Summary of the Core Content
This article discusses how, throughout the three major waves of development in the milk tea industry, it has not been the direct sellers of milk tea who have made the biggest profits, but rather the “suppliers” lurking in the shadows: first were the raw material suppliers, then the brand owners and delivery platforms, and most recently, the manufacturers of cups, straws, and packaging materials. However, these packaging giants are now facing a crisis—leading milk tea brands (such as Mixue Ice City) have begun to build their own supply chains to compete directly with them. Packaging companies must find new ways to survive, such as targeting higher-end markets or upgrading their technologies.
Who Were the Winners in Each Wave of the Milk Tea Industry’s Growth?
The milk tea industry has experienced three major developments over the past two decades, each with different hidden winners:
- First wave (late 1990s–2005): The street stall era, when raw material suppliers made huge profits
Back then, milk tea was made from powder at small stalls, sold for 2–3 yuan per cup, with raw material costs of only 0.6 yuan, resulting in a gross profit margin of over 70%. But the real beneficiaries were the suppliers of plant-based creamers, pearls, and milk tea powder. They didn’t need to open stores or worry about rent; supplying these ingredients to aspiring entrepreneurs was like making millions easily—similar to the gold rush in America, where people sold tools to miners.
- Second wave (2005–2016): The era of chain stores and delivery platforms
Taiwanese brands like CoCo and YidianYidian entered the market, turning milk tea into formal storefronts with prices rising to 10–20 yuan per cup. Delivery platforms like Meituan and Ele.me boosted business significantly. The winners were the brand owners (who charged franchise fees and sold raw materials) and the delivery platforms (which took a percentage of sales). For example, a single brand could earn hundreds of millions annually from thousands of franchises, while many franchise owners suffered.
- Third wave (2016 to present): The era of new-style tea drinks
Brands like Xicha and Mixue Ice City raised prices above 30 yuan per cup, leading to intense competition in the delivery market. However, the biggest winners this time were the companies that supplied cups, straws, and packaging materials. For instance, the newly listed company Xintianli earned a net profit of 76.16 million yuan in 2025 by supplying packaging to milk tea brands.
Why Do Cup and Straw Suppliers Make Big Profits?
You might be surprised to learn that the cost of packaging for a 30-yuan cup of milk tea can actually be higher than the cost of the ingredients. There are three key reasons:
1. High demand and large volume: Every cup of milk tea requires a cup and straw, so selling 1,000 cups per day means using 1,000 sets of packaging. With the market for ready-made tea drinks exceeding 300 billion yuan in 2025, a 5% share of that amount (15 billion yuan) is a significant market, and it grows by 10% annually—such large volumes make it easy to profit.
2. High profits and low risk: The factory price of a regular plastic cup is only 0.1 yuan, but the gross profit margin can exceed 30%; customized, high-end packaging (like those used by Xicha) can have margins over 50%. Moreover, regardless of who wins or loses in the milk tea market, as long as people buy milk tea, packaging companies will continue to have business.
3. High brand dependence: Young people often buy milk tea for the attractive cups and packaging bags (to post on social media). Packaging has become an integral part of a brand’s image, so brands are reluctant to change suppliers and are willing to spend more on customized designs.
Are the Good Days for Packaging Giants Over?
Packaging companies are starting to worry because their biggest customers (leading milk tea brands) are now producing their own packaging:
- Mixue Ice City: With over 40,000 stores, Mixue has been building its own supply chain since 2012, producing 60% of its ingredients in-house. The cost of its cups is only 0.18 yuan, 30% lower than the industry average, allowing it to sell milk tea for 3 yuan and still make a profit.
- Other brands like Guming and Cha Baidao are following suit:
Guming has established 17 storage bases, and Cha Baidao has built a central factory in Sichuan for packaging production. These leading brands taking over their own packaging orders directly threatens the packaging companies’ business.
- Problems for Packaging Companies:
Although Xintianli has gained new customers like “Shangshang Aiai,” they account for less than 15% of its business and are not stable, leading to underutilized production capacity and declining performance.
How Can Packaging Companies Break This Pattern?
To survive, packaging companies need to change their strategies:
1. Move towards the high-end market: While leading brands focus on mid-to-low-end packaging, premium brands like Xicha and NaiXue require custom-designed, high-quality packaging. Companies like Xintianli, which offer “positioned printed cup lids” with a 25% or higher gross profit margin, are taking this direction.
2. Expand into new markets: In addition to milk tea, there is growing demand for packaging in industries such as coffee, prepared meals, and cosmetics.
3. Invest in technology upgrades: With stricter environmental regulations, biodegradable packaging (such as paper straws and corn starch cups) and smart packaging (like temperature-indicating cup sleeves) are becoming trends. Those who master these technologies will gain a competitive advantage.
What Business Principles Lie Behind This?
The story of the milk tea industry reflects a universal pattern:
- The logic of “suppliers” always holds true: In any industry, those who provide the tools or services (such as raw material suppliers and packaging companies) generally have lower risks and higher profits.
- Opportunities shift from the downstream to the upstream: As industries mature and become more competitive, profits for downstream players thin, while upstream supply chains thrive. However, when the downstream becomes stronger, they may start competing with the upstream.
- There is no such thing as a permanent easy profit: If you rely on others’ demand today, they might start producing it themselves tomorrow. Only by constantly upgrading (to higher-end products, using technology, and entering new markets) can you avoid being eliminated.
Next time you buy milk tea, take a look at the cup you use—the story behind it reveals a fundamental business principle: Don’t just focus on the excitement at the forefront; the “suppliers” in the background are the real winners. But they must also be prepared to adapt to constant changes.