2020
0
Menu Insights – Tea Houses 2H – China – December 2020
2021-01-28T03:02:29+00:00
OX990878
3695
133246
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Report
en_GB
“Pressure to enlarge the consumer base and jack up unit prices continues to mount, while the COVID-19 outbreak halted the dominant out-of-home consumption in the first couple months of 2020.

Menu Insights – Tea Houses 2H – China – December 2020

£ 3,695 (Excl.Tax)

Report Summary

“Pressure to enlarge the consumer base and jack up unit prices continues to mount, while the COVID-19 outbreak halted the dominant out-of-home consumption in the first couple months of 2020. Combined these factors have negatively impacted the tea house business. In order to get ahead in this saturated market, players can look at opportunities in lower tier markets, where competition is less fierce and yet demand is strong. In addition, consumers’ willingness to splurge also bodes well for brands pursuing premiumisation via product upgrades. Given that consumers have low brand loyalty in this crowded market, players’ marketing focus should be placed on increasing attachment and boosting purchase frequency among existing tea drinkers.”

– Wen Yu, Research Analyst

This report will look at the following areas:

  • What’s the market landscape of the tea house business?
  • How has the COVID-19 outbreak impacted the market?
  • How to seek future opportunities from the highly-saturated tea drinks market?
  • As tea drink consumers have rather sophisticated and mature consumption and spending habits, what can players do to encourage more spending?
  • What are the possible product innovation directions for brands to be aware of?

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Report scope
        • Executive Summary

            • The market
              • Value and volume growth show divergent trajectory
                • Figure 1: Value sales and annual growth rate of tea houses market, China, 2016-20
                • Figure 2: Volume units and annual growth rate of tea houses market, China, 2019-20
              • Impact of COVID-19 on tea houses market
                • Figure 3: Short, medium and long-term impact of COVID-19 on the tea houses market, December 2020
              • Companies and brands
                • “Dessert-ization” trend stimulates the market
                  • Adoption of upgraded and niche ingredients to pursue premiumisation
                    • The rise of Chinese elements incorporated in tea drinks
                      • The consumer
                        • Popular tea drinks secure prevalence, while niche selections appeal to specific demographics
                          • Figure 4: Purchased tea drinks, September 2020
                        • Frequent drinkers decline at both online and offline channels
                          • Figure 5: Purchase frequency, September 2020
                        • RMB16-30 has wider appeal while one third accepts over RMB30
                          • Figure 6: Upper price limit, by city tier, September 2020
                        • Out-of-home occasions are still crucial, while in-home consumption heats up
                          • Figure 7: Consumption occasion, September 2020
                        • Uncork the potential of plant-based ingredients
                          • Figure 8: Preferred ingredients of longan and adlay added into plant-based milk drinks, by family structure, September 2020
                        • High spenders show stronger dependence and sophistication towards tea drinks
                          • Figure 9: Attitudes towards tea drinks and tea houses – “agree”, by upper price limit, September 2020
                        • What we think
                        • Issues and Insights

                          • Enhance brand attachment to stand out amid the highly-saturated market
                            • The facts
                              • The implications
                                • Figure 10: HEYTEA and Nayuki’s flagship stores
                              • Lower tier markets will become the next growth engine
                                • The facts
                                  • The implications
                                    • Emphasize tea drinks’ BFY function to engage demographics vertically
                                      • The facts
                                        • The implications
                                          • Figure 11: Chun Feng Tea House’s functional and beautifying tea drinks
                                      • The Market – What You Need to Know

                                        • Value sales drop while number of stores pick up
                                          • Brands under rising pressure to enlarge consumer base
                                            • Future growth of value sales lies in premiumisation
                                            • Market Size

                                              • Value sales will drop to around RMB50 billion amid the COVID-19 outbreak
                                                • Figure 12: Value sales and annual growth rate of tea houses market, China, 2016-20
                                              • Steady volume expansion despite the COVID-19 outbreak
                                                • Figure 13: Volume units and annual growth rate of tea houses market, China, 2019-20
                                            • Market Factors

                                              • Rising in-home cooking arouses uncertainty for tea drinks spending
                                                • Figure 14: Impact from COVID-19 on consumers’ spending priority, China, 27 November – 4 December, 2020
                                              • Investment continues flowing to unique brands
                                                • Potential for trade-up with a sizeable portion of consumers willing to splurge
                                                • Key Players – What You Need to Know

                                                  • Upgrading product portfolios to increase consumers’ spending
                                                    • Evolving drinking experience with the help of eisbock milk
                                                      • “China chic” becomes a main feature of tea drinks
                                                      • Market Share

                                                        • Behemoths cement leading positions, while rising players tap into unexploited markets
                                                          • Figure 15: Store numbers and volume share of the top brands, China, 2019-20
                                                          • Figure 16: Store count of top brands, China, 2020
                                                          • Figure 17: Store count of Good Me and Yi He Tang, China, 2020
                                                      • Competitive Strategies

                                                        • Transform simple tea drinks into sophisticated desserts
                                                          • Figure 18: Examples of tea drinks upgraded into desserts
                                                        • Collaborate with multiple business formats to gain recognition
                                                          • Figure 19: Examples of tea houses’ collaborations with Chinese baijiu spirits
                                                          • Figure 20: Examples of tea houses’ collaborations with animation IPs
                                                        • Provide value-added services aligning with brand image
                                                          • Figure 21: Tongrentang Café
                                                        • Develop emotional resonance to communicate with consumers
                                                          • Figure 22: HEYTEA’s branding content for its seasonal tangerine-based tea drinks
                                                      • Who’s Innovating?

