Afternoon tea culture brewing up a comeback in China

T9 Premium Tea's monthly sales revenue in its first outlet in Shanghai reached nearly 600,000 yuan. PHOTO: CHINADAILY.COM.CN

BEIJING (CHINA DAILY/ASIA NEWS NETWORK) - With consumption upgrades led by a rise in purchasing power and living standards, Chinese beverage consumers are participating in a buying bonanza, leaving great market space for afternoon tea-related brands.

On a typical Sunday afternoon, Mr Hai Mian, a 29-year-old programmer in Shenzhen, Guangdong province, takes his girlfriend to a shopping mall near their apartment in Nanshan district. They first go to a handmade dorayaki store to buy a box of the Japanese pancakes, then visit a teahouse next door.

At the tastefully decorated teahouse, Mr Hai often orders a cup of jasmine matcha Eisbock for his girlfriend, and a Royal Earl Grey black tea latte for himself.

"The two beverages each cost around the same as that of two Starbucks coffees. However, we prefer the beverages here, because the store offers diversified choices with refined flavours. For example, my Royal Earl Grey black tea latte contains both the fragrance of Earl Grey and the bitterness of coffee," Mr Hai said.

Ms Bei Bei, Mr Hai's girlfriend, opens the box of dorayaki pancakes, saying: "China's newly emerged consumption brands that offer afternoon tea services amaze me. Same as the teahouse, the dorayaki pancake store indeed wins over my heart."

Whether judging from the flurry of new Starbucks outlets constantly popping up, or the home-grown beverage brands springing up like mushrooms, China's afternoon tea market is transforming into a younger, more trendy and faster-moving category.

According to a report jointly launched by food delivery platform Ele.me and Alibaba's research arm AliResearch, between 2015 and 2021 - given the digitisation of China's catering industry and consumption upgrades - consumer habits and product formats of the country's afternoon tea market have undergone two critical transformations.

Before 2015, afternoon tea consumption was mainly offline, and the major consumption venues were teahouses, restaurants and mid- to high-end hotels.

From 2015 to 2020, the scenario gradually shifted to workplaces. Since 2020, with the rise of guochao - wherein consumers increasingly appreciate local elements - afternoon tea drinking became more closely aligned with traditional Chinese culture, and more snacks, such as braised foods and fried chicken, were integrated into the category.

The tea market still has great potential remaining to be fully tapped.

With the growing influence of the digital age, China's tea businesses have gradually evolved from traditional teahouses and simple online tea sales platforms to various new business formats. Taking advantage of new retail and consumption modes, they are actually achieving intelligence in channel exploration and brand image building.

T9 Premium Tea, the teahouse that Mr Hai and his girlfriend often visit, is a glimpse of how newly emerged Chinese beverage brands are enjoying the fruits of success. Founded in 2017 in Shanghai, within nearly four years, the company's monthly sales revenue of its first outlet in the city, which only takes up 28 sq m, reached nearly 600,000 yuan (S$127,900). On busy days, daily sales revenue ranges from 40,000 yuan to 50,000 yuan, data from the company showed.

Mr Wu Jianqing, chief executive of T9 Premium Tea, said that currently, the company's tea portfolio includes three series: Colourful Collection, Legend Collection, and Royal Collection. In total, there are more than 50 stock-keeping units covering black, herbal and fruit teas. Prices range from 100 yuan to 10,000 yuan per package, satisfying demand from diversified consumer groups.

"At the initial stage, we chose to explore China's tea consumption market with the affordable Colourful Collection, whose average customer unit price was around 300 yuan. The repurchase rate reached 40 per cent," Mr Wu said.

As for the secret to T9's success, Mr Wu said that on the supply chain side, the company cooperates with a 200-year-old tea supplier based in Hamburg, Germany, to ensure flavour quality.

T9 also built its own warehouse to store tea leaves of different categories and made great efforts in product quality control.

Other new Chinese beverage brands are also making strides.

Guangzhou Zetian Trading, the dorayaki maker that Ms Bei loves, launched stamp collection events, attracting dorayaki lovers to visit the stores and buy their pancakes. Likewise, Shanghai-based Pros Coffee Roaster developed Blue Latte - a tasty blend whose colour ranges from blue to white to please visually oriented yet "picky" coffee lovers.

Industry experts said with the rise of Generation Z, consumers' food and beverage choices have been constantly seeing upgrades, and the pursuit of health and quality is now driving trends. This is equally true for both female and male consumers.

According to the report from Ele.me and AliResearch, currently, the four core driving forces for China's afternoon tea market are new consumer needs, supply shortages, industry coordination, and government guidance and supervision.

"Although the pandemic has led to many setbacks, people's afternoon tea consumption habits have formed, and a new round of high-speed growth is coming," the report said.

"Meanwhile, market cultivation in some third- and fourth-tier cities has been initially completed, and the upper echelon of the afternoon tea market at the merchant end has also been formed. Skyrocketing demand has allowed businesses to grow quickly."

Mr Bo Wenxi, chief economist at marketing firm Interpublic Group China, said: "Amid consumption upgrades, it is an inevitable trend that people are buying healthier, higher-end afternoon tea products.

"Therefore, merchants should pay more attention to changes in consumer demand as well as realise the close coordination between marketing, promotion, stocking and supply so as to make more effective, timely and accurate business strategies."

In May 2021, the Tea Research Institute under the Chinese Academy of Agricultural Sciences, together with several other institutions, jointly launched a product standard guideline for tea beverages - the first of its kind in the industry.

The first batch mentioned in the standard covers milk tea, milk-capped tea, fruit tea, bubble tea and chilled tea.

Independent economist Wang Chikun said that the introduction of the standards, which signals the tightening of marketing regulations, demonstrates that the industry has matured.

"Market competition is already fierce. As consumer demand expands, the number of enterprises is growing, and the market is approaching saturation. Therefore, to get the right break, enterprises are expected to focus on enhancing user experience and satisfy refined demand," he said.

The Ele.me and AliResearch report also said that "the rise of guochao and domestic products will be a good opportunity for local brands to grow rapidly".

Join ST's Telegram channel and get the latest breaking news delivered to you.