Chinese tea beverages are experiencing a resurgence in Thailand

(Image source: Mixue)

In August 2024, NaiXue’s first flagship store made its debut in Thailand, sparking a wave of enthusiasm among local consumers. Discussions surged on social media about the store’s invitation of influencers Up and Poom, with many Thai netizens sharing their experiences of lining up to buy and taste the products. Chinese tourists also joined the “check-in trend.” The excitement was evident as videos from both Chinese and Thai users flooded Instagram and Xiaohongshu, showcasing the store’s popularity.

(Image source: Instagram)

NaiXue Seeking Growth Overseas

NaiXue faced challenging business performance in the first half of 2024. According to the latest financial report, the company’s revenue for the first half of 2024 was 2.544 billion yuan, a year-on-year decrease of 1.9%. The adjusted net loss reached 438 million yuan, compared to a profit of 70.15 million yuan in the same period the previous year. Despite the net addition of 23 new stores in the first half of the year, the average daily order volume per store declined. This issue was particularly prominent in major cities like Beijing and Shanghai, where the profit margin for self-operated stores fell below 10%.

NaiXue projects a net loss of between 420 million and 490 million yuan for the first half of 2024. This worsening financial situation is stark in contrast to past performance, as the company failed to achieve profitability for five consecutive years from 2018 to 2022, accumulating losses of over 5.3 billion yuan.

In response to declining performance, NaiXue has attempted several changes, such as introducing a franchise model. However, this model has not yet led to a significant improvement in the company’s financial results. Furthermore, the company plans to maintain stable back-end costs while increasing its marketing efforts and continuing to invest in research and development. In addition, NaiXue is exploring international markets.

Currently, NaiXue is grappling with various operational challenges domestically, including declining revenues, profit losses, and decreasing store efficiency. The opening of its store in Thailand, as noted by EqualOcean, can be seen as a strategic move to seek growth overseas and mitigate these domestic challenges.

Opportunities and Challenges in Thailand’s Tea Beverage Market

NaiXue is not the first Chinese tea beverage brand to enter Thailand. According to EqualOcean, the characteristics and development trends of the Thai tea beverage market demonstrate significant vitality and uniqueness, offering considerable growth potential for Chinese tea brands looking to expand internationally.

First, Thailand is the second-largest tea beverage market in Southeast Asia. The Southeast Asia Tea Beverage Report highlights that Thailand has over 31,000 bubble tea shops, with annual spending on bubble tea exceeding $750 million. The market is known for the strong presence of local brands, such as Owl Cha and Chatramue, which hold a significant share and have a strong consumer base. These brands boast numerous outlets, reflecting their market influence and customer recognition. Additionally, the increasing number of Chinese tourists and the influence of the local Chinese community have led to growing popularity for Chinese-style tea beverages.

Second, Thailand’s market holds immense consumer potential. Among Southeast Asian countries, Thailand and Indonesia are the largest bubble tea markets. Thai consumers have a high average consumption of bubble tea, and the dense distribution of stores across the country further indicates the market’s vibrancy. Furthermore, with the rise of food delivery platforms, bubble tea orders have doubled annually since 2018, showcasing the market’s robust growth. According to Euromonitor, the size of Thailand’s tea beverage market reached approximately 15 billion THB (around 3 billion RMB) in 2023, a year-on-year growth of 15%. The market is projected to exceed 20 billion THB by 2025, presenting vast growth opportunities for tea brands like NaiXue.

Moreover, Thailand’s consumer demographic is relatively young. The primary consumers in the Thai tea beverage market are aged between 18 and 35. This younger demographic shows strong curiosity and willingness to try new products and is receptive to innovation, particularly those that are “Instagram-worthy.” This provides a stable consumer base for Chinese tea brands entering the Thai market.

Additionally, geography and climate are key factors influencing Thailand’s tea beverage market. Located in Southeast Asia, Thailand has a tropical climate with warm temperatures year-round, averaging between 22°C and 32°C. This climate creates a steady demand for cold beverages, without distinct seasonal peaks or dips. Furthermore, local preferences lean toward sweet flavors, making milk tea and tea beverages a good fit for the Thai palate.

Mr. Xu, who operates a tea beverage business in Thailand, told EqualOcean that Thailand has become the preferred destination for many Chinese tea brands looking to expand overseas. The reasons include cultural similarities, as Thailand and China have a long history of cultural exchange, fostering a friendly and familiar attitude toward Chinese culture. Additionally, Thailand’s young consumers have strong purchasing power. As one of the more economically developed countries in Southeast Asia, Thailand’s middle class continues to expand, with a strong sense of brand awareness and loyalty. This drives demand for discretionary spending, providing a solid foundation for high-end tea beverages. Moreover, Thailand’s thriving tourism industry, particularly the influx of Chinese tourists, offers an initial customer base for Chinese tea brands. The market is also relatively open, with lower barriers to entry compared to other Southeast Asian countries and policies that are friendly to foreign businesses. Positioned at the heart of Southeast Asia, Thailand can also serve as a gateway for brands to further expand into the broader region.

