2023, the year of the explosion of new tea drinks going overseas丨Annual observation

Starting from tea drinks, this article analyzes the overseas expansion of major tea drink brands. It is recommended for practitioners in related industries to read.

2023 is already in the countdown. As the first consumption year after the epidemic, major consumer brand companies have experienced ups and downs this year, and have stepped out of their comfort zone amid uncertainty. Internally, they have transformed their companies, reduced costs and increased efficiency, and externally, they have gone overseas and expanded their territory. At present, this may be an insignificant change, but in the long run, this may be a critical period for major changes in the industry and new growth for companies. Recording the history of the past is the prologue to depicting the future.

On November 17 this year, a netizen posted a picture on a social platform, claiming to have encountered Nayuki's Thai employees in a Nayuki's Tea store in Shenzhen. The picture showed several Thai employees wearing Nayuki's Tea uniforms tasting tea in the store. In response, Nayuki's Tea said that its first Thai store will open in Bangkok in December.

At present, Nayuki’s tea ordering app has added a “Thailand Limited” area, selling two Thailand limited drinks including Thai Da Hong Pao milk tea and Thai Rose Lychee milk tea, which are sold in two stores in Shenzhen.

This year, all new tea brands have accelerated their overseas expansion. Heytea announced in March that it was recruiting overseas business partners, and opened its first store in London in the summer. It has since expanded to markets such as Europe, the United States, and Australia. Mixue Ice City plans to expand the number of stores in Japan. Tianlala, a new tea brand in the lower-tier markets, has made a high-profile entry into the Indonesian market, opening six new stores in Jakarta at the same time.

As the growth of the domestic new tea beverage market has reached its ceiling and internal competition is becoming increasingly severe, going overseas has become a must for new tea beverage brands. By the end of the year, Nayuki, which has always been relatively "Buddhist" about the overseas market, finally chose to restart its overseas expansion plan.

Image source: Weibo @喜茶

1. China's new tea drinks are opening stores overseas

In 2018, when the new tea beverage trend was just emerging in China, internet celebrity brands such as Heytea and Nayuki’s Tea had already tested the overseas market.

When choosing their first overseas destination, both Heytea and Nayuki’s Tea set their sights on Singapore, a country with a close geographical location, a large number of Chinese consumers and a similar culture.

In November 2018, Heytea opened its first overseas store in Orchard Road, Singapore. According to Heytea, the daily sales volume of the first store exceeded 2,000 cups in the first three days. In December of the same year, Nayuki's Tea also opened its first store in Singapore.

For a period of time after 2018, China's new tea beverage market was in a stage of rapid development, which led most brands to focus on expanding the domestic market instead of choosing aggressive expansion overseas. Heytea opened several stores in Singapore, but did not try to enter the more distant European and American markets; Nayuki's Tea stores in Singapore and Japan were also closed one after another during the epidemic.

As the domestic new tea beverage market becomes increasingly saturated, increasingly involuted competition has prompted various new tea beverage brands to reconsider overseas markets.

Image source: Weibo @喜茶

This autumn, many new tea brands have started a round of layout in overseas markets: Heytea opened stores in Melbourne, Australia and Burnaby, Canada; Tianlala, which focuses on the sinking market, opened 6 stores in Jakarta, Indonesia; Chabaidao’s first Korean store opened in Seoul on October 31; Guangdong’s new tea brand Cha Li Yi Shi announced the opening of its first overseas store in Barcelona, ​​Spain.

At present, the company with the most stores overseas is Michelle Ice City, which has long been in the Southeast Asian market. As early as 2018, Michelle Ice City opened its first overseas store in Vietnam. At present, Michelle Ice City has nearly 4,000 overseas stores.

With its cost-effectiveness, Mixue Ice City has become popular in Southeast Asian countries such as Indonesia and Vietnam, and has since entered developed countries such as Singapore, Australia, and South Korea. Last winter, Mixue Ice City entered the Japanese market and opened its first store in Omotesando, Tokyo's high-end commercial district. This fall, a new store opened in Osaka, Japan. Mixue Ice City plans to open 20 stores in Japan by the end of 2023.

Another new tea brand that went overseas earlier and has more overseas stores is Bawang Chaji. In 2018, Bawang Chaji's overseas business department was established; in August 2019, Bawang Chaji's first overseas store landed in Malaysia, and then entered Singapore and Thailand. Now, Bawang Chaji has nearly 70 stores in Southeast Asia, becoming one of the leading tea brands in the Malaysian market.

Bawang Cha Ji plans to open 100 overseas stores by the end of 2023 and enter the North American and European markets, shaping the brand into the "Oriental Starbucks".

