Originating in the 1980s, bubble tea was initially just a beverage, but it gradually spread worldwide and became popular even during economic hardships. Bubble tea originated in Taiwan and was introduced to Vietnam in the early 2000s, quickly gaining popularity among young people. It has also become famous in many other parts of the world.
In 2013, bubble tea marked a significant milestone with rapid growth through franchise models from Hong Kong and Taiwan, accompanied by eye-catching packaging designs and diverse product offerings.
By 2023, according to the Food and Beverage Market Report in Vietnam by iPOS.vn, which conducted primary research in 63 provinces, expert interviews, and industry sources, the frequency of Vietnamese people going for coffee or bubble tea slightly increased compared to 2022. Specifically, 42.6% of respondents reported going for coffee or bubble tea about 1-2 times per month. The number of customers who visited coffee or bubble tea shops 1-2 times per week increased compared to 2022, with 30.4% of respondents choosing this option (compared to 22.6% in 2022).
The growing interest has turned bubble tea shops into attractive franchise opportunities. Franchising not only helps brands expand quickly and reach more customers but also opens up business opportunities for many people without having to build a brand from scratch.
After two years of being heavily affected by the Covid-19 pandemic, the F&B industry in general, and the bubble tea market in particular, faced many challenges. However, the market saw a strong recovery in 2022 as students and office workers returned to schools and workplaces as usual. This recovery was driven not only by increased consumer demand but also by more favorable conditions compared to the pre-pandemic period.
Nevertheless, the market's growth potential is always accompanied by the entry of more new brands (both domestic and international, and even "family" bubble tea brands). This increase has created a competitive environment, affecting the revenue and profit growth of many brands in the industry.
Mixue
Mixue is a famous chain of stores from China, established in 1997 by Zhang Hongchao. Mixue officially entered the Vietnamese market in 2008 under the name Snow King Global Co., Ltd., with its headquarters in Thanh Xuan, Hanoi. By April 2023, Mixue had reached the milestone of 1,000 stores in Vietnam in less than five years.
Mixue's main products are bubble tea and ice cream, with a competitive advantage in affordable prices, averaging around VND 25,000 - 35,000. This price point is quite impressive as it is considered relatively cheap compared to similar products on the market.
Mixue has demonstrated remarkable flexibility in the Vietnamese market. When the bubble tea market reached saturation, Mixue shifted its focus to soft serve ice cream as the main product, streamlined its bubble tea menu, and targeted the student segment with competitive pricing.
Mixue achieved impressive revenue growth in 2023, with nearly VND 1,260 billion in revenue, an increase of over 160% compared to 2022. The company's profit after tax also surged, increasing by more than 200% compared to the previous year. The profit growth rate surpassing the revenue growth rate indicates that revenue from franchise operations is significantly contributing to the company's financial performance.
Toco Toco
Tocotoco launched its first store in 2013 with a unique approach, opting to use Vietnamese agricultural products to create beverages, positioning the brand as "bubble tea made in Vietnam." Tocotoco quickly expanded its footprint with over 700 stores from South to North Vietnam and a presence in international markets like the US, Australia, and Japan.
Tocotoco's promotions are diverse, offering customers many opportunities to enjoy delicious drinks at favorable prices. Regular discount forms include buy one get one free, free pearls, discounts on total bills, and discount vouchers. Besides pricing strategies, Tocotoco continually refreshes itself with eye-catching designs and festive-themed decorations, making bubble tea enthusiasts more excited when enjoying products in the store.
Despite impressive growth from 2021 to 2022 (nearly 50% increase), the decline in revenue in 2023 is a warning sign that requires careful consideration. The 2023 net revenue reached nearly VND 380 billion, a decrease of 17% compared to 2022. The company has recorded after-tax losses for the past three years, peaking in 2023. These are clear indicators that the company is facing operational issues. Tocotoco's business strategy needs to be adjusted. The company aims to reach 1,500 stores by 2024, covering the entire country and expanding to the US, Japan, South Korea, Canada, and more.
KOI Thé
KOI Thé, a Taiwanese bubble tea brand established in 2006, officially entered the Vietnamese market in 2015. Currently, KOI Thé operates 47 stores in Vietnam and does not offer franchise opportunities.
The Business Director of KOI Group has emphasized that KOI Thé’s goal in Vietnam is continuous adaptation and innovation. In 2023, to mark the significant milestones of 17 years globally and 8 years in Vietnam, KOI Thé updated its brand identity with a new logo featuring a golden bubble tea. The store layout, color scheme, and design style have also been updated to a minimalist approach, aligning with current trends.