EqualOcean concludes that in the face of increasing saturation and fierce competition in the domestic market, expanding into Thailand offers a new avenue for growth for Chinese tea brands.

The Battle of Chinese Tea Brands in Thailand

NaiXue is not the only Chinese tea brand entering the Thai market. In recent years, several well-known Chinese tea brands have opened stores in Thailand, sparking a wave of “Chinese tea fever” as part of their growth strategies in Southeast Asia.

Mixue has also made its presence known in Thailand. After opening its first store in Vietnam in 2018, Mixue expanded into other Southeast Asian countries, including Thailand. In July 2023, Mixue launched its first batch of franchise stores in Thailand, primarily in cities like Bangkok. These stores played the Thai version of the brand’s iconic “Snow King” theme song, showcasing Mixue’s efforts to integrate into the local market.

Chabaidao has also expanded into the Thai market. In 2024, the brand identified Thailand as one of its key international expansion destinations and achieved significant sales growth in a short period. As of June 30, 2024, Chabaidao had opened two stores in Thailand as part of its global expansion strategy. The brand aims to enhance its supply chain capabilities, product development, and brand promotion to meet the needs of overseas markets.

Taning has also gained strong popularity in the Thai market. The brand operates 68 stores across nine countries, including Thailand, Malaysia, Singapore, the UK, Australia, and Canada. In 2023, the top-performing store achieved monthly sales of 600,000 RMB. In Thailand, Taning has established 15 stores in Bangkok’s top 10 malls, securing a solid foothold in the Thai market.

(Image source: papayatop)

Local Thai Tea Brands’ Defense Strategy

Local tea brands in Thailand have shown strong performance in the market, with Owl Cha and ChaTraMue being two of the most prominent local players. 

Owl Cha is one of the leading brands in the Thai market, operating nearly 300 stores and considered the top brand in the sector. This reflects Owl Cha’s significant influence and widespread consumer recognition in Thailand’s tea beverage market.

(Image source: OwlCha)

ChaTraMue is also a significant local brand in Thailand, with nearly 200 stores. Although its store count is slightly lower than that of Owl Cha, ChaTraMue enjoys a strong reputation and a solid position in the market.

(Image source: ChaTraMue)

The positions of these two brands in the Thai tea beverage market reflect their success in product innovation, marketing strategies, and brand development. Additionally, Owl Cha and ChaTraMue’s ability to maintain their leading positions in such a competitive environment demonstrates their brand strength and the effectiveness of their market strategies, highlighting the intense competition within the Thai tea market and the formidable rivals faced by Chinese tea brands.

NaiXue Kicks Off Marketing Campaign in Thailand

In the face of the strong presence of local Thai tea brands and competition from numerous similar Chinese brands, NaiXue has put significant effort into site selection and marketing. Its first global flagship store recently opened in Bangkok’s Central World shopping mall. Spanning over 200 square meters, this flagship store integrates tea beverages, baked goods, and retail. The opening generated considerable buzz in the Thai market, with sales approaching 1 million baht in the first three days, setting a new sales record for NaiXue’s overseas stores.

On the opening day, popular Thai stars Up and Poom made surprise appearances as guest store managers, personally preparing signature items like the “Cheesy Grape” and Tiramisu Egg Tart. This event attracted numerous tea enthusiasts and fans for interactions. Reports indicate that many customers queued for hours in advance, with some even driving for hours specifically to visit the store, showcasing NaiXue’s high popularity in Thailand.

(Image source: Starupdate)

This flagship store is located in the luxury goods section on the first floor of Central World, positioned next to numerous internationally renowned brands, making it the only Chinese tea brand on that level. In December 2023, NaiXue opened its first direct-operated store in Thailand at the Emsphere shopping mall in Bangkok. This store, situated in a high-end shopping complex, spans two levels and covers nearly 200 square meters, offering 48 types of freshly made tea beverages and baked goods.

(Image source: lemon8)

From the site selection perspective, NaiXue has chosen to open its first stores in Bangkok’s core business districts (such as Siam Square and Central World), reflecting its strategic thinking of “key point occupation.” This location strategy not only ensures high foot traffic but also reinforces NaiXue’s mid-to-high-end positioning in Thailand.

In terms of KOL marketing, NaiXue leverages local celebrities and influencers to create a strong brand presence on social media platforms like Instagram and Xiaohongshu, resulting in significant exposure and initial customer traffic in a short time. This localized marketing strategy not only enhances brand awareness but also helps NaiXue better integrate into Thailand’s food culture.

NaiXue’s successful entry into the Thai market can also be attributed to its strong global supply chain and product development capabilities. These strengths enable NaiXue to quickly respond to overseas market demands, especially regarding raw material supply. Given the geographical and managerial differences between overseas markets and the domestic market, this supply chain capability is particularly vital.

NaiXue’s performance in Thailand reflects the expansion pace of Chinese tea brands in the global market. NaiXue plans to open its first store in Singapore in the first half of next year and a second store in Thailand. Beyond Southeast Asia, NaiXue also aims to enter the UK and US markets.

Is Opening Stores in Thailand as Easy as It Seems?

