Will the bubble tea bubble in China burst?
Thanks to the internet, China’s retail sales of bubble tea nearly doubled in less than five years. On average, consumers pay more than 20 yuan for a cup of new-style tea, almost the same price as an easy meal. Therefore, it is no surprise that billions of dollars were flushed into this profitable industry. In just 2019 alone, over 20 thousand bubble tea enterprises were established in China. In February 2023, 14 new-style tea companies operated over 1,000 beverage retail outlets, Mixue Ice Cream & Tea being the leading company with 23,487 outlets. Following Nayuki's IPO in 2020, six companies followed and filed for IPOs in 2023.Despite the hype, the saturated market has resulted in fewer profits for many of the market players. While there is still a positive outlook for the industry in the coming years, predictions indicate that the industry will become increasingly concentrated, with many small and medium-sized businesses at a risk of closing.
Health concerns behind the unquenchable thirst for bubble tea
As compared to two decades ago, the new-style tea industry in China has undergone profound changes. Franchise chains have replaced independent bubble tea shops. Fresh juice and milk have replaced concentrated syrup and milk powder. Bubble tea, however, still faces fierce criticism because it poses a health threat to the public, particularly children and young adults. A survey in 2023 found that nearly two-thirds of Chinese respondents drink bubble tea at least three times a month, and about a quarter consume it more than once a week. According to studies, excessive consumption of bubble tea could lead to obesity, heart disease, diabetes, and even mental health problems.
