Delta Technology Holdings Launches New Business

DANYANG, China, Nov. 27, 2018 /PRNewswire/ -- Delta Technology Holdings Limited (Nasdaq: DELT) ("Delta" or the "Company") announced that it plans to launch a tea shop chain under the brand Mingyuntang in China as part of the Company's efforts to explore new business lines outside of its specialty chemical business. This business will be conducted via the Company's newly formed subsidiary, Shanghai Mingyuntang Tea Limited which controls Hunan Mingyuntang Brand Management Company. Management expects to provide high-quality tea beverages via this new business unit.

The products of Mingyuntang are trendy tea drinks, baked breads, cakes and desserts, etc., targeting China's new urban generation. The trendy tea drinks will be developed based on a variety of teas, which are used in beverages such as fresh milk tea, fruit tea and milk cap tea. All of the Mingyuntang products will be focused on not only their taste but also their aesthetic presentation and health benefits. 

Management expects Mingyuntang to gradually open stores in small and medium-sized cities in China, where more and more consumers are seeking satisfaction through better taste in blended tea beverages. By offering tea beverages, baked goods and tea-related gifts in a pleasant and comfortable environment, we aim to attract China's younger generation aged between 20 to 40 who tend to pay more attention to their quality of life. This group historically were not the target consumer group for traditional Chinese tea products.

In 2017, as many as 500 million people in China were drinking tea-related beverages, with most of the new converts being young people born in the 1980s and 1990s, according to figures from the government-backed industry group China Tea Marketing Association, which believes the most popular tea drinks in future will be those mixed or blended with fresh milk, cream and fruit.

We plan to fund this new line of business with funds we raised in a private placement recently closed in which we raised approximately USD$1.3 million. With the funding in place, we plan to open 20 stores in 2019, with the first twenty stores to be opened in Hunan as the core market. We expect to raise additional funding via equity or debt financing and intend to add 40 new stores in 2020 and have a total of 120 stores across China by 2021.

The stores we plan to open include flagship stores and general stores. Flagship stores are designed to offer both drinks and snacks which we envision to cover a floor area of 80-150 square meters (about 860-1,615 square feet) each. Our general stores will mainly offer drinks and we expect coverage of a smaller floor area of 40-80 square meters (about 430-860 square feet) each.

In addition to physical stores, we plan to team up with China's online food delivery operators to allow consumers to order drinks and snacks through the Internet. According to "China Restaurant and Cafeteria Report 2018" issued by Meituan-Dianping, one of China's largest group buying websites for consumer products and retail services, China's food delivery market has witnessed an annual growth of more than 100% in each of the past four years. The food delivery market has had more than 300 million active users, and consumers between the ages of 20-30 contribute to two-thirds of the daily 30 million orders.     

We have identified the necessary resources for our new business, including  raw materials suppliers. We also identified the potential store spaces for renting. We plan to establish a robust personnel management system including recruitment, training and competitive compensation. We expect everything ranging from the stores' decoration and accessories to its product exhibitions will be standardized to ensure the best consumer experience.

The board of directors of Delta has appointed Jiang Jun as general manager for the new business. Mr. Jiang has a decade of experience in marketing. Before joining us, he served as general manager for a company in the online commerce industry.

About Delta Technology Holdings

Founded in 2007, Delta is a fast-growing, leading supplier of fine and specialty chemical products based in China's eastern city of Danyang. The company produces and distributes pharmaceutical, agrochemical, dye intermediate and advanced chemical materials widely used in automotives, aerospace, ceramics, coating-printing and food additives. The company has approximately 300 employees, 25% of whom are highly-qualified experts and technical personnel. The company serves more than 380 clients in various industries. Also, our business covers the chemical commodities trading.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded or followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans," and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Forward-looking statements in this release also include statements about business and economic trends. Investors should also consider the areas of risk described under the heading "Forward-Looking Statements" and those factors captioned as "Risk Factors" in Delta's periodic reports under the Securities Exchange Act of 1934, as amended, or in connection with any forward-looking statements that may be made by Delta.

Contact Information

Delta Technology Holdings Ltd.
Long Yi, Chief Executive Officer
Phone: +86 511-8673-3102 (China)
Email: [email protected]

INVESTOR RELATIONS
Brian Zhang, Investor Relations Manager
Phone: +86 511-8673-3102 (China)
Email: [email protected]

SOURCE Delta Technology Holdings Limited