[New Report] The US$3.66 billion bubble tea market of Southeast Asia

Southeast Asia currently spends US$3.66 billion a year on bubble tea and similar ‘new tea’ drinks, according to a new study jointly conducted by Momentum Works and qlub. 

The results of the study are published in the ‘Bubble Tea in Southeast Asia’ report, which provides in-depth analyses and insights into the business dynamics behind Southeast Asia’s favourite drink. 

As usual, the Bubble Tea in Southeast Asia report is complimentary and you can get a copy here. 

This report is an extension of Momentum Works’ popular Food delivery in Southeast Asia report. 

Here’s a sneak peek into the report:

• Indonesia and Thailand are the largest markets

In Southeast Asia, Indonesia and Thailand have the largest bubble tea market. Indonesia is the largest market in the region with an estimated $1.6 billion annual turnover. Thailand, unsurprisingly, has the second largest market with an annual turnover of US$749 million through its more than 31,000 bubble tea stores and other retail channels. 

• China’s bubble tea market is twice that of coffee

China’s bubble tea market had an annual turnover of more than US$20 billion in 2021. In 2018, the landscape in China entered a new tipping point: amidst saturating local competition, Chinese brands like Mixue, Chagee, HEYTEA, which gained initial scale domestically, are venturing into Southeast Asia, joining local and Taiwanese counterparts like Gong Cha and KOI. 

• Evolution of bubble tea ecosystem in Southeast Asia

Taiwanese and homegrown brands have long dominated Southeast Asia’s large bubble tea market. In addition, recently many Chinese brands like Mixue, Chagee and HEYTEA have entered the region. 

• The bubble tea landscape in Southeast Asia is very competitive

Southeast Asia has proven to be a diverse testing ground for Chinese tea brands expanding overseas. A lot of local Southeast Asian brands have emerged as well, but they are single-country focused. Among the three segments of bubble tea, the mid-segment is the most competitive and brands need to find a key USP to set them apart from the competition.

• Building a successful bubble tea business

The underlying fundamentals of a successful bubble tea chain are simple: 

(i) build (decent) flagship products to get initial traction 

(ii) achieve single-store profitability 

(iii) scale the model while maintaining the positive unit economics. The challenge, as usual, lies in execution – and the ability to build (and of course, maintain) a defensive moat along the way. 

• Store selection is a critical factor in the success of a bubble tea business

There are so many different factors to consider for a bubble tea store location. Population size and population density of each area along with the residents’ spending power and receptiveness are crucial elements to evaluate before setting up shop.

If you would like to know more about bubble tea and the business behind it, download the report here.