Chinese Milk Tea Brands Expand in Korea With Jang Won-young’s Support

The popularity of milk tea is on the rise, especially among younger consumers seeking alternatives to coffee. A recent incident involving IVE member Jang Won-young highlighted this trend when she tried Chagee’s milk tea in a livestream, leading many fans to explore the brand now poised to enter the Korean market.

That brand is Chagee, a Nasdaq-listed Chinese tea chain preparing to launch its operations in Korea within the upcoming months. “Chagee is currently preparing to enter the Korean market, but we are still at the early stages of preparation,” representatives stated to the Korea JoongAng Daily, without providing a specific timeline for their opening.

The entrance of Chagee comes at a time when milk tea is becoming a staple in the beverage culture, with many consumers opting for it over coffee. For a long time, Gong Cha was the only dominant name in the milk tea franchise, but recent competitors like ChaPanda and Heytea have captured consumer interest as well.

Observing a ChaPanda location in the Mapo District and a HeyTea outlet in Myeong-dong during a weekday revealed numerous young customers either enjoying their milk tea or waiting for their orders. “In Gong Cha, you don’t often see a drink like this with such a big emphasis on fruit,” noted customer Lee Soo-hyun, who preferred ChaPanda’s unique offerings over Gong Cha’s traditional bubble tea.

Milk tea landscape in Korea

The concept of milk tea, particularly bubble tea with tapioca pearls, has deep roots in South Korea, tracing back to Gong Cha’s arrival in 2012. The brand popularized a mix-and-match model, allowing customers to personalize their drinks by selecting base teas and other ingredients like tapioca pearls and jellies, alongside customizable sugar and ice levels.

Gong Cha’s success led to a remarkable phase in the market, with the Korean division briefly acquiring its Taiwanese parent company in 2017 before being taken over by the U.S.-based private equity firm TA Associates. It remains a significant player in Korea, boasting nearly 900 locations—approximately half the number of Starbucks stores nationwide.

In the mid-2010s, the popularity of Taiwanese brands like The Alley and Tiger Sugar ushered in a fleeting brown sugar milk tea trend, which captivated young consumers before gradually waning.

The current milk tea scene in Korea is diverse. While Gong Cha remains the leading brand, its store count has stagnated in recent years, never surpassing 1,000 locations. In contrast, Gong Cha continues to innovate its product lineup, introducing new flavors each month, though it still falls short compared to Starbucks’ staggering sales of grapefruit honey black tea over the past decade.

The second coming of tea franchises

Recent entrants from the Chinese milk tea arena, such as Chagee, are carving out their niche without simply replicating Gong Cha’s model. The brand positions itself on a more premium tier, utilizing whole leaf teas and fresh milk instead of powders. Notably, Chagee does not include tapioca pearls, encouraging customers to appreciate the authentic flavors of their teas.

Chagee also offers a wider variety of teas, showcasing different types beyond the regular selections seen at other brands. Examples include offerings such as Tie Guan Yin Emerald and Osmanthus Long Jing, paralleling selections found in high-end tea shops.

ChaPanda, in a similar vein, emphasizes fresh fruit-based drinks, featuring flavors like Jeju tangerine and watermelon jelly tea. The brand underscores its commitment to real ingredients by prominently displaying fresh fruits in their storefronts.

According to a spokesperson, Korea was chosen as ChaPanda’s first overseas market due to its mature beverage culture shaped by coffee brands, despite the relatively nascent tea culture. “The Korean milk tea industry is still in its early stages of growth,” the spokesperson noted, indicating a development room for fruit teas that still lack widespread recognition among consumers.

ChaPanda aims to open a total of 100 stores across Korea by the end of this year, extending its reach beyond Seoul.

Many customers reportedly return to ChaPanda after their first experience, with over 70 percent of clientele being Korean, contrasting with the demographics of many Chinese milk tea places primarily frequented by tourists and students.

Conversely, HeyTea also capitalizes on the freshness of their tea, offering premium milk tea selections. The brand is recognized for being a pioneer of milk tea topped with cream cheese foam.

Interestingly, during a weekday visit to the HeyTea location in Myeong-dong, there was a balanced mix of Korean patrons and Chinese-speaking customers, showcasing broad appeal.

However, the pricing of these premium offerings can be a disadvantage. “The HeyTea milk tea I tried tastes better than Gong Cha’s offerings, but I’m unsure if it’s worth the higher price,” shared Lim Hyun-jun after sampling the tiramisu milk tea, which costs significantly more than Gong Cha’s chocolate milk tea despite its distinctive topping.

Key Takeaways

• The recent surge in milk tea popularity among young consumers has opened doors for new brands like Chagee.
• Chagee aims to differentiate itself in the Korean market with premium ingredients and a diverse selection of teas.
• ChaPanda focuses on fresh fruit-based drinks, capturing a growing segment of health-conscious consumers.
• Both Chagee and ChaPanda are targeting significant expansion in Korea with numerous store openings planned.
• Competitive pricing remains a challenge for premium milk tea brands in Korea.

FAQ

What is Chagee known for?

Chagee is recognized for its use of whole leaf tea and fresh milk, providing a premium milk tea experience without tapioca pearls.

Why are ChaPanda’s drinks considered unique?

ChaPanda emphasizes fresh fruit ingredients, distinguishing its offerings from traditional milk tea options.

Are these tea brands expanding quickly in Korea?

Yes, both Chagee and ChaPanda have plans for significant store expansions in Korea, aiming to reach a wider customer base.

What’s the main audience for these new milk tea brands?

While many Chinese milk tea shops cater primarily to tourists, brands like ChaPanda attract a large percentage of local Korean customers.

How do prices compare between different brands?

Premium milk tea brands tend to have higher prices, leading some consumers to question the value compared to traditional offerings.

BY CHO YONG-JUN [[email protected]]