Chinese tea brands are expanding rapidly into Southeast Asia as they believe that this region offers fertile ground for their ventures.
Brands such as Nayuki, Hey Tea, and Mixue Bingcheng have already left a significant mark in Southeast Asia. According to a report by Momentum Works, the annual consumption of modern/milk tea beverages in Southeast Asia amounted to US$3.66 billion, and this market is led by Indonesia with US$1.6 billion followed by Thailand (US$749 million).
The Chinese tea market, on the other hand, has matured into a battleground among several dominant brands with not much room for growth. According to an industry spokesperson, “China’s tea beverage market has entered the stage of digital and intelligent transformation, while the Southeast Asian market still has the 1.0 model of single-store brands and chain brands in the capital phase.”
In addition, the hot climate in Southeast Asia has resulted in a year-round demand for cold beverages. In this region, there’s no off-season for tea brands. Generally, Southeast Asian consumers still prefer the sweeter versions of milk tea while Chinese consumers are becoming more demanding and focus on health and wellness. In this region, consumers still find milk tea as appealing and they hardly choose low-sugar options. As such, this market is easier to penetrate with lesser competition for these Chinese tea brands.
Mixue Bingcheng is currently one of the most established brands in the Southeast Asian market, with nearly 4,000 stores. Another brand that ventured overseas around the same time is Chagee. According to official data, Chagee now has nearly 100 international stores, spread across Malaysia, Singapore, and Thailand, with over 50 stores in Malaysia alone.
Despite the optimistic future, Chinese tea brands still face challenges like logistics and supply chain issues as some materials cannot be sourced locally. Many have no plans to set up factories in Southeast Asia due to the poor supply chain network in this region, and the lower production costs in China.