2. New tea drinks cannot go beyond Southeast Asia when going global

For most new tea brands that choose to go overseas, Southeast Asia is an inevitable stop. Brands such as Heytea, Mixue Ice City, and Bawang Chaji have all opened their first overseas stop in Southeast Asia, and then entered the broader markets of Europe, America, Japan, Australia, etc. Southeast Asia can be said to be the "chosen place" for new tea drinks: the local culture and customs are similar to those of China, and residents have the habit of drinking tea. The hot climate all year round leads to a huge demand for cold drinks. There is no distinction between off-season and peak season, and sales are peak all year round.

In addition, locals love sweets, so milk tea, fruit tea and other products are very popular. With the development of Southeast Asian economy, the local middle class has begun to rise, and the population structure is relatively young, so the demand for new tea drinks has become higher in recent years. According to data from Southeast Asian food delivery platform GrabFood, the order volume of bubble milk tea in Southeast Asia has been growing rapidly since 2018.

Among them, Indonesia's order volume in 2018 even increased by 8,500%. According to Momentum Works data, the market size of bubble milk tea in Southeast Asia will reach US$3.66 billion in 2021. Despite the huge market share in Southeast Asia, it is difficult for new tea drinks to "make money lying down" in Southeast Asia - there are many Southeast Asian countries, the development of each country is uneven, and the market is relatively complex. Therefore, different new tea brands need to choose different business strategies based on their own product tonality. Mixue Bingcheng, which went overseas earlier, although its overseas price is slightly higher than that in China, still opened up the market with its "extreme cost performance".

Image source: Mixue Ice City official Weibo

In China, highly sweetened milk tea and fruit tea have been gradually abandoned by consumers because they are not healthy enough, but in Southeast Asia, locals prefer the sweetness that Chinese consumers think is neither healthy nor tasty. Mixue Ice City has increased the overall sweetness according to the taste habits of local consumers and continuously launched new products based on their preferences, such as strawberry nectar in Singapore and raspberry milk cap in Vietnam.

In terms of marketing, Mixue Ice City still uses the popular "Snow King" IP overseas, adjusts the Snow King's costumes in accordance with different market cultures, and changes the theme song into the local language version. Just like in China, the Snow King is placed at the door of the store, and employees wearing Snow King doll costumes sing, dance, and walk on the street, becoming eye-catching "street darts" and attracting traffic for the brand.

With its extremely cost-effectiveness and down-to-earth marketing methods, Mixue Ice City has become a trend symbol in Indonesia and Vietnam: long queues form outside the stores, young people open and post photos of Mixue Ice City products on social media, and some students even use Mixue Ice City as a study place similar to a coffee shop. Bawang Chaji takes the mid-to-high-end route. Offline stores not only use design elements such as traditional Chinese painting, calligraphy, and opera, but are also mostly located on the first floor of shopping malls near Starbucks to strengthen consumers' awareness of its brand positioning.

Image source: Bawangchaji official Weibo

Although Southeast Asian consumers generally love sweets, Bawang Chaji has not increased the overall sweetness, but still adheres to the low-sugar and healthy label, and divides the sweetness into full sugar, 70% sugar, half sugar and other options, and continues to highlight the tea flavor in the product. In terms of marketing, Bawang Chaji also adopts various ways to get close to local young consumers, such as inviting Lee Chong Wei as a spokesperson in Malaysia and giving away peripheral products in the joint game "Star Dome Railway" in Singapore.

In addition, Bawang Chaji once launched an ultra-high hollow tea cup, adding a small gift blind box at the bottom of the milk tea, which was widely welcomed by consumers. With the dual blessing of national trend elements and localized marketing, Bawang Chaji's "original leaf fresh milk tea" brand image has been deeply rooted in the hearts of the people, and its stores have become a new social place for many young people in Southeast Asia, with an average monthly turnover of 300,000 yuan per store. In October 2023, Tianlala, a new tea brand that also focuses on the sinking market and is regarded as a "substitute for Mixue Bingcheng", also joined the competition in the Southeast Asian market, and the first batch of 6 stores opened in Jakarta, Indonesia.

According to Tianlala's plan, it will fully develop the Southeast Asian market in November and open 60 stores in Indonesia by the end of this year. As more new brands pour into Southeast Asia, the local new tea war is imminent. New tea brands from China not only have to compete with each other, but also face other opponents - the rising local brands in Southeast Asia. Take Indonesia as an example. In recent years, a variety of local coffee and tea brands have emerged. Regardless of whether Chinese brands enter the Indonesian market, similar business models can find corresponding local competitors in Indonesia.

Indonesian local brand Esteh Indonesia is gradually becoming a rival to Mixue Bingcheng.

It started as a street stall, mainly selling lemon iced tea, lychee iced tea, milk tea and other products. The product prices and franchise fees are slightly lower than those of Mixue Ice City, making it very competitive locally.

At present, Esteh Indonesia has opened hundreds of stores. In addition, Indonesia also has Haus, a bubble tea brand that also operates catering, Kopi Kenangan, a takeaway coffee brand known as the "Luckin Coffee of Indonesia", and Ban Ban, a high-end tea brand that mainly opens stores in first-tier shopping malls in the capital.

