Tea in China: Non-dairy milk could revive growth of a slowing market, say analysts

By Pearly Neo contact

- Last updated on GMT

The tea market in China appeared to have hit peak growth in 2017-2018, but analysts at Mintel say that using non-traditional complements like non-dairy milks could spell broader opportunities. ©Pixabay
The tea market in China appeared to have hit peak growth in 2017-2018, but analysts at Mintel say that using non-traditional complements like non-dairy milks could spell broader opportunities. ©Pixabay

Related tags: China, Tea, Non-Dairy

The tea market in China appeared to have hit peak growth in 2017-2018, but analysts at Mintel say that using non-traditional complements like non-dairy milks could spell broader opportunities.

According to the market intelligence agency, the tea market in China grew by 14% from 2017 to 2018 to reach CNY48.5bn, and appeared to have reached the pinnacle of its growth. Volumes also surged 4% in this period to reach some 1.3bn litres.

Following this, Mintel predicted a CAGR of 3% between 2019 and 2023, with Mintel China Reports Food and Drink Analyst Belle Wang saying: “[Steady but slower] growth is expected for the market in the next five years as there is little space for further unit price growth and an increasingly competitive marketplace.

“While the market is set to slow down, the tea shops category still has potential to grow further, with more opportunities for new entrants​.”

Amongst the ‘new entrants’​ mentioned here, non-dairy milks, especially nut-based milks, are expected to be a strong contender.

“[Milk] tea tops the list of popular tea shop drinks with 53% of tea shop drink consumers having had it in the last three months,”​ said Mintel.

“[Nut-based] milk drinks [have the potential] to enjoy strong growth despite having a comparatively low penetration rate of 22% among Chinese consumers currently.

“[This can be seen by the fact that] female consumers are more likely to queue for nut milk drinks. [Over] two in five (41%) female consumers who have drunk nut milk drinks from tea shops agree that it is worth queueing for two hours.”

Nut-based milks are seen as a strong candidate for growth in terms of popularity due to factors such as the relevant health benefits and taste advantages, falling in line with current food and beverage trends in the region​.

“Tea shop brands can take advantage of this opportunity by introducing nut milk drink options with female-oriented claims, like highlighting antioxidant and anti-ageing properties,” ​added Wang.

Online opportunities

Online purchasing is said to be another avenue of retail opportunity, with only some 69% of tea consumers having purchased tea online. Mintel believes that the value of avenue can be increased significantly.

“[There is] a significant opportunity for online tea shops to introduce desserts or bakery products in their menu offering, which can provide these [users with] a solution to reach the minimum price required for delivery while also increasing revenue,”​ said Wang.

It is worth noting that while tea shops that have made their name online have been surging in popularity in China of late, the Mintel research shows that over half (56%) of urban Chinese consumers ‘do not think it is worth queueing for two hours for an internet-famous tea drink/shop’,​ versus the 28% who do, so this may not be a lasting trend.

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