BEIJING — Once a symbol of urban indulgence, bubble tea is facing a seismic shift in China’s vast beverage market. As consumers increasingly seek value, a wave of budget-friendly brands is challenging the dominance of established chains, offering drinks for as little as US$1.
The bubble tea phenomenon, characterized by its sweet, milky flavors and chewy tapioca pearls, has captured the hearts of millions across China. In bustling shopping malls and vibrant high streets, large plastic cups filled with colorful concoctions have become a common sight. However, the post-pandemic economic environment has altered consumer spending habits, pushing many young Chinese towards more affordable options.
The bubble tea industry, valued at over $21 billion last year, once thrived on premium offerings priced between 25 and 40 yuan ($3.50 to $5.50). These products were marketed as status symbols, appealing to the aspirations of a rapidly growing middle class. But with economic recovery faltering, many consumers are hesitant to part with their cash.
“The existing market is saturated,” said Stacy Chen, a bubble tea vlogger in Hangzhou. With a following of 180,000 on platforms like Xiaohongshu and Douyin, Chen reviews the latest offerings, noting the rapid influx of new brands. “Reducing prices is the only feasible way to highlight their market competitiveness.”
Outside her office, Chen showcases a bustling street packed with tea shops, where deliverymen on hoverboards zip by with orders. “There are so many milk tea brands now, and they release new products very quickly,” she added.
Leading the charge among budget options is Mixue Bingcheng, which began as a humble shaved ice shop in 1997 and has since transformed into a major player. With its cheerful snowman mascot and bright signage, Mixue operates over 32,000 stores in China and 4,000 more abroad. Market analysts suggest the brand’s early entry into the low-cost segment has given it a significant advantage.
“Current consumer sentiment is driving many cafes to lower their prices,” noted Evelyne Chang, a market analyst at China Skinny. “Stiff competition and product homogeneity have sparked a price war in the sector.”
Despite hopes for a robust post-COVID recovery, China’s economy continues to grapple with challenges, including a struggling property sector and rising trade tensions. As retail growth stagnates and unemployment remains high, young professionals are increasingly drawn to budget-friendly brands like Mixue.
“I just bought an iced lemonade for 2.8 yuan ($0.40) using a discount on Douyin,” said 21-year-old Guo Jun, who works in Beijing. “Work stress is high, and salaries aren’t great, so we need to be more practical.”
Chen attributes the rise of low-cost bubble tea to the popularity of domestic coffee chains that have democratized access to previously luxury-priced beverages. “Now I can buy a luxury coffee for 9.9 yuan ($1.40), so why should I spend more than 20 yuan on milk tea?” she questioned.
As the bubble tea landscape evolves, the clash between premium brands and budget disruptors is likely to define the future of this beloved beverage in China. Whether established chains can adapt to shifting consumer preferences remains to be seen, but one thing is clear: the era of affordable bubble tea is here to stay.