Bubble Tea Looks to Conquer Under-Penetrated Markets

Once a drink found only in Taiwan, bubble tea continues to attract new consumers on its way to becoming one of the most popular beverages around the world. Growth prospects remain strong as the market is still developing in many countries throughout Asia Pacific and Europe.
By Eugene Gerden

With its broad flavour offerings, customisation, strong interest in the Asian culture, and ‘Instagram-ability’, bubble tea’s popularity continues to grow around the world. The drink was first created in Taiwan during the 1980s and expanded to other Asian countries before slowly moving to Western nations.

Thanks to Gen Z consumers, the bubble tea sector in North America remains strong, where most analysts expect the market will continue to expand with annual growth rates of seven to eight percent. In the US, the bubble tea market was valued at USD $496.75 million in 2024, with the projected growth from $531.69 million in 2025 to $865.87 million by 2032. In Canada, the number of bubble tea shops in some major cities of the country has significantly increased and the market is projected to grow at a compound annual growth rate of 7.3 percent from 2023 to 2033.

But two regions to watch are Asia Pacific, where the bubble tea market is not yet saturated, and Europe, where it is under-penetrated.

According to the Fortune Business Insights research agency, the global bubble tea sector is expected to grow from USD $2.63 billion in 2024 to $4.78 billion by 2032, with the annual growth rates of 7.74 percent during the forecast period. Of these, the share of Asia Pacific region will exceed 42 percent, which makes it the biggest player in the global market. While the overall demand for bubble tea in the Asian Pacific region is still growing, the development of the industry significantly varies depending on the country.

China’s Bubble Tea Boom

The bulk of bubble tea market of the region is concentrated in China, where the market has grown by almost five times since the beginning of the 2020s. At present, its market remains extremely large, characterised by different consumption habits in first-tier and third-tier cities, and different drinking habits in the north and south of the country.

The current popularity and importance of bubble tea in China is reflected by the fact that its boom has created at least six billionaires in the country in recent years and several major local players. For instance, Mixue Ice Cream & Tea, China’s largest milk tea brand, recently announced its plans to further accelerate expansion in the domestic market. The company has about 37,000 stores, which is almost as large as Starbucks. Mixue was co-founded in 1997 by billionaire brothers Chang Hung-chao and Chang Hung-fu, who each have a net worth of $1.5 billion.

Gu Ming Holdings has the second largest share of China’s bubble tea market, with 9,000 stores, while Sichuan Baicha Baidao Industrial Co is China’s third-largest bubble tea chain. It is estimated that there are 600,000 bubble tea shops in China at present, while these numbers are constantly growing. Some Chinese analysts report that the current rapid growth of the bubble tea business is particularly beneficial to tea makers with lower costs, as China’s overall economy has suffered in recent years and consumers have responded enthusiastically to low-priced products.

At the same time, the trend towards lower prices has created serious difficulties for Nayuki Holdings, a high-end bubble tea maker, which has faced a serious drop in demand and sales in the domestic market in recent years.

The China Chain Store & Franchise Association estimates the domestic bubble tea industry’s size at about 145 billion yuan (USD $20.4 billion) and expects further growth with the rate up to 10 percent between now and 2030.

Yu Jian, general manager of Kantar Worldpanel China, a consumer research organisation, said that innovation will continue to be a key to the industry’s success, and “new flavours and new recipes will contribute to the further growth of the market.” He added this strategy helped leading domestic bubble tea chains to expand beyond China’s big cities.

Slow Growing in Japan

In Japan, a tapioca boom began in 2013 when the first of such stores opened in Daikanyama, one of Tokyo’s districts. However, after 2020, it disappeared.

In the second half of the 2010s, the Japanese bubble tea market experienced explosive growth. According to a survey by Yano Research Institute, at that time the market exceeded 70 billion yen, and the number of specialty stores grew to about 5,000 nationwide. The beginning of the Covid-19 pandemic and the lockouts and closures associated with it led to a sharp drop of the local market, which, in contrast to China’s, had been unable to return to pre-pandemic figures.

This is also reflected in the latest statistics of the Japanese Ministry of Finance, which reported that the imports of various ingredients that are used in the production of bubble tea in Japan declined several times, compared to 2019. For example, in the case of tapioca, its imports fell from about 17,000 tonnes in 2019 to no more than 2,400–2,500 tonnes at present. That also led to the massive closure of bubble tea shops in the country.

Demand Rises in the EU & UK

The demand for bubble tea is also growing in Europe, although its share is estimated at only about 12–15 percent ($350–400 million in value terms) in the global market, which makes it promising for further growth in years to come.