However, Thailand’s tea beverage market is known for its fierce competition and consumers’ emphasis on quality. The recent marketing success of NaiXue raises questions: is this just a fleeting moment of excitement fueled by cash? Is the road to growth for Chinese tea brands in Thailand as smooth as anticipated? Through in-depth interviews with local consumers, we gathered a series of key insights reflecting the challenges Chinese tea brands face in the Thai market.

Shawn, a resident of Bangkok, commented that the popular phenomenon surrounding NaiXue’s recent opening does not resemble typical customer behavior. Another consumer, Xiao Jun, stated that the recent popularity of NaiXue in Thailand is primarily due to marketing efforts, while MiXue Ice City stores are actually more ubiquitous. EqualOcean notes that the queueing phenomenon is driven solely by the star effect, revealing a common marketing dilemma: initial hype often fails to sustain itself. Relying solely on short-term celebrity endorsements and influencer marketing is insufficient; brands need to establish deeper emotional connections and value recognition to transform transient curiosity into long-term brand loyalty.

Some consumers also provided feedback on “Taning,” indicating that after trying it once, their experience was not very satisfactory. This highlights a gap between product taste and local consumer expectations. EqualOcean analyzes this insight as touching upon the core challenge of cross-cultural product development: how to adapt to local taste preferences while maintaining original characteristics. This issue extends beyond taste and delves into deeper differences in cultural identity and consumer habits.

Chenyi, who resides in both Bangkok and Chiang Mai, mentioned that Thai consumers are more inclined to choose local hand-brewed tea over Chinese brands. EqualOcean interprets this phenomenon as reflecting the quality advantages of local brands and suggesting consumers’ cultural affinity for local products. This preference stems not only from practical considerations but also from a sense of cultural identity and national sentiment. For Chinese tea brands, this means competing not only on product quality with local brands but also overcoming cultural barriers and finding ways to integrate into local culture.

Consumer Mr. Li, who is visiting Thailand, shared his observations about Chinese tea brands like MiXue Ice City, Bawang Tea Ji, Shuyi, and Coco, noting that their products largely replicate those in China, often with even less variety, mainly focusing on bubble tea with adjusted sweetness to cater to the Thai market. EqualOcean’s analysis reveals a lack of localization in product offerings by Chinese tea brands. Merely increasing sweetness is a superficial adjustment that clearly fails to meet the deeper needs of Thai consumers. This reflects a common underestimation of the complexity and necessity of localization when entering new markets. True localization requires not just flavor adjustments but a comprehensive understanding and integration of local food culture, lifestyle, and consumer psychology.

EqualOcean identifies that Chinese tea brands in Thailand are facing multi-layered challenges: how to achieve true localization while maintaining brand identity, how to transform short-term market heat into long-term brand recognition, and how to carve out a unique position amidst deeply entrenched local competitors. These challenges test not only the brands’ product innovation capabilities but also their market insight and cultural adaptability. Moving forward, successful Chinese tea brands need to deeply localize across various dimensions, including product development, brand marketing, and corporate culture, to truly win over Thai consumers.

The success of Chinese tea brands in Thailand cannot rely solely on initial marketing heat and site advantages. To achieve sustainable development in the long term, brands need to engage in deep localization across product innovation, quality management, brand positioning, and marketing strategies. They also need to retain their cultural characteristics while striking a balance between globalization and localization. Only by truly understanding and integrating into the local market can Chinese tea brands secure a foothold in Thailand’s fiercely competitive tea beverage market and ultimately transition from “Chinese brands” to “international brands.”

The Southeast Asian Journey of Chinese Tea Brands Has Just Begun

In recent years, as the domestic market becomes increasingly saturated, more and more Chinese tea brands are setting their sights on the vibrant lands of Southeast Asia. From NaiXue Tea to Heytea, from MiXue Ice City to Cha Baidao, they act as small cultural ambassadors, attempting to build a bridge of taste between China and Southeast Asia with every cup of milk tea. However, as the rich aroma of tea crosses borders, it encounters not only differences in taste but also cultural collisions. These challenges are not just about the taste of a cup of tea; they involve maintaining one’s identity while reconciling with local cultures amidst the tide of globalization.

EqualOcean believes that true localization is not about simple replication or compromise but about finding a balance through understanding and innovation. In Vietnam, a market manager for a Chinese tea brand shared that they began collaborating with local tea farmers, ensuring the freshness of ingredients while creating job opportunities in the local community. Such a deep integration approach undoubtedly earns the brand greater recognition and respect.

When examining the Southeast Asian journey of Chinese tea brands, perhaps we should step away from a purely commercial perspective. This journey is not only about conquering taste buds but also about cultural dialogue and fusion. EqualOcean suggests that future success will depend not only on product flavor but also on the ability to truly understand and respect local cultures and needs. Only then can Chinese tea truly “take root” and flourish uniquely in foreign lands.

As a Chinese tea entrepreneur working in Singapore stated, “What we bring is not just a cup of tea, but a possibility of a lifestyle.” Perhaps, when we no longer cling to replicating domestic success and instead engage sincerely with local cultures, the story of tea crossing oceans will have a more beautiful ending.