“We still see fast growth in tea houses, however, brands should start to pursue consumer loyalty rather than rapid growth. Brand value can be better delivered by incorporating traditional and local touches. Differentiation can be established through different tea bases and milk bases. At the same time, self-expressive elements are crucial in keeping Gen Z consumers.”
– Yifan Gu, Associate Director
Key Issues covered in this Report:
- Market value and forecast of the total value of tea drinks.
- Brands’ marketing activities.
- New product development updates.
- Consumers’ perception of different drink bases, trendy flavours and co-branding strategies.
- The price range and premiumisation triggers of tea drinks.
Collapse All
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Overview
- What you need to know
- Key Issues covered in this Report
- Covered in this Report
- Excluded
- What you need to know
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Executive Summary
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- Issues and Insights
- Connect with traditional and local roots to stand out
- Figure 1: Example of traditional elements, 2023
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- Figure 2: Example of local features, 2023
- The market calls for mid-end pure tea drinks
- Figure 3: Example of in-market pure tea offerings, 2023
- Drive young generations to trade up for self-expressive elements
- Figure 4: Example of self-expressive elements, 2023
- Market Summary
- From high-speed growth to high-quality development
- Humanised branding becomes a necessity
- What we think
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Market Size and Forecast
- The industry of tea houses enters the maturity stage
- Figure 5: Best- and worst-case forecast of tea houses retail market value, China, 2017-27
- The industry of tea houses enters the maturity stage
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Market Factors
- Favourable policies supporting local tea drinks are introduced
- Sinking markets become new arenas
- Figure 6: Example of brands in lower-tier cities, 2023
- Higher growth potential lies in the global market
- Figure 7: Example of brands in global markets, 2023
- Cost reduction is expected with capital flowing into the supply chain
- Favourable policies supporting local tea drinks are introduced
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Market Share
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- Figure 8: Store numbers and volume share of the top brands, China, 2022
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Marketing Activities
- Going live presents brand stories better
- Figure 9: Example of brands going live, 2023
- Receipt literature opens up new ideas for co-creation marketing
- Figure 10: Example of brands leveraging receipt literature, 2023
- Emotional marketing: understanding consumers on a deeper level
- Figure 11: Example of brands leveraging ‘let it rot’ culture, 2023
- Going live presents brand stories better
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New Product Trends
- Pure tea house as a new ‘third space’ after the coffee shop
- Figure 12: Example of pure tea houses
- Tea drinks with flowers are still in trend
- Figure 13: Example of tea drinks with flowers, 2023
- Tea bases become a point of differentiation
- Figure 14: Example of brands using tea base to differentiate, 2023
- Pure tea house as a new ‘third space’ after the coffee shop
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Consumption Trend
- Higher tendency to consume pure tea and tea drinks with fruits
- Figure 15: Consumption trend, China, 2023
- Pure tea and fruit-flavoured tea are more gender-neutral
- Figure 16: Consumption trend – have bought more, by gender, China, 2023
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- Figure 17: Consumption trend – have bought more, by gender and age, China, 2023
- People in their 30s are ready to indulge more
- Figure 18: Consumption trend – have bought more, by age, China, 2023
- Higher tendency to consume pure tea and tea drinks with fruits
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Price Range
- RMB16-20 is the most accepted price range
- Figure 19: Price range, China, 2023
- Price cuts: a way to attract more young and male consumers
- Figure 20: Price range, by age, China, 2023
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- Figure 21: Price range, by gender, China, 2023
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- Figure 22: Price range – low price, by gender and age, China, 2023
- Caregivers have a higher willingness to premiumise
- Figure 23: Price range, by living situation, China, 2023
- RMB16-20 is the most accepted price range
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Milk Base Preference
- Old story for coconut milk but new chapter with nut milk
- Figure 24: Milk base preference, China, 2023
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- Figure 25: Milk base preference, by price tier, China, 2023
- Peanut milk: nostalgic but yet to farewell
- Figure 26: Milk base preference – peanut milk, by age, China, 2023
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- Figure 27: Example of nostalgic new products
- Figure 28: Milk base preference, by gender, China, 2023
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- Figure 29: Milk base preference – peanut milk, by region, China, 2023
- Diversity in plant-based drinks entices high-frequency consumers
- Figure 30: Consumption frequency, China, 2023
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- Figure 31: Milk base preference – by frequency, China, 2023
- Old story for coconut milk but new chapter with nut milk
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Premiumisation Trigger
- Adding fresh fruit is the rule of thumb for a higher price
- Figure 32: Premiumisation trigger, China, 2023
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- Figure 33: Premiumisation trigger – fresh fruits added, by age, China, 2023
- Figure 34: Example of tea drinks with fresh fruits, China, 2023
- Ingredients prepared on-site support premium positioning well
- Figure 35: TURF Analysis – premiumisation trigger, China, 2023
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- Figure 36: Premiumisation trigger – all ingredients are freshly made, by age, China, 2023
- Figure 37: Example of tea houses preparing ingredients on-site, 2023
- Youngsters also like to spend more on non-health advantages
- Figure 38: Premiumisation trigger – selected items, by age, China, 2023
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- Figure 39: Premiumisation trigger – selected items, by gender and age, China, 2023
- Adding fresh fruit is the rule of thumb for a higher price
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Interest to Trendy Flavours
- Osmanthus and citron are must-have trendy flavours
- Figure 40: Interest to trendy flavours, China, 2023
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- Figure 41: Interest to trendy flavours, China, 2023
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- Figure 42: Interest to trendy flavours – selected items, by gender, China, 2023
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- Figure 43: Interest to trendy flavours – citron, by region, China, 2023
- Sakura still struggles for taste recognition
- Figure 44: Interest to trendy flavours – sakura, by frequency, China, 2023
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- Figure 45: Example of mixing sakura with other ingredients, 2023
- Bamboo can find better companions
- Figure 46: Interest to trendy flavours – bamboo, by education, China, 2023
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- Figure 47: Example of bamboo tea drinks, 2023
- Osmanthus and citron are must-have trendy flavours
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Co-branding Interest
- Tradition is making a comeback
- Figure 48: Co-branding interest, China, 2023
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- Figure 49: Example of co-branding with traditional Chinese culture
- Anime/ACG is more for 18-29 year olds
- Figure 50: Co-branding interest – Anime/ACG, by age, China, 2023
- Figure 51: Example of co-branding with anime/ACG, 2022
- Tradition is making a comeback
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Food Personas
- Who are they?
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- Figure 52: Food personas, China, 2023
- Figure 53: Food personas, by age, China, 2023
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- Figure 54: Food personas, by monthly household income, China, 2023
- Critical Shoppers value nutrition-related benefits most
- Figure 55: Premiumisation trigger – selected triggers, by persona, China, 2023
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- Figure 56: Interest to trendy flavours – purple perilla, by persona, China, 2023
- Emotional eaters drink for pleasure
- Figure 57: Premiumisation trigger – with toppings, by persona, China, 2023
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- Figure 58: Interest to trendy flavours – mulled wine, by persona, China, 2023
- Who are they?
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Appendix – Market Size and Forecast
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- Figure 59: Total market value of tea houses, China, 2017-27
- Figure 60: Store numbers and volume share of the top brands, China, 2019-2022
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Appendix – Methodology and Abbreviations
- Methodology
- Methodology
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