SINGAPORE (THE BUSINESS TIMES) – Bubbling excitement for bubble tea across South-east Asia has helped the industry grow to a whopping US$3.7 billion ($5.1 billion) in 2021 – spent on both bubble tea and similar “new tea” drinks, according to a study published on Tuesday (Aug 16).
The report, jointly conducted by venture outfit Momentum Works and payments start-up qlub, also found that Indonesia’s bubble tea industry ranked first in terms of market size among all South-east Asian nations – with an annual turnover of US$1.6 billion.
This was followed by Thailand with an annual turnover of US$749 million through its more than 31,000 bubble tea stores and other retail channels.
Singapore, being the smallest nation in the region, came in fourth with an annual turnover of US$342 million, just behind Vietnam at US$362 million.
Despite the country’s size, Singapore consumers were found to have the highest purchasing power, as the average price of a bubble tea order is nearly two times more than that of other countries in the region, making it a great entry point for premium brands, the researchers wrote in their report.
At present, there are more than 60 active bubble tea brands covering different tastes and price ranges in Singapore, which was notably the first South-east Asian entry point for “premium” brands like Heytea.
While the region’s bubble tea industry is one that has been long dominated by Taiwanese and home-grown brands, that might be about to change as a slew of Chinese brands make their way into South-east Asian markets.
The bubble tea market in China, estimated to have an annual turnover of US$20 billion, has already seen some of its popular Chinese brands like Mixue, Chagee and Heytea segue into South-east Asia, joining earlier counterparts like Gong Cha and Koi.
However, despite the good product gross margin across the industry – estimated at around 60 per cent to 70 per cent – few players have managed continuous profitability at a large scale, according to Momentum Works.
Nayuki for example, the first “new tea” brand to go public, has seen its market cap plunge over 70 per cent since.
“Many young people in South-east 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,” said Mr Sik Hoe Yong, chief operating officer of qlub.
However, he believes that consumers’ love for bubble tea is one that is unlikely to change anytime soon, though they are likely to vote for their favourite brands with their wallets.
S-E Asia spent $5b on bubble tea in 2021; Indonesia tops list: Report & Latest News Update
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