China's new-style tea brands find a hot new market in US

After becoming established in the Southeast Asian market, Chinese new-style tea brands are now turning to dig gold in the United States, looking for new opportunities.

Mixue Group opened its first brick-and-mortar store in the US on Saturday, marking its entry into the North American market. The store was opened in Hollywood, directly opposite the iconic TCL Chinese Theatre on the Hollywood Walk of Fame in Los Angeles, California.

New-style tea refers to freshly prepared, healthier versions of milk tea and fruit tea.

The opening of new-style tea brand stores in the US has been gaining momentum this year.

On Aug 1, Heytea opened a store in Cupertino in northern California. So far, Heytea, the first Chinese new-style tea brand to explore the US market, operates 35 stores in the US, according to research institute Hongcan. This makes it the brand with the most US stores among Chinese new-style tea brands. One year ago, it had just two stores in the US, which demonstrates its rapid expansion.

Meanwhile, Molly Tea has opened five stores in the US, while Chagee, as China's first new-style tea brand to be listed in the US, opened an outlet in the Westfield Century City mall in Los Angeles. Less than three months later, another outlet was opened in the metropolitan Los Angeles area.

In July, Lelecha opened stores in New York and Los Angeles, continuing its business model of selling both tea and baked goods.

The market is responding positively.

For example, Heytea's outlet in Times Square in New York, which was opened at the beginning of this year, sold more than 3,500 cups of tea on the first day, and its average daily sales volume exceeded 2,000 cups, according to company data.

Molly Tea's outlets are also breaking records. According to the company, the sales revenue of its outlet in New York in October 2024 surpassed $570,000, a record for Chinese new-style tea brands. The gross merchandise value of its first outlet in Los Angeles surpassed 4.19 million yuan ($595,000) in its first month, setting an overseas store record for the company.

Chagee and Auntea Jenny have also proved popular in the US. On the day that Chagee opened its store in the US, it sold over 5,000 cups of tea. From May 16-18, Auntea Jenny's first store in the US, located in the Flushing neighborhood of the New York City borough of Queens, recorded 3,024 orders and achieved gross merchandise value of $65,000.

Facing an increasing number of Chinese new-style tea brands in the US, Jason Smith, a US netizen, said on social media platform X that he hoped American companies "are ready for some real competition".

Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, said, "With the Southeast Asian market tending to be saturated, the US, with its large consumption power base, high per customer transaction rate and demand for consumption upgrade, has become a new hot spot for Chinese new-style tea brands."

Zhan Junhao, founder of Fu-jian Huace Brand Positioning Consulting, said: "New-style tea brands opening stores in the US is an inevitable trend, as they compete fiercely in (China's) domestic market and look for incremental markets. Each brand adopts a differentiated positioning layout to adapt to the market, avoiding homogeneous competition.

"The new-style tea market in the US is growing rapidly, and there is no dominant brand, offering a window of opportunity for Chinese brands to seize market share," Zhan said, adding that the market potential will likely attract more brands.

Zhan noted that as promising as the market is, Chinese brands still face challenges when opening stores in the US. For example, high costs of staffing and rent squeeze profits, and there are cultural differences.

Wang, the researcher, said that the brands need to adopt a long-term strategy, building core competitiveness through precise positioning, deep localization and supply chain resilience.

zhengyiran@chinadaily.com.cn