China’s Bubble Tea Brands Eyeing Global Expansion

In the bustling heart of downtown Shanghai, the bubble tea market is abuzz. Across from one of ChaPanda’s 8000 domestic outlets, rival tea specialist Heytea competes for customers, with another establishment under construction nearby.

“Teenagers, white-collar workers in their thirties—they’re drinking it every few days,” shared a worker at ChaPanda. “They can’t go without it.”

Bubble tea, renowned for its origin in 1980s Taiwan and signature tapioca balls or “bubbles,” has garnered global popularity. Now, mainland Chinese companies, buoyed by a recent domestic surge, are aiming to raise capital and expand beyond borders.

Overseas Expansion Potential

Wang Hongxue, an executive director at ChaPanda, emphasized the “huge potential” of overseas markets during a press conference in Hong Kong. The company, poised to raise approximately $US330 million through a listing in the territory, eyes opportunities in South-East Asia alongside continued domestic growth. Similarly, Heytea ventured into New York in December, marking its international debut.

Mixue and Guming, renowned for their affordability and ranking as China’s top two bubble tea chains, respectively, are gearing up for initial public offerings in Hong Kong. Mixue, which opened its first international store in Hanoi in 2018 and now boasts over 3000 stores outside China, is eyeing further global expansion. Guming, recognizing the highly competitive nature of the Chinese market, remains open to exploring overseas markets.

Domestic Success

Within mainland China, the market for freshly made tea beverages has skyrocketed, nearly doubling in size from 2018 to 2022, according to the China Chain Store & Franchise Association. With the market projected to reach 150 billion yuan in 2023, bubble tea brands like ChaPanda have witnessed remarkable sales growth despite the COVID-19 pandemic’s impact on other consumer sectors.

Jason Yu, managing director at Kantar Worldpanel, emphasized the broad appeal of milk tea brands compared to coffee chains. Mainland companies, under pressure to innovate, have elevated the category, expanding beyond traditional milk tea to incorporate diverse flavors and ingredients.

Resilience Amid Economic Slowdown

In the face of a sluggish economy marked by Beijing’s lowest growth target in decades, affordable indulgences like bubble tea remain resilient. With Chinese consumers tightening their belts, products like ice cream and bubble tea offer inexpensive treats that are less affected by economic downturns.

Diverse Product Offerings

Bubble tea brands like Mixue, known for their wide range of offerings at affordable prices, cater to diverse consumer preferences. With drinks priced as low as 6 yuan, Mixue’s extensive network of franchise stores spans smaller cities, backed by nationwide logistics support.

Chinese Tea Culture and Innovation

While many international consumers associate bubble tea with Taiwan, mainland China’s rich tea-drinking traditions also influence the beverage’s popularity. Incorporating elements of “guochao” or “national wave” culture into their products, brands like Sexy Tea tap into China’s cultural heritage to appeal to consumers at home and abroad.

As China’s bubble tea brands embark on their global expansion journey, they continue to innovate and adapt, driven by both domestic success and international aspirations.

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