Before 2020, the Vietnamese milk tea market was overshadowed by imported brands with names such as Dingtea, Tocotoco, Gongcha... but up to now, Vietnamese businesses have gradually regained their home turf.
Từ Dingtea, Tocotoco...
7 years ago, in 2017, it could be called "the year of milk tea". Some people even jokingly compared that every time you open your eyes, you see a new milk tea brand appear. Many central streets in Hanoi or Saigon suddenly have the name "milk tea streets" with the number of shops selling this drink densely packed within just a few dozen meters of road.
Dingtea is the largest milk tea chain in Hanoi with 80 shops, and nationwide the number is approaching 200. Following Dingtea is Tocotoco with the corresponding numbers of about 66 and 124. (Information updated according to the Dingtea and Tocotoco websites). In the HCMC market, the leading position belongs to Hot & Cold, Hoa Huong Duong and Phuc Long.
The milk tea craze has even affected the real estate market in some areas as the demand for renting premises to sell this product increases. A report from a research unit in Ho Chi Minh City shows that the real estate value on some streets selling this product has increased by 25-71% compared to the same period in 2016.
But since 2018, after a period of hot growth with thousands of milk tea shops springing up everywhere, the milk tea market has become saturated.
F&B expert Nguyen Thai Binh - COO HT House - a company that manages and develops a chain of mid-range and high-end restaurant brands - commented: Customers are gradually getting bored when the flavors of milk tea are similar, because they use the same imported ingredients and brewing methods. In addition to tea, brands only compete on convenience by opening more stores, followed by toppings.
By 2019, milk tea brands gradually reduced their scale, many stores had to return their premises, and the bustling customer situation on milk tea streets also gradually decreased.
In 2020 and 2021, the Covid-19 pandemic swept through, causing the business situation of many enterprises to suffer.
Vietdata's milk tea chain market report shows that many milk tea brands had declining business results in 2023.
Figures from this data platform show that last year, Tocotoco had net revenue of nearly 380 billion VND, down 17% compared to 2022, equivalent to a loss of about 77.5 billion VND. Notably, the chain's after-tax profit was negative for 3 consecutive years, of which the biggest loss was in 2023, more than 112 billion VND. In 2021-2022, the losses were more than 77 billion and 54 billion VND, respectively.
Meanwhile, Ding Tea in 2023 had a net revenue of only 30 billion VND, down 35% compared to 2022, after-tax profit decreased sharply by 80% but not to the point of loss. In 2022, Ding Tea also had a revenue growth rate of over 35% and after-tax profit also increased to nearly 160%.
The milk tea craze seemed to be going into the dark, but at that time, strong-flavored tea became a trend, leading to the appearance of many new Vietnamese brands with strong-flavored milk tea products, strong-flavored Oolong tea...
Phuc Long, Phe La make Vietnamese milk tea brands rise
Among the "hot" names at the moment, the first name that cannot be missed is Phuc Long. Right from its launch, Phuc Long has had the most outstanding strength in products with a strong tea flavor that is both traditional and modern.
Notably, in 2023, the acquisition of Phuc Long by Masan was the most notable M&A event. Mr. Lam Boi Minh - founder of Phuc Long once shared that with the vision and scale of the group, Phuc Long will create its own unique path. His goal is that Phuc Long will inherit and promote traditional values, combined with a modern enjoyment style, bringing the taste of "Vietnamese tea and coffee" to global customers.
Up to now, according to Masan's report, in 2023, Phuc Long recorded revenue of VND 1,535 billion. By the end of 2023, Phuc Long has 156 stores outside of VinCommerce. This year, the chain is expected to reach VND 1,790 billion to VND 2,170 billion in revenue, equivalent to an increase of 17% to 41% compared to the previous year, and is expected to open from 30 to 60 new stores.
Also in the same "strong tea" segment as Phuc Long, Phe La focuses on developing and enhancing the Da Lat specialty Oolong tea line and bringing them closer to the community.
In 4 years on the market, Phe La has opened 31 stores (as of early September 2024). At many stores, this brand has reserved a limited customer reception area and only sells handcrafted pure tea and coffee. Vietdata's report shows that in 2023, Phe La achieved nearly 300 billion VND in revenue and about 57 billion VND in profit. Recently, in June 2024, Phe La announced that it would open a shop from 4am to 11pm to serve young people who come to drink milk tea early in the morning to watch the sunrise, attracting great attention from milk tea lovers.
After the two names Phuc Long and Phe La, the strong tea market has also emerged with many other names.
Cheese Coffee is also a name that has a leading influence on young people. Up to now, Cheese Coffee has had 16 stores in Ho Chi Minh City and 1 store in Hanoi.
La Boong was established in July 2023, so far has nearly 100 stores and aims to increase this number to 130-140 by the end of this year. Mr. Vu Viet Anh - Founder of La Boong shared: The source of tea materials in Vietnam is becoming more local. Previously, most tea regions in Vietnam still only harvested and exported raw, not yet producing finished products for use in making milk tea, so businesses imported raw materials from abroad. However, currently, some tea growing regions such as Da Lat have updated production technology, producing finished products that are specialized raw materials for making milk tea and fruit tea.
Another brand that is also spreading strongly with the style of strong milk tea is La Si Mi. The chain also said that the ingredients used are fresh tea from Lam Dong plateau, especially Oolong, creating milk tea cups that are just right for your taste. La Si Mi has 37 stores, covering the most in Ho Chi Minh City and key tourist cities from Da Nang to the South, along with 4 locations in Hanoi.
F&B expert Nguyen Thai Binh shared about the strong flavor that is becoming more and more popular in the market: “The trend will be born, expand, then decline to continue developing a new cycle. I see that strong milk tea is currently in the stage of being born and expanding.”
(markettimes)
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