Despite impressive revenue and profit growth from 2021 to 2022 (with revenue increasing by 60% and profit rising by over 730%), the decrease in revenue and profit in 2023 is a concerning sign. KOI Thé’s net revenue for 2023 was nearly VND 320 billion, down by almost 10% compared to 2022. Although profit after tax decreased significantly by over 50% compared to the previous year, it remains positive. The sharp decline in profit after tax relative to the drop in revenue indicates potential issues with cost management for KOI Thé.
Gong Cha
Gong Cha, which translates from Chinese as "to present the finest tea to the emperor from all resources," is a renowned bubble tea brand from Taiwan. Established in 2006, Gong Cha entered the Vietnamese market in 2014 through a franchise model.
In Vietnam, Gong Cha is exclusively franchised and operated by Golden Trust Co., Ltd., a company with extensive experience in the F&B industry. The company also manages other brands such as Uncle Tetsu, PIKO Coffee, and Shinsho Ramen. As of July 2024, Gong Cha operates 40 stores nationwide and is known for its strict franchise requirements.
Gong Cha experienced explosive revenue growth in 2022, increasing by over 70% compared to 2021, although it saw a significant profit decline of over 100%. In 2023, Gong Cha diversified into the coffee sector by adding coffee drinks to its menu. This expansion resulted in revenue reaching nearly VND 115 billion, a 13% increase from 2022. Profit after tax saw a substantial increase of nearly 100%, reflecting improvements in business operations and cost management.
Ding Tea
Ding Tea is a renowned bubble tea brand from Taiwan with over 650 locations worldwide. It entered the Vietnamese market in 2013 and now operates nearly 200 stores across the country. Ding Tea is certified by various international organizations, including SGS Taiwan and has passed 231 tests by the Japanese government for import approval.
Ding Tea positions itself as a friendly, youthful brand that aims to cater to popular tastes. The brand relies heavily on word-of-mouth rather than extensive advertising and rarely offers promotions to avoid constant price reductions, focusing instead on maintaining customer loyalty with consistent pricing.
In 2022, Ding Tea saw remarkable growth, with revenue increasing by over 35% and profit after tax soaring by nearly 160%. However, in 2023, Ding Tea's net revenue dropped to VND 30 billion, a 35% decrease from 2022. Profit after tax also fell sharply, down more than 80% compared to the previous year. The decline in revenue coupled with high costs suggests that Ding Tea may be struggling with cost management or adjusting its business strategy to the current market conditions.
Bobapop
Bobapop opened its first store in Vietnam in early 2013, at a time when bubble tea was still emerging. At that time, the take-away model was new and popular, so Bobapop chose to open its first take-away store in Ho Chi Minh City. Within six years, Bobapop experienced significant growth, expanding to over 150 stores across Vietnam, with many locations offering spacious seating beyond the take-away model.
In 2022, Bobapop made a major expansion by opening a large-scale store on Nguyen Tri Phuong, approximately three times its previous size, integrating fashion into the bubble tea experience. Staying true to its bold style, Bobapop introduced a fresh approach to bubble tea by combining fashion with hypebeast accessories. Each corner of the store is meticulously designed to provide a modern, Instagram-friendly space with LED lights and a strong Gen Z aesthetic.
Despite impressive revenue growth in 2022, with a 170% increase and a 70% rise in profit after tax, Bobapop still faced a loss of over VND 2 billion. In 2023, net revenue dropped to VND 55 billion, a decrease of over 30% compared to 2022. The company’s loss after tax also increased to several billion VND, nearly a 50% rise from the previous year. The business has yet to achieve its desired performance, indicating that there are several issues to address to ensure sustainable growth in the future.
Phê La
Despite seeming market saturation, rich-flavored bubble tea has emerged as a "fresh breeze," sparking a new trend. Phê La, a pioneer in this trend, was established in 2021 and quickly expanded to 23 locations nationwide, with most stores covering several hundred square meters in prime locations in Hanoi and Ho Chi Minh City.
The brand stands out for using locally sourced ingredients, particularly specialty Oolong tea from Da Lat. Phê La offers a diverse menu featuring unique preparation methods, with prices ranging from VND 40,000 to 60,000 per cup. In June 2024, Phê La extended its hours from 4 AM to 11 PM, catering to early risers and drawing significant attention from bubble tea enthusiasts.
As a new, fully Vietnamese bubble tea brand, Phê La has garnered enthusiastic support from tea lovers. In 2023, the company achieved a revenue of nearly VND 300 billion and a profit after tax in the tens of billions. These positive indicators suggest that Phê La has significant potential for continued growth and sustainable development in the future.
Source: Vietdata's 2023 Milk Tea Market Report in Vietnam
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