(Yicai) Aug. 29 -- Profit at Baicha Baidao Industrial, which runs new-age tea chain ChaPanda, dived in the first half, while Nayuki Holdings sank to a loss as China’s belt-tightening consumers drank fewer of their beverages.

Baicha's net profit tumbled 60 percent to CNY237 million (USD33.3 million) in the six months ended June 30 from a year earlier, the Chengdu-based company said in an earnings report released on Aug. 26. Revenue sank 10 percent to CNY2.4 billion (USD337.6 million).

Baicha said changes in consumer habits, coupled with the company increasing support and discounts for franchisees, led to a 18.6 percent drop in gross profit to CNY760 million, with the gross profit margin contracting 3.4 percentage points to 31.7 percent.

Nayuki had an adjusted first-half net loss of CNY437.7 million, versus a net profit of CNY70.2 million (USD9.9 million) a year ago, its financial report showed on Aug. 27. Revenue fell 1.9 percent to CNY2.5 billion, mainly due to a slower-than-expected recovery in consumer demand and lower income from self-operated stores.

Sluggish demand and falling revenue are the main problems Shenzhen-based Nayuki faces, Chief Financial Officer Shen Hao said on an earnings conference call yesterday.

Baicha and Nayuki are prominent players in China's new-style tea market, which focuses on premium, handcrafted beverages targeting younger consumers. In recent years, these brands expanded rapidly, driven by high consumer demand and an evolving market that embraced trendy, experiential products. But the market has softened since last year, leading to poorer earnings.

Nayuki's main goal is to build a high-quality brand, so developing in sinking markets does not match its positioning, noted founder and General Manager Peng Xin.

Nayuki's self-operated stores in first-tier Chinese cities accounted for about 35 percent of its total, with plans to expand in existing first-tier, other first-tier, and key second-tier cities to enhance market penetration, the company said.

Baicha, which went public in Hong Kong in April, tends to open ChaPanda stores in fourth-tier and lower-tier cities. According to its listing prospectus, there is a large market space in lower-tier urban areas, so the firm plans to open more shops in second- and lower-tier cities to seize the sinking market.

The number of ChaPanda shops in fourth- and lower-tier cities jumped 41 percent to 2,026 in the first half from a year ago, Baicha noted. The firm also operates four stores in South Korea, two in Thailand, and one in Australia.

Nayuki opened its first overseas flagship store in Thailand this month.

Editor: Martin Kadiev