The Taiwanese Tea Trend Is Taking Off

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The Taiwanese tea trend transcends beyond the fun way of drinking tea, it’s a movement focused on health and wellness.

Taiwanese tea shops have swept through foreign markets as the new craze of innovated beverages. Invented in the 1980s, but tracing back to the 1940s, bubble tea (also called “black pearl tea” or “boba tea”) is a beloved Taiwan classic.

Taiwanese tea shops offer a huge variety of options to chose from. From your favorite fruit drinks mixed with an assortment of tapioca or fruit jelly to the plainest green tea, these tea shops are sure to draw in consumers with all sorts of taste preferences.

Beyond the countless combinations of flavors and add-ons, at its core, it’s a mix of tea, milk, and ‘bubbles’ – which are made of anything from tapioca to fruit jelly.

Tapioca is the starch extracted from the cassava root and contains no fat or cholesterol, which makes it a healthy choice for those watching their dietary cholesterol and saturated fat intake.

Yet the craze has been all about the ‘bubbles’ rather than the quality of the tea itself.

What these tea shops had been missing to properly penetrate the Western beverage markets is what the COVID-19 period has offered: An increased product awareness and new market opportunities.

 

Product Awareness


While supply has been low due to lockdowns all over the world, there has been an increased demand for tea throughout the pandemic. An emerging need for caffeine has arisen due to the inability to go out and buy the usual morning coffee on the way to work. Thus, consumer preferences largely shifted towards tea as a substitute.

Despite an estimated 50% increase in tea prices since March, demand seems to be unrelenting.

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This demand is only going to persist as normal day-to-day activities resume post-COVID-19. One of the biggest trends for the future of the beverage industry is health and well-being.

With many people working from home, this marks the first time that tea is consumed more than coffee in the household. Tea currently ranks 6th as the most consumed drink in the United States, while coffee sits at a solid 3rd. Expect tea to slowly climb the ranks and creep up to coffee in the coming years.

 

New Markets


As people begin to recognize tea for its health benefits, a new market for potential customers will begin to form. Currently, a large portion of overseas Taiwanese tea shops are packed with youth and other young adults. Fruit drinks and sweet tapioca drinks are extremely popular amongst this demographic, but the healthier choices of plain tea could attract a new wave of health fanatics as well.

The tea shops offer adjustments to sugar levels and the hotness of tea as well, satisfying customers with all preferences. There is reason to believe that this newfound craze over health beverages will lead to packed tea shops all over the world.

Sweeter drinks and the sensation that is tapioca could also capture the attention of soft drink consumers as well. Currently, soft drinks are the 2nd most-consumed drink in the US, behind water. But the soft drinks market is a declining one.

The compound annual growth rate (CAGR) for soft drinks has declined 1.6% from 2012-2017 and is still on a downward trajectory.

The predicted CAGR for tea, on the other hand, boasts a whopping 5.5% from 2019-2025. The truth is that customers are shifting away from soft drinks to pursue healthier alternatives, and the tea industry is looking to catch the eye of some of these people.

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According to a recent study, the bubble tea industry is expected to grow by almost $2 billion to $4.3 billion by 2027.

Despite the ongoing pandemic, Taiwanese tea brands have been aggressively expanding overseas.

    • Taiwanese chain Yi Fang Tea has been pushing into foreign markets, including various cities within the US, Europe, and the Middle East.
    • Bubble tea sensation Sharetea has also recently opened its first store in Japan, claiming that the demand for tea is still growing within Asia.
    • Milksha, known for their fresh milk inspired drinks, recently opened its second store in North America, located in Richmond, British Columbia.

Taiwanese tea shops have realized the opportunities overseas, and the timing to expand could not be better. The local tea industry will most likely experience a significant increase in demand over the coming years, making it lucrative for new entrants.

All in all, COVID-19 has acted as a catalyst for the growth of Taiwanese tea shops overseas, by:

    1. Raising awareness for tea as a potent substitute for coffee as a source of caffeine, and
    2. Capturing the markets of older consumers and soft drink lovers as a healthier alternative.

As industries return to normal after the pandemic settles, expect demand for tea to increase as tea shops begin to open overseas to serve consumers again.

For a DIY (do-it-yourself) experience a great alternative is the lovely Rooibos tea mixed with a pinch of milk and added jelly.

In the long run, expect the tea industry to grow steadily as it lures more and more customers of different demographics.

 

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Morgan Tseng

Morgan Tseng is a senior studying Business Economics and Business Information Management at University of California, Irvine. He has a background in research and analytics as he spent a quarter participating in the research of the Development Finance Corporation and its effects on developing countries. He is passionate about the investing landscape today, and the ebb and flow of bull and bear markets. He believes that credibility and ethics are the most important parts in business. In his spare time, he loves to play the guitar and piano.

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