From Industry Leader to Struggler: Naixue’s Contradictions and Challenges

Naixue once stood out as a pioneer in the tea beverage sector, gaining prominence through its dual-category model of “tea + bakery” and its strong emphasis on space and customer experience. However, as the tea industry rapidly evolves, Naixue no longer holds the central position it once enjoyed.

Recently, Naixue has undergone several notable changes. Social media users observed new stores adopting a snowflake-inspired logo, with the brand name shifting from “奈雪的茶” to simply “奈雪,” and the Romanized “NAIXUE” altered to “Naìsnow.” An internal Naixue source confirmed the company’s intention to launch a comprehensive brand upgrade for its tenth anniversary, with the new logo emphasizing core elements like “snowflake” and “fruit,” retaining the signature green color. The updated logo is currently featured on select packaging and new outlets, with plans for broader application online and offline.

Despite these developments, Naixue’s official customer service stated that no formal name change has been confirmed and that the brand still operates under “奈雪的茶.” This is supported by observations on delivery platforms where “奈雪的茶” remains the official name. Previously, in 2022, the company modified its name from “奈雪の茶” to “奈雪的茶,” changing “NAYUKI” to “NAIXUE.” The latest logo change represents another step in Naixue’s ongoing brand evolution.

Naixue recently increased breakfast prices at several stores in Guangzhou and Shenzhen, raising meal set prices from 9.9 yuan to a starting price of 15.9 yuan. The company cited a breakfast bakery upgrade that introduced new bagel options and over 20 breakfast set choices at preferential prices for members, aiming to enhance product value and selection. However, consumer feedback has been predominantly negative, with many expressing dissatisfaction and threatening to cease patronage.

This tension reflects Naixue’s conflicting strategies—initially attracting customers with low-priced offerings and later raising prices with upgraded products—leading to slowed growth and uncertain strategic direction.A few years ago, Naixue’s founder Peng Xin acknowledged the difficulty in maintaining mid-range pricing amid fierce competition from both budget and premium tea brands. In response, Naixue committed to releasing fresh fruit teas priced between 9 and 19 yuan monthly to maintain competitiveness.

Originally focused on direct store operations with skepticism towards franchising, Naixue shifted its stance by opening to franchise partners in July 2023. However, management later reflected that while expansion was anticipated following the easing of pandemic restrictions, the company realized the importance of steady growth aligned with its high-quality positioning, avoiding blind expansion into lower-tier markets.

Naixue strives to balance evolving market demands with maintaining its original brand identity, but such ambivalence has contributed to slower development. In contrast, competitors like Chagee have accelerated their growth by aggressively expanding and aiming to surpass Starbucks China in annual sales.

Chagee, founded by the ambitious 90s-born entrepreneur Zhang Junjie, has aggressively pursued a “pixel-level benchmark” against Starbucks. Its global store count grew from 1,087 in 2022 to 6,440 in 2024, doubling annually. Naixue, meanwhile, operates 1,798 stores in 2024, including 1,453 direct stores and 345 franchises.

Chagee positions itself as a “modern oriental tea” brand, focusing on original leaf milk tea in the mid-market segment, leveraging franchise-driven rapid expansion for compounded growth. Conversely, Naixue initially targeted a premium market but struggled to sustain an average customer spend around 30 yuan amid shifting consumer trends and its predominantly direct-store model—a strategy requiring more time to prove viable.

Capital markets reflect these differences. While several tea brands like Mixue Bingcheng and Chagee have seen successful IPOs with strong stock performance, Naixue’s IPO was underwhelming, with its share price dropping below issue price and continued declines afterward.

In 2024, Naixue reported revenue of 4.921 billion yuan, a year-on-year decline of 4.7%. It posted an adjusted net loss of 919 million yuan, reversing from a modest profit of 20.9 million yuan in 2023. Among the top five tea brands listed in Hong Kong, Naixue was the only one recording a loss.

Naixue’s early market success was driven by its distinct brand identity and innovative positioning in the new tea beverage sector. Today, however, the influx of competitors, rapid expansion, and evolving consumer preferences have diluted its uniqueness.

The brand’s current strategy emphasizes that Naixue is “not just selling milk tea.” Founder Zhao Lin has articulated this vision, highlighting the potential of tea to carry broader meanings and experiences. As part of its brand upgrade, Naixue launched 30 “green” light food and beverage stores in major cities, introducing light meals and health-oriented drinks. This move signals deeper engagement with the health-conscious market segment.

Additionally, Naixue has diversified through ventures like BlaBlaBar, a bar concept, indicating a more layered brand approach. This multi-dimensional strategy is common in the tea industry, with other brands launching sub-brands to capture varied consumption scenarios, such as tea houses, coffee shops, and artistic bars.

Ultimately, Naixue’s attempts to diversify beyond milk tea reflect an industry-wide trend of innovation and adaptation, representing both a survival tactic and an ambitious gamble amid intensifying competition.