Tea in China

PROSPECTS

Tea consumption driven by younger audience

Traditional Chinese tea consumers are typically portrayed as middle-aged males. However, according to the China Tea Marketing Association, over a third of the population drinks tea in one way or another, with especially those in their 20s showing increasing attention.

Fermented tea outperforms green tea

Green tea remains the largest share in tea in both volume and value terms, but various fermented teas such as black tea and dark tea are gaining share. Fermented tea is mellow and tastes less bitter than green tea, and thus it is easier for beginners to start with.

Instant tea challenged by street stalls/kiosks

Milk tea is one of the most popular drinks, but instant tea has continued to decline over the years due to the weakness in taste and convenience compared with fresh milk tea. Prevailing milk tea shops and online food delivery platforms enable consumers to enjoy freshly-made milk tea in just a few clicks.

COMPETITIVE LANDSCAPE

Fragmented category with few international names

The China Tea Marketing Association reveals that nearly 90% of domestic tea sales are branded, but the category remains fragmented with hundreds of competitors. For example, loose black tea is led by Yunnan Dianhong Group Co Ltd with a small value share, and green tea is led by Beijing Zhangyiyuan Beverage Co Ltd with a similarly small share.

Historic brands embrace new retail

Many Chinese tea brands have a long history and maintain their stores where the majority of sales take place. E-commerce penetration increases, and historic brands launch online flagship stores to target more consumers.

Xiangpiaopiao reduces its reliance on instant tea

The instant tea giant started its business with solid milk tea packed in cups and heavily depends on that. Now the focus is turning to RTD drinks to tackle the downtrend in instant tea.

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