BUBBLE tea chain Nayuki plans to open an additional 350 new stores this year after recording 326 new openings across the country last year, a strategy the Shenzhen company hopes will help bring down costs and bring in new customers in an already crowded market where a price war is under way.

Nayuki, also known as Naixue’s tea in Chinese, reported a net loss of 145 million yuan (US$21 million) last year although its sales rose 40.5% from a year ago to 4.3 billion yuan.

With its online sales taking up 71.8% of the total last year, Nayuki can “reach more customers by increasing the number of brick-and-mortar stores and at the same time reduce operational costs by coordinating the outlets within a same area,” said Zhang Chenkai, an analyst with domestic consultancy CIC Research.

Founded in 2014, Nayuki is famous for its fresh fruit and cheese topping teas, considered as new-style bubble tea that has gained popularity among young consumers in recent years. As of Dec. 31, the teahouse operator had 817 outlets in 80 Chinese cities, with more than 100 of them located in Shenzhen.

Retail consumption of tea beverages in China is projected to expand at an annual pace of 14.6% to about 810.2 billion yuan by 2025, with more than 1,000 tea beverage brands grappling for a share of the market at present, according to domestic consultancy CIC Research.

One of Nayuki’s largest competitors is Shenzhen-based Heytea, which once took the market by storm with the original tastes of its relatively high-priced drinks and fresh packaging designs.

Nayuki and Heytea used to price their offerings at an average of 30 yuan each but both have initiated price cuts earlier this year to adapt to the market. Heytea announced price cuts of up to one third in February while Nayuki made a similar move last month, promising that all its new products would be priced under 20 yuan for each month this year.(Liu Minxia)