 Now Mishui Bingcheng, which has roughly 36,000 stores and is China's biggest bubble tea

00:47 maker, is on the verge of going public.

00:49 And Zhang, now 47 years old, and his younger brother Hangfu, who is 39 years old, are billionaires,

00:56 according to Forbes' estimates.

00:59 Mishui filed for an initial public offering in Hong Kong last week, revealing the ownership

01:03 details of the company.

01:05 Each brother currently holds a 42.8% stake in the business.

01:09 In the first nine months of 2023, Mishui's revenue jumped 46% to $2.2 billion, and its

01:16 net profits jumped 48% to $338 million.

01:20 Forbes conservatively estimates that Mishui is worth $2.9 billion.

01:25 That puts the Zhang's net worth at an estimated $1.2 billion apiece.

01:31 The privately held bubble tea maker last raised money in January 2021 during the funding bubble,

01:36 pulling in $329 million at a $3.3 billion valuation from investors including billionaire

01:43 Lei Zhang's Hill House Capital and Dragon Ball Capital, the venture arm of billionaire

01:48 Wang Xing's Meituan.

01:51 Mishui filed for a $915 million IPO in Shenzhen back in 2022, but it never materialized.

01:58 Mishui, which has 32,000 nearly all-franchise stores in China and another 4,000 in 11 other

02:05 mostly Asian countries, didn't respond to a request for comment on the company's valuation

02:09 or the brothers' net worths.

02:12 According to the Prospectus, its stores sold about 5.8 billion drinks worldwide during

02:16 the first nine months of 2023, making it the second biggest global seller of freshly made

02:22 drinks by cups sold, according to China Insights industry consultancy.

02:26 The number one seller is Starbucks.

02:29 The company stands out in the crowded bubble tea market for its bargain prices, earning

02:33 the nickname "Pin Duo Duo" of bubble tea, after billionaire Colin Huang's popular Chinese

02:39 discount e-commerce platform.

02:41 Pin Duo Duo's US shopping site, Timu, launched in 2022.

02:46 Mishui's products, which also include freshly made lemonade, soft-serve ice cream, fruit

02:51 tea and coffee, cost between 3 cents, roughly the price of a can of Coke in China, and $1.

02:58 That compares with the average price of $3.80 that Nayuki, another popular Chinese bubble

03:03 tea chain listed in Hong Kong, charges for its drinks.

03:07 Mishui has said it is able to keep its prices low because of its end-to-end supply chain

03:12 covering everything from procurement and ingredient production to logistics, research

03:16 and development and quality control.

03:19 Nearly all of its revenue and profits, meanwhile, come from sales of supplies such as kitchen

03:24 appliances and food ingredients to franchisees.

03:28 The Zhangs are the latest to make their fortune from bubble tea, which is popular among millennials

03:32 and Gen Z in Asia and the US.

03:35 Other bubble tea billionaires include Wang Xiaokun, the founder and chairman of ChaPanda.

03:40 Peng Xin and Zhao Lin, the husband and wife team behind Mishui's rival Nayuki, became

03:46 billionaires after the company's Hong Kong IPO in 2021.

03:50 But the pair has since dropped out of the billionaire ranks following an 80% plunge

03:54 in the share price triggered by food safety issues.

03:58 For full coverage, check out Xenia Li's piece on Forbes.com.

04:03 This is Kieran Meadows from Forbes.

04:05 Thanks for tuning in.

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