Summary of Key Points
The Thai milk tea category, which was once unpopular due to its overly sweet taste, has suddenly become popular again after 2025. New brands, represented by Taiko Tea Garden, have contributed to this resurgence by improving the flavor (reducing sugar content and creating a more complex taste), targeting a mid-to-high-end market (with a per-order price of over 20 yuan), and expanding rapidly (leveraging the "first-store effect" in key shopping areas). However, this popularity is more driven by the efforts of the brands and their franchisees on the supply side, rather than pure consumer demand. With established brands like Luckin and GuMing entering the market, Thai milk tea brands are facing competition in terms of cost-effectiveness. Additionally, the low repurchase rate and slowing growth in new store openings raise doubts about the sustainability of this trend.
How Did Thai Milk Tea Go from Being Unpopular to Becoming Popular? — The Evolution from 1.0 to 2.0
Early versions of Thai milk tea (1.0) were packaged in bags and had a very sweet taste, which consumers found so intense that it kept them awake at night, preventing them from sleeping. The Thai milk tea of 2025 (2.0) has addressed these issues:
- Flavor Improvement: For example, Taiko Tea Garden's popular "Salted Milk Tea" combines sweet and salty flavors and offers four different levels of sweetness, retaining the exotic spices of Southeast Asia while catering to the trend towards healthier, lower-sugar options.
- Positioning Upgrade: The brand has shifted away from the affordable price point, with per-orders now costing over 20 yuan. This is due to the high costs of opening stores—located in central shopping areas with exotic decor (e.g., Thai-style interiors)—and the nationwide expansion (Taiko has 366 stores in 115 cities). The lack of a regional clustering effect means that supply chain and marketing costs are reflected in the prices.
- First-Store Effect: Opening the first store in each city generates buzz through long queues and media attention, quickly increasing the brand's visibility.
Is the Popularity of Thai Milk Tea Driven by Consumers or by Brands? — A Supply-Side Drive
It's less about consumers suddenly developing a liking for Thai milk tea and more about the combined efforts of brands and franchisees:
- Opportunities in a Stagnating Market: The overall tea drink market growth rate has slowed from 19.3% in 2023 to 6.4% in 2025, making niche categories more attractive. Brands have targeted the "exotic flavor" segment, defining what Thai milk tea is (e.g., Taiko's claim that it's about the combination of sweet and salty flavors) and trying to shape consumer perceptions.
- Speed Competition: Taiko Tea Garden's founder, Xie Huancheng, emphasizes that their core competitiveness lies in opening stores two months faster than their competitors. They rely on powerful franchisees with access to shopping mall resources to quickly expand and create a strong marketing presence.
- Targeted Market Selection: They wisely started in regions with a high acceptance of sweet flavors, such as Jiangsu, Zhejiang, and Shanghai. For example, ChunLai has 600 stores, 15.6% of which are in Zhejiang. Taiko began in Suzhou and then expanded nationwide, establishing itself in high-demand areas before moving to other regions.
Can Thai Milk Tea Brands Survive the Competition from Luckin and GuMing? — The Threat of Cost-Effectiveness
The entry of brands like Luckin and GuMing, which offer Thai milk tea for 9.9 yuan, poses a significant threat:
- Comprehensive Brand Strength: These brands have a nationwide presence, allowing them to negotiate better supply chain terms and offer products at lower prices. For instance, Luckin's 9.9 yuan Thai milk tea is half the price of Taiko's 20+ yuan option, making it more attractive to consumers.
- Response from Thai Milk Tea Brands: They can only rely on their expertise and unique store experiences (e.g., Thai-style decor and services) to retain customers, but this limits their ability to lower prices and makes it difficult for them to become mainstream brands.
- Lack of Product Barriers: Xie Huancheng acknowledges that the formula for Thai milk tea is not proprietary, and larger brands can easily replicate it, weakening the competitive advantage of Thai milk tea brands.
How Long Can the Popularity of Thai Milk Tea Last? — The Low Repurchase Rate Is a Major Concern
The current popularity of Thai milk tea may not last:
- Low Repurchase Rate: A Taiko franchisee in Zhejiang reported that the business was only popular for a month before sales declined, with negative net profits in July, due to customers buying it as a novelty and then stopping.
- Slowing Growth in New Store Openings: Taiko's number of new stores opened from April to July 2026 decreased from 46 to 26, indicating a decline in franchisee enthusiasm.
- Short Lifecycle of Niche Categories: Niche categories often gain and lose popularity quickly. Although Thai milk tea has gained momentum since 2025, it has not yet reached the stage where it has thousands of stores, indicating a weak foundation. Once consumers lose interest or larger brands continue to pressure the market, Thai milk tea brands could be quickly phased out.
Conclusion
The resurgence of Thai milk tea is a niche attempt in the competitive tea drink industry, but it seems more like a marketing phenomenon than a genuine category revolution. If Thai milk tea brands cannot address issues related to repurchase rates and establish strong barriers, this trend may end soon. For consumers, trying Thai milk tea now is more about experiencing something new, and whether they will continue to buy it in the future depends on whether the brands can truly satisfy their taste preferences. For franchisees, it's important to consider whether this popularity is a long-term trend or a short-term bubble before entering the market.