- The milk tea market in Malaysia has seen a shift, with newer Chinese brands like Mixue and Chagee dominating the landscape, while some earlier franchises have struggled to stay relevant.
- Chinese milk tea chains are leveraging economic pressures at home to expand internationally, with Malaysia becoming a key market due to its cultural overlaps and strong growth potential in the sector.
- Consumers are drawn to milk tea for its affordability, convenience, and as a form of self-reward, with preferences varying between budget-friendly options like Mixue and premium experiences offered by Chagee.
- Mixue competes on low prices and efficient logistics, while Chagee appeals to consumers seeking healthier, high-quality options, creating a stratified market targeting both budget-conscious and premium-seeking consumers.
KUALA LUMPUR, Dec 14 — Less than five years ago, Malaysians were swept up by the influx of milk tea franchises and beverages — characterised by the chewy tapioca balls or “pearls” in their serving — where people sipping through straws from large plastic cups is a common sight in urbanised areas nationwide.
However, the recent years have seen some of these milk tea franchises — mostly local, Taiwanese and Hong Kong-based — struggling to keep up in the competitive Malaysian market, with some having now significantly downsized or faded into obscurity as fresh competitors stepped in to take their place.
At the forefront, mainstream Chinese brands such as Chagee and Mixue have now successfully made inroads into the market, bringing about a new shift in consumer behaviour and sentiment towards the wildly popular milk tea here.
“What we have observed over the past few years, especially post Covid-19, is that a lot of economic pressure and challenges are happening domestically in China, where local consumptions have gone down, in particular, outside major Chinese cities like Beijing or Shanghai.
“This has driven many Chinese brands, especially those in the food and beverage industry to look for opportunities in other markets by rapidly expanding their international franchise operations and South-east Asia is kinda like the first stop for them,” Shanghai-based market research company Labbrand Group’s Alex Lessard told Malay Mail in an interview recently.
With the local milk tea sector valued at US$64.57 million in 2022 and an estimated growth of 6.6 per cent from 2024 to 2028, it would be self-explanatory as to why these Chinese brands have shifted their attention towards Malaysia recently.
“Maybe for some larger and premium brands they might head to the United States or Europe but South-east Asia, especially a place like Malaysia where you also have cultural overlaps with the ethnic Chinese population, is the first [go-to] place,” Alex, who is also the founder of Labbrand Malaysia, said.
A menu is seen on display at the Chagee Eco Grandeur outlet in Shah Alam on November 21, 2024. — Picture by Yusof Mat Isa
Milk tea as daily comforts
For many young professionals here, the surge in new milk tea chains now meant more accessibility and affordability for a product that made them status symbols of contemporary urban life.
“They are affordable and conveniently located near my house, making them easily accessible. I enjoy them as a self-reward, especially after a long day or after completing challenging tasks, providing a sense of satisfaction,” Lim Chin Hong, a veterinarian, told Malay Mail.
Lim said she drinks milk tea at least once to twice weekly — alternating between her go-to choices of either up-and-coming Chinese bubble tea chain Auntea Jenny, or the home-grown franchise Tealive.
“My previous choice was Mixue, but I made the switch recently. This was because Mixue’s sudden removal of many options from their menu, especially the cream cheese range, which I enjoyed.”
The 29-year-old told Malay Mail her preferred choice was Auntea Jenny’s Taro Mochi milk tea and Tealive’s original pearl milk tea.
“The decision [to shift] was not very difficult as the alternatives offered a better variety in menu choices, not really on the pricing itself,” she said.
Another habitual drinker, 28-year-old Lau Ying Ru, said Chinese brands such as Chagee offered greater convenience and healthier options as compared to home-grown milk tea chains such as Black Whale and Tealive that she patronised previously.
“The beverage sweetness for other brands’ milk tea is quite high, but Chagee’s isn’t as sweet to my liking.
“I also know, for a fact, that milk tea does not come cheap but I do not mind paying a higher price for a product that allows me to experience a sense of gratification after an exhausting day or long hours of work,” the marketing executive said.
She also said her go-to choices — Chagee’s White Peach Oolong milk tea and Camellia Oolong Perfume Lemon tea — invoked a self-soothing effect that was difficult to reproduce by other milk tea brands.
