With increasingly fierce competition in the Chinese tea-based beverages market, more and more domestic enterprises are turning their attention overseas.
This emerging business sector involves new types of freshly made tea, with ingredients such as unprocessed tea, milk and fruit, and differentiated new products are regularly being launched. In 2015, the Chinese tea drink industry entered a period of rapid development. The market is now becoming saturated, and it faces problems such as slow growth and weak development.
Most brands are selecting Southeast Asia as their first stop for implementing overseas exploration plans. In addition to its proximity to China, which facilitates the transportation of raw materials, the region also has a tea culture that is similar to China’s, and local consumers have a high degree of acceptance for these new types of tea-based drinks. The region is in the tropics, making it more suitable for cold drinks. More importantly, Southeast Asian countries have a combined population of 600 million, representing huge consumption potential. A small number of brands have also entered other regions like Japan, the US, and Europe.
As early as 2011, Chinese milk tea brand CoCo opened its first store in New York. In September 2018, the first overseas store of Mixue was also established in Vietnam, where it now has more than 200 stores. HeyTea and Nayuki followed closely behind, and in November of the same year, their first overseas stores were settled in Singapore. CHAGEE just gained a firm foothold in China in 2019 and entered Malaysia without hesitation.
The firms’ exploration of global markets has not always been smooth, due to multiple factors such as the eating habits of local consumers, supply chains, and operational abilities of the new stores.
In order to resolve supply chain problems, Mixue started to build its Asian headquarters in Chengdu, China’s Sichuan Province in July of last year, and it is expected to be completed in January 2023. By then, raw materials such as tea, seasoning milk and packaging materials produced by the brand can all be sent to global sites via a transportation network starting from Chengdu.
To cater to the tastes of local consumers, tea brands have also made adjustments to their products. For example, after HeyTea entered Singapore, it was found that local people preferred durian-flavored and salted egg yolk-flavored choices. The brand then developed drinks and ice cream products with these two flavors. Mixue also adjusted the sugar level of its milk tea products after entering Vietnam.
Southeast Asia is emerging as the first stop for new Chinese tea brands to go global. As this market gradually heats up, some brands are turning their attention to the US, Australia and Europe. Although the latter markets may eventually serve as the next gold mines for new Chinese tea brands, they are currently more difficult to enter.
Besides, as these firms pour into overseas markets, local brands are also growing wildly. Chinese new tea brands have set a good example for them, and many local companies are expected to join the market share competition in the future.