                                                        • The debut of eisbock milk
                                                          • Figure 23: Eisbock milk series new launches of HEYTEA and Le Le Cha, China 2020
                                                        • Brands resort to nostalgia to popularize “China chic” tea drinks
                                                          • Figure 24: Tang Zhi’s milk drinks sprinkled with Mylikes chocolate confectionary
                                                          • Figure 25: China chic tea drinks
                                                        • Highlight the ethnic characteristics of niche regional milk tea
                                                          • Figure 26: Xinjiang milk tea and Inner Mongolia-style Milk T
                                                      • The Consumer – What You Need to Know

                                                        • Saturated market with stable penetration level
                                                          • One third of consumers willing to spend over RMB30 on tea drinks
                                                            • Consumers fall for fruits to spice up flavours
                                                            • Purchased Tea Drinks

                                                              • Penetration of fresh tea drinks remains static
                                                                • Figure 27: Purchased tea drinks, September 2020
                                                              • Females contribute more to the market growth than males
                                                                • Figure 28: Purchased tea drinks, by gender, September 2020
                                                              • Consumers with kids skew towards milk/plant-based milk drinks
                                                                • Figure 29: Purchased milk drinks and plant-based milk drinks, by family structure, September 2020
                                                              • Frequent drinkers lean towards milk drinks
                                                                • Figure 30: Purchased tea drinks, by purchase frequency, September 2020
                                                              • Play with marketing tactics in promoting pure tea to engage consumers
                                                                • Figure 31: Purchased tea drinks, by consumption occasion, September 2020
                                                                • Figure 32: Chun Feng’s overnight water and detox water
                                                              • Well-penetrated consumers boast high diversity in drink selection
                                                                • Figure 33: Repertoire analysis of the types of purchased tea drinks, September 2020
                                                                • Figure 34: Repertoire analysis of the types of purchased tea drinks, by repertoire analysis of the types of consumption occasions, September 2020
                                                            • Purchase Frequency

                                                              • Proportion of frequent drinkers has taken a dive
                                                                • Figure 35: Purchase frequency, September 2020
                                                              • Brands must take frequent male drinkers into account
                                                                • Figure 36: Online frequent drinkers, by gender and age, September 2020
                                                                • Figure 37: Offline frequent drinkers, by gender and age, September 2020
                                                            • Upper Price Limit

                                                              • RMB16-30 is the ideal price range for the majority
                                                                • Figure 38: Upper price limit, September 2020
                                                              • Spending structure stays alike regardless of different city tiers
                                                                • Figure 39: Upper price limit, by city tier, September 2020
                                                            • Consumption Occasion

                                                              • Out-of-home occasions still dominate, while indoor consumption on the rise
                                                                • Figure 40: Consumption occasion, September 2020
                                                              • Low spenders’ consumption occasions vary from medium and high spenders’
                                                                • Figure 41: Consumption occasion, by upper price limit, September 2020
                                                            • Fruit and Ingredient Preference

                                                              • Fruits steal thunder from ingredients overall
                                                                • Figure 42: Fruit and ingredient preference, September 2020
                                                                • Figure 43: Product line of coconut-added tea drinks from HEYTEA and Le Le Cha
                                                              • Burgeoning fusions can leverage their edge in nutrition and texture
                                                                • Figure 44: Preferred ingredients of longan and adlay added into plant-based milk drinks, by family structure, September 2020
                                                              • Cheese tea to regain the momentum
                                                                • Figure 45: Preferred fruit of waxberry added into tea with cheese topping, by region, September 2020
                                                                • Figure 46: Product line of waxberry-added tea drinks from HEYTEA and Le Le Cha
                                                                • Figure 47: Preferred ingredient of longan added into tea with cheese topping, by city tier, September 2020
                                                            • Attitudes towards Tea Drinks and Tea Houses

                                                              • Established tea drinking habits entrenched in consumers’ lives
                                                                • Figure 48: Attitudes towards tea drinks and tea houses, September 2020
                                                              • Using environmentally-friendly features to drive premium perception
                                                                • Figure 49: Attitudes towards tea drinks and tea houses, September 2020
                                                              • On-the-go consumption occasions can be further utilised
                                                                • Figure 50: Attitudes towards tea drinks and tea houses, September 2020
                                                              • Potential to inflate the market’s value sales
                                                                • Figure 51: Attitudes towards tea drinks and tea houses – “agree”, by upper price limit, September 2020
                                                            • Appendix – Methodology and Abbreviations

                                                              • Methodology
                                                                • Abbreviations

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