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Chinese beverage entrepreneurs are increasingly setting their sights on the US market and are hoping to convert young coffee and matcha drinkers with innovative tea offerings.
Leading the charge was Amanda Wang, co-founder of fast-growing Chinese chain Ningji Lemon Tea, who took four research trips to the US before launching Bobobaba, a brand tailored specifically for American tastes.
BoboBaba’s vibrant, Instagram-friendly drinks, featuring fruit pieces, boba pearls and distinctive logo, are designed to attract a new demographic. Wang, whose China venture is backed by tech giants Tencent and ByteDance, believes the US presents a significant opportunity.
“The United States is a developing country when it comes to bubble tea,” he told Reuters. He said Bobobaba’s US-focused recipes are sweeter than those offered in China.
However, adapting to the US business landscape has presented its own obstacles. Wang highlighted the huge difference in operational speed, where it took seven months to open a store in the US, while only 20 days in China.
“Doing business here (in the US) is very different from what we imagined. It took seven months to open a store, which was quite painful,” he said, outlining a cautious ten-year expansion strategy for the US.
Despite these challenges, a range of other Chinese tea brands, including Chagi Tea House, Chahalo, Molly Tea and Auntie Jenny’s, have either opened US outlets or announced expansion plans in the past year. Their confidence stems from considerable success in China’s modern tea-beverage market driven by flavor innovations, fresh branding and rapid store rollout.
Mixue, which has leveraged its $1 fruit teas to become the world’s largest food and beverage chain with more than 53,000 locations globally, announced a ten-year storefront lease in New York City in September.
“Everyone is looking at the U.S. as a potential market,” said Felix Lin, CEO of HF Foods, a Nevada-based distributor of Asian food products. He said he had received a large number of calls from Chinese food and beverage chains.
Chagi, which listed on NASDAQ in April, has more than 80 employees working full-time on the company’s “significant pipeline” of U.S. expansion, Emily Chang, the company’s top U.S. executive, told Reuters in November. It plans to open a larger flagship store in the heart of Silicon Valley next year.
Chang, who was previously an executive at Starbucks China, said Chagi’s plans include a public campaign to promote the tea among American consumers and establish it as a new product category.
It reflects how Starbucks popularized coffee in tea-drinking China nearly 30 years ago. In November, Chagi launched “Evening Tea Service”, an exclusive experience offering a flight of three teas and a tea sommelier, to show American consumers that tea can be enjoyed in the evening.
Demand for coffee drops in the afternoon, Chang said.
Most of these brands have found success beyond China’s highly competitive market, where the Hong Kong Research Institute estimates annual tea-beverage revenues will top 30 billion yuan ($4.2 billion) this year.
They have already expanded into other nearby Asian markets like Southeast Asia and Australia. Some have also begun to establish a presence in the Middle East and Europe.
Wang has no doubt that the opportunities for tea brands in America’s large, stable consumer market are vast, though she knows it won’t be easy.
“Culture and brand awareness are the biggest challenges,” he said. “It takes time to build trust.”