Summary of Key Points
Chinese new tea drink brands (such as HeyTea, Cha Baidao, and Ba Wang Cha Ji) are flooding into the Korean market. Initially, they gained attention through long queues, social media buzz, and popularity, but they face three major challenges: the dominant coffee culture in Korea, high barriers to entering the supply chain and complying with local regulations, and the difficulty of transitioning from being a novelty to a regular purchase. These brands need to meet Korean consumers' demands for health and freshness to truly establish a foothold.
1. Chinese New Tea Drinks Entering Korea: A Range of Price Points
This year, brands like Ba Wang Cha Ji, HeyTea, and Cha Baidao have entered the Korean market with different strategies:
- Ba Wang Cha Ji: Opened three stores simultaneously in April; its flagship store in Jiangnan became a popular Instagram spot, with two more stores opening within a month. The prices are more affordable (most ranging from 5,000 to 6,000 Korean won, approximately 28 to 34 yuan), and the menu includes not only milk tea but also desserts and coffee.
- HeyTea: Launched a three-story concept store; its fresh fruit teas (such as coconut and mango tea) are very popular, with an average price of 7,000 Korean won (approximately 40 yuan).
- Cha Baidao: Expanded rapidly after obtaining franchise rights, with nearly 40 stores as of now. Its signature Yangzhi Ganlu (a type of tea drink) is popular among Koreans, priced at 6,000 Korean won (approximately 34 yuan).
Together with previously established brands like Mixue Bingcheng and Hu Shang Auntea (under the “Auntea Jenny” brand), Chinese new tea drinks cover a range of price points, disrupting the existing Korean tea drink market.
2. Koreans Prefer Coffee Over Milk Tea: New Tea Drinks Struggle to Become a Daily Habit
Korea is a country with a strong coffee culture:
- High Number of Coffee Shops: There were over 100,000 coffee shops by the end of 2022, twice the number of convenience stores. Affordable brands like Mega Coffee (over 4,000 stores) and Compose Coffee (over 3,000 stores) are very popular; a small coffee (ice Americano) can cost as little as 1,500 to 2,000 Korean won (approximately 8 to 11 yuan).
- Coffee as a Daily Habit: Koreans drink coffee during commuting and lunch breaks, while a cup of Chinese new tea drink costs six to seven thousand Korean won (approximately 34 to 40 yuan), which is 3 to 4 times more expensive than coffee, making it difficult to become a regular choice.
- Coffee Shops Also Compete in the Tea Drink Market: Korean coffee shops offer a wide variety of drinks, including iced teas, juices, and milkshakes. For example, Compose’s watermelon juice costs 3,900 Korean won (approximately 22 yuan), which is about half the price of Cha Baidao’s watermelon drink.
3. Supply Chain and Compliance: Hidden Barriers for Overseas Brands
The introduction of Chinese new tea drinks to Korea faces significant challenges related to ingredients and regulations:
- High Cost of Ingredients: Fruits in Korea are expensive, and import restrictions add to the cost. For instance, Cha Baidao’s Yangzhi Ganlu originally used Taiwanese mangoes, but due to Korean regulations, it had to switch to South American apples and mangoes, increasing the cost significantly.
- Compliance Issues: Companies exporting food to Korea must register in advance, and if they have previously exported substandard products, they may face on-site inspections. This requires brands to adjust their formulas, procurement methods, and even store operations.
4. Transitioning from Novelty to Regular Purchase: Addressing Korean Consumer Preferences
The characteristics of Korean consumers dictate that new tea drinks need to make the following adjustments:
- Health Focus: Koreans place great emphasis on health and body management (calorie counts are displayed near elevators in airports, and there are many beauty clinics), so new tea drinks should emphasize being “refreshing and low-calorie” (using loose-leaf tea, fresh milk, and real fruits), and clearly label the sugar and calorie content to make consumers feel that they won’t gain weight.
- Maintaining Freshness: Koreans follow trends, and brands rely on social media to gain popularity, but this popularity can be short-lived. They need to constantly introduce new features, such as celebrity endorsements (Stray Kids members for Gongcha), collaborations with popular IPs, and seasonal limited editions, while also maintaining consistent taste.
- **Being an “Occasional Favorite”: Brands need to appeal to Koreans as an occasional treat. For example, opening a new store in a popular area like Jongno (the city’s old district) near tourist attractions and office areas could make them a desirable choice for office workers, provided the price and taste are appealing.
Conclusion
Chinese new tea drinks are making a splash in Korea, but to thrive, they must adapt to local customs, overcome supply chain challenges, and transform from being a trendy novelty to a regular part of Korean consumers’ daily lives. Otherwise, the initial excitement may be short-lived.