Nayuki Tea Says Recent Reports Questioning Food Safety Won’t Severely Affect Operations or Finances

Hong Kong-listed Nayuki’s Tea on Wednesday announced that recent reports regarding food safety issues and the review of the regulatory authorities will not have any significant adverse impact on the group’s operations and financial situation.

“We are committed to complying with food safety and product quality requirements in our daily business operations,” the firm expressed in a statement. “In response to the negative reports and the food safety assessment conducted by relevant government departments in Guangdong Province, the company immediately set up a task force to conduct a thorough check and rectification of the two tea stores which have been closed immediately.”

In order to further ensure food safety, Nayuki Tea says it will undertake two key measures. Firstly, it will increase the disinfection frequency of external service suppliers for the two Beijing shops in question. Secondly, the in-store inventory management system will be upgraded to accurately track the shelf life of raw materials, so as to ensure the implementation of quality control policies.

On the evening of August 2, a Xinhua News Agency undercover investigation found that employees at a Nayuki store in Xidan Joy City and Chang’an Market had turned a blind eye to poor hygiene situations and improper handling of food ingredients. Some also changed a production time label to sell bakery items that were not fresh from the oven. The Shenzhen-based company, raised $656 million in its Hong Kong IPO in June.

Affected by this news, Nayuki’s share plunged as much as 10% during Tuesday trading, while its market value dropped to HK $16.98 billion ($2.18 billion).

On August 3, the Market Supervision Administrations in Guangdong and Beijing said that they would conduct interviews with Nayuki’s headquarters, the person in charge of the firm’s Beijing division, and the person in charge of the shopping mall.

Xinhua’s report caused many netizens to worry about the product quality of the milk tea brand. “I can understand the bad beverage production environment of cheap milk tea. Nakuyi’s Tea is a luxury brand. Where is their conscience?” one Weibo user complained. Some netizens even advised revoking its business license. The unsanitary in Beijing stores also lead to public concern about product quality control in other places.

On the evening of August 3, Nayuki’s Tea issued a statement on its official Weibo account, saying that local government regulatory authorities raided 186 tea stores and didn’t find any problems with food safety, sanitary environment, production or other areas.

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At the same time, Nayuki’s task force launched a comprehensive self-inspection of 603 stores across the country. As of 6 pm on Tuesday, a total of 592 stores under investigation, of which 11 stores closed due to force majeure factors such as the ongoing epidemic, received an average self-inspection score of 90.37%.