• Bubble tea industry in Indonesia is the biggest in Southeast Asia with an annual turnover of $1.6 billion
  • Thailand has the highest bubble tea consumption on average compared to other regional peers.
  • Despite good product gross margin across the industry (60-70%), few players have managed continuous profitability at a large scale. 

SINGAPORE, 16 August 2022 – 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. 
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. 

Singapore stands out again amongst the region’s 6 key markets, with the smallest population but the highest spending power. The average price in Singapore is double that of other countries in the region, making it a great entry point for premium brands – there are more than 60 active brands of bubble tea chains covering different tastes and price ranges.

Taiwanese and homegrown brands have long dominated Southeast Asia’s large bubble tea market. In addition, recently many Chinese brands have entered the region. The bubble tea market in China is estimated to have an annual turnover of US$20 billion, saturating and hyper competitive. Popular Chinese brands like Mixue, Chagee and HEYTEA have already ventured into Southeast Asia. 

“Many young people in Southeast Asia want to open a bubble tea shop someday. Though there are high margins, bubble tea is a low-differentiation game with easily replicable products and a challenging supply chain. The pandemic served as a natural selection process as many stores shut down. However, consumers’ love for bubble tea won’t change anytime soon, but they will vote their favourite brands with their wallets,” said Sik Hoe Yong, Chief Operating Officer of qlub.

Jianggan Li, Founder and CEO of Momentum Works added, “The market is fragmented, and unlike internet companies, there is enough room for larger and smaller bubble tea players to co-exist and flourish. The emergence of Chinese players who are good at branding, product/supply chain and cost management could pose an increasing challenge to existing local players. It’s not difficult to observe and learn their play and strategy, but what’s more important is to ensure positive unit economics and good return on investment.”

Trends and Analysis in the Report

Momentum Works- qlub report also sheds light on several trends and insights into the bubble tea industry:

  1. Despite high margins, few bubble tea stores are profitable: The bubble tea industry has a good product gross margin of 60-70%. Yet, few players have managed continuous profitability at a large scale. Nayuki, the first “new tea” brand to go public (HKSE), has seen its market cap plunge > 70% since. There is also an industry saying that nine out of ten bubble tea stores lose money.
  2. Bubble tea is a purple ocean with little differentiation: In Singapore alone, there were more than 90 brands at the peak! It is dubbed the purple ocean (redder than the red ocean) because it is a low-differentiation game with easily replicable products. The supply chain can be more challenging than ecommerce due to the high demand for the freshness of raw materials. 
  3. Though consumers’ preferences vary, pricing is not the only factor that affects purchasing decisions:: Apart from pricing, consumers also decide based on the product selection at stores, as well the ease of access which means number of stores a brand has.
  4. There are three underlying fundamentals to building a successful bubble tea business: They 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. 
  5. Brands are providing more health-conscious options: While consumers in Singapore are more health conscious, it’s not the same across other markets. Even though consumers aren’t necessarily more health conscious, brands are catering to the segment of more health conscious/non-bubble tea drinking population through customisable sugar levels, ‘healthier’ alternatives like brewed fresh fruit tea.


About Momentum Works

A Singapore-headquartered venture outfit, Momentum Works builds, scales and manages tech ventures across the emerging world. 

Momentum Works also leverages its knowledge, community and experience to inform, connect and enable the tech/new economy ecosystem. Key business areas include ventures, insights, academy and advisory. 

About qlub

qlub is a global digital payments solution provider that enables dine-in customers to pay their bills at their table in 3 simple steps – scan, pay, and go. qlub’s hassle-free payment service enhances customer satisfaction and increases the efficiency of restaurant operations.

Started by a group of veteran entrepreneurs in 2021, qlub is now present in Australia, Japan, Malaysia, Saudi Arabia, Singapore, Turkey, United Arab Emirates, and more. qlub raised one of the largest seed rounds in 2022 globally – US$17 million. 

For more information

The full report is complimentary and can be downloaded here.

For further enquiries, please contact Aishwarya ([email protected])

Appendix A

bubble tea market
Appendix B

Appendix C

bubble tea china

Appendix D

bubble tea southeast asia

Appendix E

singapore bubble tea

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].