• The explosive popularity of bubble tea in recent years has led to enormous wealth.

• At least six Chinese bubble tea business owners made fortunes of over a billion dollars.

• A chain of bubble tea shops is about to go public in Hong Kong with a valuation of nearly $4 billion.

The explosion in popularity of bubble tea has created at least six billionaires in China over the past few years.

Bubble tea is a sweet tea-based beverage that typically contains soft, chewy tapioca “bubbles” that sink to the bottom and require a particularly large straw to enjoy. The drink was invented in Taiwan in the 1980s.

Later this month, China’s third-largest bubble tea chain, Sichuan Baicha Baidao Industrial Co., is scheduled to make its debut on the Hong Kong Stock Exchange.

According to Bloomberg, the company is expected to raise more than $300 million from the share sale, giving it a valuation of nearly $4 billion and making it the largest IPO in Hong Kong since November.

Baicha Baidao’s IPO will make founders and husband and wife Wang Xiaokun and Liu Weihong billionaires with a combined net worth of $2.7 billion from their 73 percent stake in the company.

Baicha Baidao’s IPO is expected to be followed by the IPO of two of its biggest competitors: Guming Holdings, the second-largest player in China’s bubble tea market with 9,000 stores, and Auntea Jenny (Shanghai) Industrial Co., the fourth-largest bubble tea retailer.

China’s largest bubble tea manufacturer, the Mixue Group, is also considering an IPO. The company has around 36,000 stores, making it almost as big as Starbucks.

Mixue was founded in 1997 by billionaire tea brothers Zhang HongChao and Zhang Hongfu. Bloomberg estimates that each of the brothers has a net worth of $1.5 billion.

The upturn in the bubble tea business particularly benefited the manufacturers of cheap teas, as China’s economy as a whole had suffered in recent years and consumers responded positively to the lower prices.

This price dynamic has put bubble tea maker Nayuki Holdings in a difficult position. The share price of the 1,800-store company has fallen by almost 90 percent since its IPO in Hong Kong three years ago due to strong competition.

According to Bloomberg, the combined net worth of Nayuki founders Peng Xin and Zhao Lin has fallen from $2.2 billion in 2021 to less than $300 million today.

Read the original article on Business Insider