Bubble tea: China’s bubble tea brands look to create a stir overseas

Already a subscriber?At a crossroads in downtown Shanghai, the market for bubble tea is crowded. Opposite one of ChaPanda’s 8000 domestic stores, rival tea specialist Heytea vies for customers.“Teenage students, white-collar workers in their thirties, they’re drinking it every few days,” said a worker at ChaPanda. “They can’t go without it.”Bloomberg

Mixue and Guming, both known for their low prices and for being the first and second-largest bubble tea chains in China, respectively, are also planning initial public offerings in the coming months in Hong Kong, where proceeds can be more easily directed outside of mainland China. “ have a much wider appeal in comparison to coffee chains,” said Jason Yu, managing director at Kantar Worldpanel, a consumer research group. Mainland companies, under pressure to compete with new ideas, have “taken the category to the next level”.

The products vary in price, but drinks from Mixue, which had 30,000 stores as of December and like many of its peers operates a franchise model, can cost as little as 6 yuan and are popular in smaller cities where suppliers often crowd the same street. Mixue has its own factories and said in its IPO prospectus that it provided “nationwide free logistics services” to its thousands of franchisees, which purchase ingredients, marketing materials and equipment from it.

Sexy Tea, another bubble tea competitor, is known for incorporating so-called guochao, or “national wave”, elements of Chinese culture into its products, according to consultancy Daxue. Jeongwen Chiang, a professor of marketing at China Europe International Business School, said expansion “can be achieved easily through joint ventures with local partners or licensing arrangements”.

Source: News Formal (newsformal.com)

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