This report looks at the following areas:
- Outlook and growth prospects for China’s on-premise tea and dairy drinks market
- The competitive landscape of the on-premise tea and dairy drinks market and the growth of leading brands
- The latest product trends and growth opportunities
- Consumption trends and motivations in the main on-premise tea and dairy drinks sub-categories
- Preferences in health attributes for on-premise tea and dairy drinks
- Changes in awareness and interest in ingredients (including flowers and other ingredients) in on-premise tea and dairy drinks
The on-premise tea and dairy drinks industry has entered a phase in which competition for footfall is pursued alongside efforts to build value, with the market shifting from an expansionary model to a systematic stress-test of brand, product and operational strength. Brands need to focus on healthfulness while also emphasising emotional value to effectively build and convey brand distinction.
Roolee Lu, Director, China Insights
Market Definitions
The on-premise tea and dairy drinks businesses covered in this Report are foodservice operators that primarily sell freshly made drinks (excluding coffee) or use drinks as their main selling point to attract consumers. On-premise tea and dairy drinks include milk tea, pure tea, fruit tea and non-tea dairy drinks.
Excluded:
On-premise coffee (see Mintel Report On-premise Coffee Consumption – China – 2024), traditional teahouses and morning teahouses.
Subgroup definitions:
- Lower-priced on-premise tea and dairy drink consumers refer to consumers who normally spend RMB15 or less for a cup (500ml) of freshly made on-premise tea and dairy drink
- Mid-priced on-premise tea and dairy drink consumers refer to consumers who normally spend RMB16-20 for a cup (500ml) of freshly made on-premise tea and dairy drink
- Higher-priced on-premise tea and dairy drink consumers refer to consumers who normally spend RMB21 or more for a cup (500ml) of freshly made on-premise tea and dairy drink
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Executive summary
- Key issues covered in this Report
- Definition
- What you need to know
- On-premise tea and dairy drinks industry in value-building phase
- New product trends
- Consumer trends
- Keys to success
- What we think
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The market
- Market size and forecast
- Slowing growth in the industry, on-premise tea and dairy drinks market in brand-building phase
- Market factors
- Government policies leading to greater standardisation of the industry
- County-level consumption potential continues to be unleashed, with a greater balance between the speed and quality of expansion
- Several brands have gone public, with a growing trend towards more chains
- Smart technologies transform the efficiency of tea drinks companies
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Companies and brands
- Market share
- Brand concentration increasing further, with industry shifting to focus on quality
- Regional brands developing opportunities for national expansion through brand-building efforts
- New product trends
- Evolution of tea bases, fruits and vegetables and dairy products
- Build a holistic image of healthfulness
- Use superfoods to enhance health benefits
- Short drama marketing generates traffic and builds brand culture
- Use regional speciality ingredients to develop localised innovation
- Occasion-based marketing helps to expand consumption boundaries
- Create low-caffeine and sleep-aiding drinks to address sleep management needs
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The consumer
- Health choices determine category direction, brands need to shift from maximising traffic to building value
- On-premise tea drinks still have an important place amid a general return to considered consumption
- Graph 1: tea drink consumption frequency, 2025
- Graph 2: changes in penetration rate of tea drinks and proportion of heavy drinkers, 2024-25
- On-premise milk tea is gradually being seen as a daily necessity, with potential in parent-child occasions
- Graph 3: changes in the penetration rate* and the proportion of heavy drinkers** of on-premise milk tea, by age, 2024-25
- Graph 4: changes in the penetration rate* and the proportion of heavy drinkers** of on-premise milk tea, by age of children in household, 2024-25
- On-premise dairy-free tea drinks seeing similar trends and rapid growth
- Graph 5: changes in the penetration rate* and the proportion of heavy drinkers** of on-premise tea drinks (a), by age of children in household, 2024-25
- Graph 6: changes in the penetration rate* and the proportion of heavy drinkers** of on-premise tea drinks (a), by age, 2024-25
- Optimism for growth in fruit teas, with yogurts at risk of decline
- On-premise tea and dairy drink segments: optimism for growth in fruit teas, yogurts at risk of decline
- Graph 7: penetration rate* and change in penetration rate of on-premise tea and dairy drinks, 2024-25
- Graph 8: consumption frequency of on-premise tea and dairy drinks, 2025
- Potential for fruit tea to become a daily must-have, with room for improvement in fruit and vegetable juices and milk drinks
- Graph 9: penetration rate* and proportion of high-frequency consumers** of on-premise tea and dairy drinks, 2025
- Adjusting price strategies may help slow the migration of yogurt consumers
- Graph 10: penetration rate* and proportion of high-frequency consumers** of on-premise tea and dairy drinks – yogurt (a), by monthly household income, 2025
- Graph 11: penetration rate* and proportion of high-frequency consumers** of on-premise tea and dairy drinks – yogurt (a), by gender, 2025