Customers sit and wait for their order numbers at Mixue Kuala Lumpur, September 19, 2024. —Picture by Raymond Manuel
Covering both extreme ends of spectrum
While the local market is mainly driven by economics and consumer preference, Alex pointed out consumer preference, in particular, also ends up being stratified when a product like milk tea is involved
“Milk tea by nature is a treat, a luxury and is the type of thing you would naturally be trading up if you have the money for a more premium option,” he said, noting the Chinese chains have managed to successfully capture both low and high-ends of the local market within a short period of time.
This has led to the split in consumers on both extreme ends of the market as larger groups of habitual consumers either trade up or trade down, confining and driving existing milk tea chains to target the much smaller middle-market consumer group instead.
Popularly-known for its low prices, Alex said Mixue is a testament to the brand’s leveraging of its huge presence in China and logistical prowess in its overseas expansion undertakings, especially in Malaysia.
“Basically they have been able to come in and compete at a price level that is insane where other milk tea brands are now finding it hard to compete,” he said, adding most established chains here also simply lacked the supply chain system necessary to operate at Mixue’s level.
For example, a Mixue vanilla soft-serve ice cream costs a mere RM2; whereas their classical milk tea with toppings costs just RM6.50 for a large serving (half of what is being offered by others with similar products).
Founded in Zhengzhou, Henan province by Zhang Hongchao in 1997, Mixue — whose name translates as “honey snow ice city” (pinyin: Mixue Bingcheng) — with its smiling snowman mascot and bright red signs has rapidly expanded to about 32,000 stores in China and around 4,000 more in 11 other nations as of 2023.
Their first Malaysian outlet opened in Paradigm Mall, Johor Baru in 2022. There are now more than 300 local outlets in operation at present.
According to the chain’s website, three major companies each with their own specialisation in operations and management; research, development, and production; and logistics services have collaborated to form a comprehensive industrial chain.
As to how Mixue has successfully transformed itself into a mainstream consumer choice, Alex explained the chain’s menu is well-tailored to the mass market here that opts for sweeter and simple desserts such as iced teas and ice cream at a bargain.
Mixue offers a wide variety of sweet treats from ice creams to iced teas at affordable prices.
On the higher end, Alex said Chagee has established itself as a chain offering consumers a more premium experience with higher quality ingredients, healthier options and finer tea taste in their products.
Founded in Kunming, Yunnan province by Zhang Junjie in 2017 before expanding into a regional chain of teahouses, Chagee now boasts over 4,500 outlets worldwide.
According to Chagee’s official website, their tea leaves are sourced from its 500-acres organic tea plantation located at 1,588m above sea level in Lincang, Yunnan.
Compared to Mixue, a beverage under Chagee’s milk tea series without toppings goes upwards from RM11.90 to RM16.90 depending on their serving size.
“If you are already consuming that means you are not rejecting it, so if you are given a choice, a healthier and less healthy one that provides the needed gratification, people would opt for the more expensive because they are more health conscious,” Eileen Tang, Labbrand Malaysia founder, told Malay Mail.
Similar to Mixue’s affordability that appeals to the masses, Tang said Chagee has managed to emulate a sophisticated sense of ‘context travelling’ amongst their consumers through the blend of classical and modernist Chinese aesthetics in their branding and marketing.
For the uninitiated, Chagee derives its Chinese name (pinyin: Bawangchaji) from the traditional Chinese opera Farewell My Concubine, with the logo based on a huadan opera actor.
Each of their menu items are also stylised after ancient Classical Chinese poetry forms, a melding of traditional oriental culture with tea heritage and innovation. Its bags have also been compared to luxury brands such as Dior.
The stylish and artistic Chagee’s beverage packaging bearing some semblance to the motives on Dior’s book tote. — Picture by Raymond Manual and courtesy of Christian Dior
“Through the five senses, we aim to bring a whole-body experience to all our customers, transporting them back to a simpler time where traditions and authenticity are revived through the highest quality tea,” the brand described itself on its official website.
According to Lau, who regularly consumes milk tea at least twice to thrice weekly, the existing milk tea trend offers attractive bargains and premium alternatives that influence consumers on a psychological level, causing them to expect more bang for their buck.
“It’s not much of a difference in terms of consumption habits like how one would take a smoke or a coffee after a meal.
“A single beverage costs almost the same as a packet of cigarettes or lower, and depending on your purchasing power, it is affordable in both ways,” she said.
