Milk tea makers seeking new ingredient for growth

Domestic milk tea makers are ramping up efforts to tap new growth opportunities in more scenarios, and cash in on the nation's consumption upgrades.

During this year's Qixi Festival－also known as Chinese Valentine's Day－which fell on Aug 4, Chinese boutique teahouse chain Heytea, in cooperation with local governments in some cities, launched a cultural event called "Sending out love on Qixi". During the event, the tea maker offered free fruit tea, Qixi Festival-themed fans and badges for newlyweds, and a variety of interactive activities with festive elements, such as floats and a queqiao, or magpie bridge, which in the legendary tale at the heart of the Qixi Festival is a bridge made of living magpies who join together to cross the galaxy to unite two separated lovers.

The event captured the hearts of some local consumers. "This is so joyous. We are grateful to be offered free fruit tea from Heytea during the Qixi Festival. My wife and I are fans of Heytea. Being given a bottle of Heytea's fruit tea and its Qixi-themed gifts on our special day expanded our joy," said a consumer surnamed Wang. He and his wife got their marriage certificates on the Qixi Festival day and joined the event in Qingdao, Shandong province.

Apart from festive events, the tea maker is also eyeing wedding ceremonies.

"With a marriage certificate, newlyweds can enjoy 10 percent off when they buy over 299 bottles of Heytea on their wedding day, as more new couples are choosing healthy milk tea as wedding feast beverage," a Heytea spokesperson said.

"With the launch of the promotion activity, I plan to order Heytea instead of wine and beer on my wedding day. We are not fans of alcohol. We feel great to have a much healthier way to celebrate our special day," said Gloria Jia, a 30-year-old white collar worker in Beijing.

Xie Zongbo, an independent finance columnist, said: "After years of rapid development, China's tea beverage market is almost saturated. Market competition is increasingly fierce, and enterprise growth has slowed down. To promote sales growth, brands should envision new future scenarios and expand the market size to a larger dimension.

"Heytea stepping into the wedding market is representative of these explorations. The country is advocating new forms of weddings, and Heytea exploring new markets by replacing alcohol with tea not only conforms to the mainstream preference for a healthy lifestyle, but also caters to the hobbies of young people. The new business will definitely generate new growth points for the company.

"When a burgeoning industry encounters development bottlenecks, through existing brand influence, enterprises should keep exploring niche markets and new scenarios. This is critical to expanding market scale and realizing stable growth."

China's milk tea market has grown rapidly in recent years. Qianzhan Industry Research Institute said that by 2023, the country's milk tea market is expected to surpass 120 billion yuan ($17.7 billion). Currently, there are roughly 500,000 milk tea stores nationwide, with the top 50 milk tea brands operating only 100,000 outlets.

Other milk tea brands are also exploring new consumption scenarios. Jinhua, Zhejiang province-based milk tea maker xsqtea introduced a fried chicken business, while other brands have adopted plant-based milk tea, ginseng milk tea and Chinese herbal milk tea to satisfy consumers' diversified demands.

Chen Jia, an independent researcher in international strategy, said: "Prosperous as the milk tea industry is, its development won't all be smooth sailing. With mounting competition, tea beverage brands should focus on their own core competitiveness, intensively cultivate themselves, put forth new ideas, and be alert to potential risks so as to realize sustainable development."

"For a long time, we have stuck to bringing a relaxing and cheerful experience to consumers by offering them high-quality yet inexpensive products. In the process of deepening the emotional connection with consumers, we are promoting new tea drinks to a wider consumer group," said the Heytea spokesperson.