Bubble tea could have began as a playful drink, nevertheless it has grown into an business price billions.
The worldwide bubble tea market measurement will develop from $2.83 billion in 2025 to $4.78 billion by 2032, in line with a report from Fortune Enterprise Insights.
This 12 months, three Chinese language bubble tea chains — Mixue Group, Guming Holdings and Auntea Jenny — listed in Hong Kong, and raised greater than $700 million as traders wager on China’s fast-growing client market.
“That is the best place on the proper time,” stated William Ma, chief funding officer at Develop Funding Group, stated in an interview with “CNBC Explains.“
“Quite a lot of world traders are attempting to put money into sectors much less delicate to the U.S. tariffs. So home consumption, youthful technology consumption, is a extra secure or much less susceptible sector,” Ma added.
Mixue has emerged because the sector’s heavyweight, working greater than 46,000 shops worldwide by the tip of 2024. That makes it the world’s largest food-and-beverage chain by outlet depend — forward of McDonald’s, Starbucks and Subway. Its ultra-low pricing and high-volume mannequin lean closely on franchising.
“In 2024, they’re rising at round 22% by way of new retailer development,” Ma famous.
Franchising is central to the bubble tea business. Most massive bubble tea chains do not run the retailers themselves. Practically each outlet is franchised. Guardian firms earn from supplying elements and tools, and accumulating charges, whereas franchisees shoulder the prices of hire, labor and utilities.
That mannequin fuels speedy development however comes with trade-offs: sustaining high quality and avoiding retailer cannibalization will get more durable as retailers multiply.
“The conventional payback interval for the enterprise proprietor, for the franchisee, is between 18 to 24 months,” stated Ma, estimating retailer closure charges at roughly 20% throughout the market.
However abroad enlargement isn’t any assure of success. CNBC’s China reporter Elaine Yu famous that replicating the home system overseas comes with added challenges.
“Provide chains are more durable to manage, and client tastes differ from metropolis to metropolis. That is why manufacturers are adapting to regional flavors and completely different retailer codecs to win over native prospects,” Yu stated.
Market saturation at residence, rising prices and intense worth wars are additionally testing the resilience of those manufacturers. Whether or not they can maintain their valuations will depend upon their capacity to steadiness scale with profitability — and show they’ll construct greater than only a fad.
Watch the total explainer by clicking the video on the prime of the story.