As China’s consumption sector continues to surge, a wave of businesses offering innovative tea beverages is propelling the industry towards a significant boom.
Zhang Shuai, proprietor of a franchised milk tea store in Cangzhou, Hebei province, highlights the burgeoning presence of milk tea brands in fourth-tier cities. Attracted by robust consumer demand, Zhang’s venture into a franchised milk tea chain has proven lucrative, with sales exceeding 500,000 yuan ($69,057) within the first month of operation since its establishment in February.
Zhang’s success story is emblematic of the over half-a-million new-style tea beverage outlets scattered across China, tapping into the vast potential of the sector. According to a report jointly released by the tea and new beverage committee of the China Chain Store and Franchise Association and the Meituan Research Institute, the country boasted approximately 515,000 such outlets as of August 31, marking a notable 36 percent increase from the end of 2020.
Contrary to speculations of a downturn, corporate data provider Qichacha revealed the establishment of 12,421 new tea beverage-related firms in 2023 alone. Askci Corp, a market consultancy based in Shenzhen, Guangdong province, projects that China’s freshly made tea beverage market will generate 257.8 billion yuan in revenue by the year’s end.
Independent F&B analyst Zhu Danpeng underscores the sector’s evolution, noting its transition into a stage where enterprises of all sizes can thrive. The comprehensive and multi-dimensional consumption structure caters to diversified consumer needs, driving further market expansion.
The 2023 financial report of Shenzhen-based milk tea chain brand Naixue underscores this growth trajectory, with sales revenue surging by 20 percent to nearly 5.2 billion yuan. Notably, profits from outlets in third- and lower-tier cities played a pivotal role in Naixue’s robust performance.
As leading enterprises penetrate lower-tier cities, medium-sized firms such as Chagee, Auntea Jenny, and Guming are also expanding their presence, aiming to consolidate market share.
A nationwide survey conducted by National Business Daily in March revealed the widespread penetration of new tea beverage chain brands across cities, resonating with over 86.7 percent of surveyed consumers. Founder of Fujian Huace Brand Positioning Consulting, Zhan Junhao, dismisses foreign media reports depicting China’s weak consumption, emphasizing the market’s vast potential and dynamism.
With the continuous expansion and evolution of the consumption sector, the new-style tea beverage industry anticipates broader development prospects, driven by trends towards healthy lifestyles, diversified demand, and digitalization. The tea and new beverage committee of the CCSFA and the Meituan Research Institute projects that China’s new-style tea beverage market will surpass 200 billion yuan in revenue by 2025, with regions such as Guangdong, Sichuan, Shanghai, and Chongqing leading the way in outlet numbers.
