Nayuki’s Tea, once the darling of China’s "New Tea" revolution, is finding that imitation is a costly form of flattery. A Beijing court recently ordered the Hong Kong-listed chain to pay 320,000 RMB to toy giant Pop Mart for "unfair competition." The dispute centered on Nayuki’s unauthorized use of the iconic "LABUBU" intellectual property to boost its own sales during a 2025 marketing campaign.
The court rejected Nayuki's defense that it had purchased authentic toys for its giveaways, noting that the branding—dubbed "Mi-bu-bu"—was intentionally similar to the original and designed to confuse consumers. This legal setback is more than a minor fine; it highlights a growing desperation in marketing as the brand struggles to maintain its cultural relevance in an increasingly oversaturated and cutthroat market.
Beyond the courtroom, the financial picture for the self-proclaimed "first stock of new tea" remains bleak. In 2025, revenue tumbled by nearly 12%, retreating to levels not seen since 2021. Despite efforts to narrow losses, the company recorded a net loss of 239 million RMB, bringing its cumulative deficit since 2018 to a staggering 6.4 billion RMB.
To stem the bleeding, Nayuki has pivoted from aggressive expansion to a strategic retreat. By the end of 2025, the brand had shuttered 152 stores, reducing its total footprint to 1,646 locations. This downsizing signals the end of the "premium space" era, where massive, high-rent flagship stores were once thought to be the primary engine for winning over China’s middle class.
The broader industry context reveals a brutal "involution" within China’s beverage sector. As competitors like HeyTea and Luckin Coffee slash prices to capture a more frugal consumer base, Nayuki's average order value has plummeted from over 40 RMB to just 24 RMB. Investors have responded with a mass exodus, leaving the company’s market capitalization at a mere fraction of its multi-billion dollar IPO valuation.