When Mixue Ice City first entered the Southeast Asian market, the local new tea beverage market was still a blue ocean, and Chinese brands with rich marketing experience could form a dimensionality reduction attack on the local market. But now, with the entry of various players, the Southeast Asian tea beverage market is becoming more and more competitive, and if Chinese new tea beverage brands want to stand out, they need more differentiated operations and better integration and adaptation to the local market.

3. The challenges of going global to multiple markets have just begun

For new tea brands that are accelerating their overseas expansion, the underdeveloped blue ocean market can bring more revenue and profits, but it also means more diverse challenges, such as how to attract local consumers through localized operations, how to do a good job in store quality control, and how to build relationships with local franchisees.

The Southeast Asian market is relatively close to Chinese culture and consumption habits, and tea drinks are more accepted locally. However, in Europe, America, Australia and other countries, coffee is the most familiar and favorite beverage for consumers. It is difficult for new tea drinks to generate high revenue and profits solely from Chinese customers. If you want to attract more customers, you need to do a good job of localized operations.

Most of the tea brands going overseas still start their localization operation attempts in Southeast Asia.

Image source: Nayuki's Tea official Weibo

In 2018, when HEYTEA entered the Singapore market, in addition to making city-limited milk tea with spices such as pandan that are popular among locals, it also launched two limited products, durian ice cream and salted egg yolk ice cream, based on the locals' love for durian and the internet-famous snack salted egg yolk fried fish skin.
Starting this summer, Heytea has launched franchise stores in London, England, Melbourne, Australia, and Burnaby, Canada. In Europe and the United States, Heytea has adopted a new localized marketing strategy and launched a series of city-limited refrigerator magnets. For example, in London stores, refrigerator magnets incorporate elements of the local landmark building Big Ben; while in Australia, city-limited refrigerator magnets incorporate kangaroos.

Heytea has achieved certain success after opening its overseas stores. According to data released by Heytea, the London store has an average daily sales of 1,300 cups, with the highest daily sales exceeding 12,000 pounds (about 110,000 yuan); the Melbourne, Australia store has a maximum daily sales of nearly 3,000 cups, with the highest daily sales exceeding 30,000 Australian dollars (about 140,000 yuan).

However, the consumers queuing at HEYTEA overseas stores are still mainly international students and new immigrants. On Xiaohongshu, many overseas bloggers have posted their notes on visiting HEYTEA stores, but some netizens said that the taste of HEYTEA overseas seems not as good as that in China, and "the fruit pulp does not seem to be as much as in China."

For new tea brands going overseas, franchising is a simpler path than direct operation. Direct operation requires more manpower and operating costs, while the franchising model allows them to directly find business partners who are more familiar with the local business environment and quickly open stores.
However, the franchise model will also lead to some problems, such as greater difficulty in quality control and the brand needs more time to work with franchisees.

Mixue Ice City, which is very popular overseas, has already experienced this series of problems. Its Australian stores have received many negative reviews from consumers, saying that the wrong ingredients were added and some products were out of stock. In response, store staff explained that Australia does not have the supply chain factories of Mixue Ice City, and a considerable part of the materials have to be shipped from China, which puts a lot of cost pressure on it. In addition, due to the excessive pressure of orders in the first week, most of the store staff are part-time college students, and it is inevitable that they will make mistakes in a hurry.

In Vietnam, where it has already opened many chain stores, Mixue Ice City has also had conflicts with franchisees. Recently, Mixue Ice City reduced the price of its products in Vietnam by 25%, but the price of raw materials only dropped by 10%, which invisibly increased the cost of franchisees and triggered widespread dissatisfaction. A group of Vietnamese franchisees came to the Mixue Ice City store to protest with banners. The left side of the banner had the image of the Snow King, and the right side had a slogan in both Chinese and Vietnamese: "Protest against the Vietnamese Mixue Ice City for disrespecting and oppressing franchisees."

This shows the many challenges that new tea drinks face in their rapid overseas expansion.

First, new tea beverage brands need to reorganize their supply chains and try to reduce costs and increase efficiency; second, they need to constantly improve their relationship with franchisees, train local staff, and do a good job in store quality control to achieve mutual benefit and win-win results with franchisees.

In developed countries, international students and Chinese immigrants may go to Chinese new tea stores to queue up and check in because of sentiment, but compared with the slightly higher prices in China, it is difficult for international students to become a daily consumer. To attract more local consumers, Chinese new tea brands still need to find the right product positioning and adjust their marketing strategies, and work harder on social media marketing and store quality control.

At present, China's new tea beverage brands that have just gone abroad are still quite far away from mature global beverage giants like Starbucks.

Author: Danmu, Editor: Maji

Source: Public Account: Value Planet (ID: ValuePlanet), discovering company value and telling capital stories.