New-Age Teas Bubble Up Toward a Boom in China

China’s burgeoning consumption sector is witnessing a surge in businesses offering a diverse array of new-age teas, heralding a potential boom in the industry.

Zhang Shuai, proprietor of a franchised milk tea establishment in Cangzhou, Hebei province, attests to the rapid evolution of the tea beverage sector. In response to robust consumer demand, Zhang joined a franchised milk tea chain and has witnessed substantial success since the opening of his store in February. Within the first month alone, sales soared past 500,000 yuan ($69,057), reflecting the burgeoning popularity of new-style tea beverages.

Zhang’s store is just one among the vast landscape of over half a million such outlets across China, capitalizing on the burgeoning prospects within the new-style tea beverage sector. According to a joint report by the tea and new beverage committee of the China Chain Store and Franchise Association and the Meituan Research Institute, as of August 31, approximately 515,000 new-style tea beverage outlets dotted the country, marking a 36 percent increase from the previous year.

Contrary to rumors of stagnation, the sector continues to thrive, with a notable uptick in the establishment of new tea beverage-related firms in 2023, as reported by corporate data provider Qichacha. Projections from Askci Corp estimate that China’s freshly made tea beverage market will generate a staggering 257.8 billion yuan in revenue by year’s end.

Zhu Danpeng, an independent F&B analyst based in Guangzhou, underscores the sector’s evolution, emphasizing its capacity to cater to diverse consumer needs. Major players like the Shenzhen-based milk tea chain Naixue have witnessed remarkable growth, particularly in third- and lower-tier cities, where outlets have recorded significant sales milestones.

The expansion of leading enterprises into lower-tier cities has prompted medium-sized firms, including Chagee, Auntea Jenny, and Guming, to follow suit, aiming to consolidate their market presence. A nationwide survey conducted by National Business Daily revealed a widespread influx of new tea beverage chain brands across various cities, with consumers attesting to the sector’s dynamism and potential.

Zhan Junhao, founder of Fujian Huace Brand Positioning Consulting, emphasizes the vast potential and vitality of China’s consumption market, dismissing notions of weakness in beverage consumption. As the consumption sector continues to expand and embrace digitalization, the new-style tea beverage sector is poised for broader development opportunities.

With projections indicating exponential growth, China’s new-style tea beverage market is anticipated to surpass 200 billion yuan in revenue by 2025. Regionally, cities like Guangzhou, Shenzhen, Chengdu, and Shanghai emerge as key hubs, boasting a significant concentration of tea beverage outlets and signaling the sector’s widespread appeal and growth potential.

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