(Yicai) Dec. 20 -- Shares of Xiangpiaopiao Food surged after China's largest instant milk tea brand opened its first fresh tea drinks store, aiming to tap into shifting consumer demand.

The owner of brands Meco and Lan Fong Yuen [SHA: 603711] was trading 5.3 percent elevated at CNY16.16 (USD2.20) in Shanghai as of 2.34 p.m. after gaining as much as 6.8 percent earlier.

The company's first store in Hangzhou offers nine fresh milk tea beverages priced between CNY9 and CNY12 (USD1.20 and USD1.60), Yicai observed on site.

Staff told Yicai that Xiangpiaopiao opened the store to engage with consumers. The company wants customers to experience its light milk tea products while providing direct feedback to improve their offerings.

Founded in 2005, Hangzhou-based Xiangpiaopiao holds China's largest market share in instant milk tea. However, its revenue declined from 2020 to 2022 amid the rising popularity of fresh milk tea.

Branding expert Zhan Junhao said that opening offline stores should help Xiangpiaopiao increase consumer interactions and generate online discussions, boosting its marketing efforts. However, he noted that the brand's association with instant products may make it difficult to establish credibility in the fresh products segment.

In the first three quarters of this year, Xiangpiaopiao's net profit increased more than fivefold to CNY17.7 million (USD2.4 million) from a year earlier, according to its latest financial report. However, excluding nonrecurring items, the company posted a loss of CNY5.8 million (USD794,680). Revenue fell 2 percent to CNY1.9 billion (USD260.3 million).

Editors: Dou Shicong, Emmi Laine