What challenges are new tea beverage brands facing?

May 11, 2024

In recent years, modern tea drinks have become a new social choice for young people, and the market size has rapidly expanded. The 2022 New Tea Beverage Research Report released by the China Chain Store Association shows that the market size of new tea beverages is expected to recover to 145 billion yuan and the compound annual growth rate is expected to return to nearly 20% in 2023.
On the other hand, with major brands announcing the opening of franchise businesses, the total number of new tea beverage stores in China is still growing rapidly. According to incomplete statistics from the China Chain Store Association, as of the end of August 2023, the total number of new tea beverage stores in operation in China was about 515000, an increase of over 36% compared to 378000 at the end of 2020.

However, with the expansion of the market and the popularity of franchise models, the challenges of the new tea beverage market are becoming increasingly apparent. So what challenges do tea brands face?

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01
Quality and Taste

The competition between quality and taste is fundamental for new tea beverage brands to establish a foothold in the rapidly changing market.
No matter what class of consumers, they have a discernment of quality. Quality ensures the long-term brand image, while taste can determine consumer loyalty.
Therefore, adhering to the principle of prioritizing product quality, improving product quality and taste, and focusing on product research and development are the fundamental principles for the development of tea drinks.

02
Homogenization

With the booming new tea beverage market, competition within the industry has become increasingly fierce. The homogenization of products in the new tea beverage market is evident to all. In this situation, how to stand out in a homogeneous market is a huge challenge for new tea beverage brands.

In this regard, on the one hand, brands need to strengthen product innovation and increase the frequency of new product launches. Even if latecomers follow the trend and imitate, the eyes of users are clear, and users can perceive what is right and what is wrong.

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03
Price sensitive

In recent years, consumers have had a negative consumer sentiment, and they pay more attention to cost-effectiveness when selecting products. Consumers are more price sensitive, and for new tea beverage enterprises, price factors have a significant impact.
Given the high requirements for material selection, production technology, packaging design, and other aspects of new tea beverage brands, their costs are inevitably higher than traditional tea drinks. For operators, it is also a challenge to consider price positioning.

04
Alternative demand crowding out

For the tea industry, it also faces alternative demand from other categories such as coffee and yogurt.

In recent years, the new tea beverage industry has already fallen into a vicious circle of internal competition, with price wars, marketing wars, and channel competition constantly unfolding. Faced with these challenges, tea brands need to constantly innovate and adapt to market changes, only in this way can they stand invincible in the fierce market competition.

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2024-05-11

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