As in case of Asian nations, the pandemic hit the bubble tea market in Europe hard (although the stagnation of the market began much earlier). Still, since the beginning of the 2020s, the market has demonstrated generally good growth rates, which is observed in most countries of the region. For example, in Germany, bubble tea’s popularity peaked during the 2010s, after which the industry suddenly declined. One explanation for this was the existing claims of the carcinogenic origin of some ingredients used in the production of bubble tea (which were recognised as unfounded later). Those reports, along with some other factors, resulted in a drop of demand for bubble tea in the German market.

However, the situation has changed in recent years. According to the German Schwerin Lokal business paper, one of the major reasons for the ever-growing popularity of bubble tea in Germany is the variety of flavours along with the increased demand by German customers for healthier alternatives to other sweetened drinks.

Recently, bubble tea’s popularity has returned not only in the largest cities of Germany, but also in rural areas of the country, with the biggest demand for it being observed from German youth. The ever-rising popularity of the drink is leading to the growth in the overall number of bubble tea shops in Germany. These trends are also supported by an increased interest in Asian culture in Germany.

A similar trend is being observed in France, where the number of bubble tea shops has almost doubled in the last several years. The drink is positioned as part of the Taiwanese street food culture, fuelled by the island’s subtropical climate and it enjoys a high demand among local customers. According to a report in the French Les Echos paper, the Asian diaspora living in France has successfully imported the concept of bubble tea to France itself, as well as to Anglo-Saxon countries, particularly the United States.

Today, the demand for bubble tea in France (along with its original taste) has led to a wide range of varieties available in the local market, with menus of many of local restaurants and cafés offering up to 60 options.

Per statements made by bubble tea shops owners in Paris, local consumers’ tastes are constantly changing. However, the wide selection of bubble teas available in the local market enables them to meet these fickle consumers’ preferences.

For example, the current trend is dalgona bubbles, a kind of ‘toffee sponge’ popularised by the Taiwanese chain Xing Fu Tang, and granita-style slushies. Adding oatmeal, cornflakes, or nata de coco jelly is also popular. Some stores are pushing the boundaries by offering avocado yogurt topped with green tea jelly, whipped cream, and walnuts, or a frappe with kefir, lychee, and activated charcoal.

The demand for bubble tea is also growing in Italy, which is known for its traditional love of coffee. One study, conducted by the Italian research agency and tech investment bank Growth Capital, found that Italy currently represents over 15 percent of the European bubble tea market, which is equivalent to about EUR 50 million in value terms.

The growth of the market is mainly due to the rapidly rising number of bubble tea shops throughout the country, which has almost doubled in the last four to five years, currently estimated at about 300. Geographically, most of the locations are located in the large cities such as Milan, Rome, Turin, Florence, as well as Bologna, Naples, and Genoa. These shops are typically opened on streets with high tourist and pedestrian flows and high office density, and in neighbourhoods known as ‘China Town’, leveraging the Asian origins of the drink.

In terms of structure, the Italian bubble tea market is highly fragmented, tied to three main chains: Bobble Bobble, with a market share of seven percent; Frankly, with a market share of five percent; and Mistertea.

Last month, bubble tea chain Gong Cha announced ambitious plans to open more than 225 stores across the United Kingdom and create nearly 2,000 jobs after signing a franchise agreement with Jinziex. Gong Cha, which was founded in Taiwan in 2006, and moved its global head office to London in 2019, said the deal with Jinziex forms part of its wider strategy to reach 10,000 locations across the world by 2032.

Gong Cha currently operates more than 2,100 locations across 28 countries. In the UK, Gong Cha currently runs 13 stores.

Barriers to Growth

According to earlier statements made by Andrea Casati, an official spokesman of Growth Capital, “there is a tendency to include bubble tea among the offerings of commercial establishments outside of stores focused on this product, such as yogurt and ice cream or poké chains, but also generalist bars and supermarkets.” Still, according to some analysts, the success of bubble tea in most European countries is surprising, given the fact that it costs much more than a coffee (between four and eight euros).

In addition to generally high prices, another challenge, which may limit a more active growth of the market is the supply chain, with products coming almost exclusively from Taiwan.

However, there is a possibility that the supply chain problem may be largely resolved in the near future, as many local sellers and chains have begun to launch their own small production of various ingredients, which are used in the production of bubble teas, such as alginate beads and syrups. For example, in France, two young entrepreneurs have launched Nostea, a company manufacturing syrup beads, near Montpellier.