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 response to 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 guess on China’s fast-growing client market.
“That is the precise place on the proper time,” mentioned William Ma, chief funding officer at Develop Funding Group, mentioned in an interview with “CNBC Explains.”
“Quite a lot of international traders are attempting to spend money on sectors much less delicate to the U.S. tariffs. So home consumption, youthful era consumption, is a extra steady 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 rely — 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% when it comes to new retailer development,” Ma famous.
Franchising is central to the bubble tea business. Most massive bubble tea chains do not run the outlets themselves. Practically each outlet is franchised. Dad or mum firms earn from supplying substances and gear, and accumulating charges, whereas franchisees shoulder the prices of lease, labor and utilities.
That mannequin fuels fast development however comes with trade-offs: sustaining high quality and avoiding retailer cannibalization will get tougher as retailers multiply.
“The conventional payback interval for the enterprise proprietor, for the franchisee, is between 18 to 24 months,” mentioned Ma, estimating retailer closure charges at roughly 20% throughout the market.
However abroad enlargement is not any assure of success. CNBC’s China reporter Elaine Yu famous that replicating the home formulation overseas comes with added challenges.
“Provide chains are tougher 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 clients,” Yu mentioned.
Market saturation at dwelling, rising prices and intense value wars are additionally testing the resilience of those manufacturers. Whether or not they can maintain their valuations will rely on their potential to steadiness scale with profitability — and show they’ll construct greater than only a fad.
Watch the complete explainer by clicking the video on the high of the story.