- Milk teas unlikely to become a daily must-have, focus more on relaxation and enjoyment occasions
- Graph 12: proportion of high-frequency consumers* of on-premise tea and dairy drinks – selected categories, by age, 2025
- Mainstream price range stable at RMB16-20, younger consumers prefer more affordable drinks
- Graph 13: price ranges for on-premise tea and dairy drinks, by age, 2025
- Graph 14: price ranges for on-premise tea and dairy drinks, 2024-25
- Do not assume that an affordable pricing strategy is required for lower tier markets
- Graph 15: price ranges for on-premise tea and dairy drinks, by city tier, 2025
- Brands need to focus on value-building, with emphasis on health and innovation along with regional characteristics
- Graph 16: reasons for switching on-premise tea and dairy drinks brand, 2025
- Promotions and co-branded marketing remain effective for male consumers
- Graph 17: reasons for switching on-premise tea and dairy drinks brand, by gender, 2025
- Consumers of higher-priced on-premise tea and dairy drinks have more diverse demands
- Graph 18: reasons for switching on-premise tea and dairy drinks brand, by purchase price, 2025
- Consumer activity in all categories is determined by occasion; authentic and pure ingredients support healthful attributes
- Relaxation is a common motivation for consumers, but different categories are associated with specific occasions
- Yogurt as a meal replacement could be a winner
- Yogurt as a meal replacement could be a winner, especially among female consumers
- Graph 19: reasons for drinking on-premise tea and dairy drinks – selected options, 2025
- Graph 20: reasons for drinking on-premise tea and dairy drinks – yogurt, 2025
- Pure tea primarily a functional need, more creative ways needed to expand consumption occasions
- Graph 21: reasons for drinking on-premise tea and dairy drinks – to refresh myself, 2025
- Graph 22: reasons for drinking on-premise tea and dairy drinks – pure tea, 2025
- Use authentic and pure ingredients to support health attributes
- Graph 23: health attributes of on-premise tea and dairy drinks, 2025
- Guilt-free health attributes will help to reach a broader range of consumers
- ‘Plus’ attributes can create possibilities for premiumisation
- Graph 24: health attributes of on-premise tea and dairy drinks – selected options, by purchase price, 2025
- Consumers in Eastern China are more sensitive to sugar content
- Graph 25: health attributes of on-premise tea and dairy drinks – selected options, by region, 2025
- Classic ingredients continue to dominate; emotional benefits of floral elements emerge
- Classic ingredients still dominate the mainstream market; mung beans/red beans and grass jelly gain in popularity
- Graph 26: interest in ingredients in on-premise tea and dairy drinks, 2024-25
- Differing preferences between age groups provide an entry point for innovating with mix-ins
- Graph 27: interest in ingredients, by age, 2025
- Higher-priced drink consumers expect more options; premiumisation potential in cookie crumbs and agar jelly
- Graph 28: interest in ingredients in on-premise tea and dairy drinks (number), by purchase price, 2025
- Graph 29: interest in ingredients in on-premise tea and dairy drinks, by purchase price, 2025
- Broad recognition of the delicate qualities of floral elements
- Graph 30: perception of floral elements, 2025
- Relaxation is a fundamental emotional benefit, similarly associated with all flower types
- Graph 31: perception of floral elements – relaxing, 2025
- The orchid is known for its delicate beauty, yet it has no distinct advantage over alternatives
- Graph 32: perception of floral elements – delicate, 2025
- Graph 33: perception of floral elements – delicate, 2025
- Jasmine is seen as refreshing, lotus and camellia are both refreshing and delicate
- Graph 34: perception of floral elements – selected flowers, 2025
- Graph 35: perception of floral elements – refreshing, 2025
- Rose is most aromatic flower, useful for product differentiation
- Graph 36: perception of floral elements – selected flowers, 2025
- Graph 37: perception of floral elements – aromatic, 2025
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Issues and insights
- Upgrade healthfulness by moving from authentic ingredients and clean recipes to occasion-based functional benefits
- Build trust through full supply chain transparency to capture health mindshare
- From preventative to proactive health: use low calorie/low fat with plus attributes for next-level healthfulness
- Grade caffeine content for a range of occasions: from daytime stimulation to nighttime relaxation
- Crossover into health and wellbeing occasions: from drinks to light meal solutions
- Healthful and tasty: focus on sensory experiences to balance healthfulness and enjoyment
- Healthfulness and emotional value are must-haves, consumers expect the right balance
- Use floral scents and aromas to compensate for reduction in sweetness
- Blending ingredients: use natural sweetness and a rich taste to enhance the experience
- Build value and brand culture to ensure competitiveness
- Actively integrate regional characteristics to define brand image
- Leverage merchandising and membership schemes to convey brand culture
- Use a multi-brand strategy to create a brand universe
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Appendix – market size and forecast, research methodology and abbreviations
- Market size and forecast
- Methodology
- TURF analysis methodology
- Abbreviations
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