Amanda Wang, co-founder of the Chinese fast-growing beverage chain Ningji Lemon Tea, made four research trips to the US before launching Bobobaba, designed to cater specifically to American tastes. With colourful, Instagram-friendly drinks filled with fruit pieces, boba pearls and cute logos, Wang is among an influx of Chinese tea brand entrepreneurs betting they have what it takes to convert young American coffee and matcha drinkers. “The US is a developing country in terms of bubble te
ble tea,” she told Reuters, adding that the US-centric label is sweeter than what Ningji offers in China.
Another concession needed is the pace of doing business in America, where it’s impossible to open a store within 20 days of signing a contract.
“Doing business here (in the US) is quite different from what we imagined in our heads. It took seven months to open the store, which was quite painful,” Wang said, adding that she has a ten-year plan for cautious expansion in the US.
Despite the challenges, companies such as Chagee Tea House, Chahalo, Molly Tea, and Auntea Jenny have opened US stores or announced expansions in the last year. Many have been buoyed by their success in China’s modern tea-drink market and propelled by flavour innovations, fresh brands and rapid store rollouts.
Mixue, for example, announced a 10-year storefront lease in New York City in September after it leveraged $1 fruit teas to become the world’s largest food and beverage chain by store count, with over 53,000 locations globally.
“Everyone is looking at the US as a potential market,” said Felix Lin, the CEO of a Nevada-based distributor for Asian food products, HF Foods, who said he has received a growing number of calls from Chinese food and beverage chains.
Attempting to transform the US beverages market
Meanwhile, Chagee, which was listed on the NASDAQ in April, has over 80 personnel working full-time on the company’s “significant pipeline” for US expansion and plans to open a large flagship store in the heart of Silicon Valley next year.
Emily Chang, Chagee’s top US executive, told Reuters previously that the company plans to launch a public campaign to promote tea among US consumers and establish it as a new product category – mirroring how Starbucks popularized coffee in China 30 years ago.
In November, Chagee launched the “evening tea service,” a bespoke experience that offers a flight of three teas and a tea sommelier, in part to show US consumers that tea can be enjoyed in the evening. Demand for coffee tends to drop off in the early afternoon, Chang said.
Most of these brands have found success beyond China’s highly competitive market, where annual tea drink revenues are estimated at 30 billion yuan ($4.2 billion) this year. They have also already expanded to Southeast Asia and other nearby Asian markets, such as Australia. Some have also begun building a presence in the Middle East and Europe.
Wang is in no doubt that the opportunity for tea brands in America’s large, stable consumer market is vast, though she knows it won’t be easy.
“Culture and brand awareness are the biggest challenges,” she said. “Building trust takes time.”
Reporting by Waylon Cunningham in New York and Casey Hall in Shanghai. Editing By Lisa Jucca and Aurora Ellis. All courtesy of Reuters.
Further reading: How China turned milk tea into a domestic powerhouse and global export