Summary of Key Points
The new tea drink industry continues to grow slowly, with an estimated market size of 210 billion yuan in 2026, but it has entered a stage of competitive saturation: the number of new stores opening is declining compared to those closing. Consumers are becoming less interested in new products and collaborations with well-known brands. Brands are trying to break through by focusing on hit products and expanding into new categories such as ice cream, coffee, and low-alcohol beverages. However, they face challenges such as severe homogenization, limited room for innovation, and a cooling capital market. In the end, the essence of a successful brand remains the same: delicious, healthy, and affordable products.
1. Growing in Scale, but Facing Challenges: The New Tea Drink Industry in a State of Competitive Saturation
The new tea drink market is expected to reach 210 billion yuan in 2026, with over 450,000 stores. However, the “growth era” is over; the net number of new stores decreased by more than 40,000 between 2024 and 2025, making it increasingly difficult to make a profit from opening new stores. Leading brands like Mixue Ice City (with 46,000 stores) and GuMing (with 14,000 stores) have expanded rapidly through franchising, with most of their revenue coming from selling raw materials to franchisees (97% of Mixue’s revenue comes from this). In contrast, direct-operated brands like NaiXue have seen limited growth, with revenue declining by 12% in 2025. Although young people consider tea drinks a part of their daily routine (just as they would ask about food), there are too many options available, making it harder for brands to attract new customers.
2. Focusing on Hit Products: From Regional Favorites to National Trends, but Still Confronted with Homogenization
Hit products are crucial for attracting customers, but the strategies for creating them have become predictable: first, local stores create unique offerings (such as lemon milk in Huzhou), which are then adopted by national chains (like BaWang Cha Ji and XiCha). The popularity of these products often relies on influencer reviews. The problem is that once a product becomes popular, it is quickly copied by others. For example, when XiCha launched cheese and grape-flavored products, GuMing and NaiXue quickly followed suit, and even niche fruits like oil tangerines and bananas have become targets of competition. The space for innovation is shrinking, and even if a new hit product is created, it’s hard for consumers to remember that it’s unique to a particular brand.
3. Expanding beyond Tea Drinks: Ice Cream, Coffee, and Low-Alcohol Beverages, but with Many Challenges
Brands are diversifying their offerings:
- Ice Cream: Mixue Ice City sells honeydew ice cream for 3-6 yuan, while XiCha offers Italian gelato for 20 yuan. However, ice cream sales are highly seasonal, performing well in summer but declining in winter.
- Low-Alcohol Beverages: BaWang Cha Ji uses hops syrup to create “non-alcoholic beer tea,” and XiCha collaborates with Corona to produce fruit tea with a low alcohol content. However, selling alcohol requires specific licenses, limiting the ability to expand nationwide.
- Coffee: Brands like GuMing and ChaBaiDao have started selling freshly ground coffee, using their expertise in milk foam and coconut milk toppings (e.g., raw coconut latte). It’s estimated that by 2030, tea drink brands could account for 30% of the coffee market sales. However, these expansions do not address the issue of finding a second growth curve and are merely temporary trends that capitalize on current popularity.
4. Consumers Losing Interest, and Capital Cooling Down: Dual Pressures on the New Tea Drink Industry
- Consumer Disinterest: Collaborations with well-known brands (like Hello Kitty) used to be highly effective, but now consumers are becoming more discerning, focusing on health (calories, sweetness), and value for money.
- Cooling Capital Market: The stock prices of companies in the industry have dropped significantly, with shares of some companies falling from their initial prices. Investors are also skeptical about the long-term prospects of the industry. AI ordering systems (e.g., those used by Luckin Coffee) may seem innovative, but they simply simplify the ordering process and do not necessarily increase sales.
5. Back to the Basics: Delicious, Healthy, and Affordable Products
The new tea drink industry initially gained popularity thanks to “fresh ingredients” and a sense of “ritual.” However, these elements no longer distinguish brands. After trying various strategies (hit products, collaborations, and product expansion), it’s clear that the most effective approach is to focus on basic principles:
- Delicious Taste: Focus on the quality of the tea, milk, and fruit ingredients.
- Health: Reduce sugar and additives to ensure products are safe and enjoyable for consumers.
- Affordability: Offer products that are worth the price.
In essence, this news analysis suggests that the new tea drink industry has moved from rapid growth to more focused development. Brands need to let go of their anxiety and return to the core values of their products if they want to survive in a competitive market.