Inside the Explosive Growth of the New Tea Beverage Sector: Supply Chains, Innovation, and Cultural Capital

The new tea beverage sector is gradually entering its next phase. Once a rapidly expanding industry valued at over RMB 100 billion, it reached its peak in 2025. Mixue Ice City established a global presence with 46,000 stores, dominating lower-tier markets, while BaWang ChaJi debuted on the Nasdaq with a market capitalization exceeding USD 5.9 billion on its first trading day. Despite these achievements, industry growth has slowed from 25.2% during 2018–2023 to a projected 15.4% over the next five years, according to Frost & Sullivan, placing major players at a critical juncture amid fading incremental dividends.

The global tea beverage market has surpassed USD 200 billion, with China accounting for over RMB 300 billion, occupying a significant share globally. In this rapidly growing market, Mixue Ice City and BaWang ChaJi have emerged as prominent brands. Mixue Ice City relies on ultra-low-priced products such as RMB 2 ice cream and RMB 4 lemon water to drive its "grassroots counterattack" positioning. By the end of 2024, the company had 46,000 stores globally, surpassing McDonald's to become the largest restaurant chain worldwide by store count. BaWang ChaJi, through its fresh leaf milk tea positioning and distinctive Chinese cultural branding, saw its store count exceed 3,000 by 2023. Its GMV increased 38% year-on-year in Q1 2025, and its flagship product "BoYa JueXian" surpassed 600 million cups sold.

Both companies have demonstrated robust performance. From 2022 to 2024, Mixue Ice City’s revenue grew from RMB 13.6 billion to RMB 24.83 billion, representing a 35% compound annual growth rate. Its terminal retail sales reached RMB 58.3 billion, and the average daily sales per store exceeded RMB 4,000. BaWang ChaJi’s revenue surged from RMB 492 million to RMB 12.405 billion, with a CAGR of 400%. In 2024, its average monthly GMV per store reached RMB 512,000.

Capital market activity reflects the industry’s heat. In March 2025, Mixue Ice City listed on the Hong Kong Stock Exchange as the world’s largest freshly made beverage company. Its share price rose over 29% at opening and peaked at 42.52%, reaching a market value of over HKD 100 billion. In April, BaWang ChaJi went public on Nasdaq as the first new tea beverage stock in the U.S., opening with a 20% increase and closing with a market cap exceeding USD 5.9 billion (about RMB 43.4 billion).

The sector has also seen an influx of capital. HeyTea’s post-investment valuation reached RMB 60 billion in its latest round, a RMB 40 billion increase within six months. Xinshiqi Milk Tea has plans to enter the Hong Kong capital market, while Chayan YueSe reportedly shifted from a Hong Kong IPO to U.S. listing plans in December 2024. Leading brands such as Sweetala, YiHeTang, Shuyi Grass Jelly, HeyTea, CoCo, 1 DianDian, YumFresh Milk Bar, NingJi Lemon Tea, and LinLi Lemon Tea are all rumored to have IPO ambitions.

Market concentration in the new tea beverage sector is increasing, especially in the high-end market. Mixue Ice City commands a 20% market share, and the top five freshly made tea brands account for 44.2%. As the market nears saturation, mid- and low-end segments are experiencing intense competition. According to iiMedia Research, China’s new tea beverage market was estimated at RMB 354.72 billion in 2024 and is expected to exceed RMB 400 billion by 2028, indicating a transition to a stock-driven competition phase.

The sector's explosive growth is attributed to the convergence of changing consumer habits, supply chain innovation, and the rise of cultural value. The essential drivers include inclusive access, health-focused upgrades, and emotional value. The industry is shifting from a phase of wild expansion fueled by traffic and scale to an era focused on refined management and differentiated innovation. Mixue Ice City’s success illustrates the power of affordable offerings. With an average product price of RMB 6, it built a formidable scale barrier in lower-tier markets. By end-2024, 57.2% of its 46,500 stores were located in cities below tier three, covering more than 4,900 towns across China (13% of the total). The company optimized its supply chain by establishing its own raw material factories, cutting lemon procurement costs by 20% below industry averages, and achieving a logistics cost of RMB 0.1 per cup. In the first three quarters of 2024, 97.6% of revenue came from supply chain sales (RMB 18.22 billion), with franchise service fees contributing only 2.4%.

Mid-range brands like GuMing and ChaBaiDao expanded rapidly with highly standardized franchise systems within the RMB 10–20 price band. Research indicates GuMing operated over 9,000 stores by end-2024 (80% in tier two or lower cities) with a net profit margin of 14.3%. 76% of its stores were located within 150 kilometers of warehouses, supporting frequent fresh fruit deliveries and forming a closed-loop system integrating franchising, stores, and supply chain.

Consumer preferences have structurally shifted. According to the 2024 Freshly Made Tea Beverage Health Awareness Report by China Consumer News, 50.47% of consumers prioritize transparency in ingredients, 44.13% focus on authentic ingredients, and 30.99% aim to control sugar intake. Regulatory developments have accelerated industry upgrades. New food safety regulations ban canned preservatives and restrict additives, pushing supply chains toward natural ingredients. Leading brands are investing in technology: HeyTea introduced the "Four Real and Seven Zero" health standard, while BaWang ChaJi used supercritical extraction to reduce caffeine content to below 0.6%, launching the "Light Cause" series to address milk tea-related insomnia.

New tea drinks are also becoming emotional and social symbols for Gen Z. Grandpa Doesn’t Brew Tea’s “KongShan Gardenia” series combined Sichuan Leshan gardenia with dual tea bases, selling over 1,000 units per store within the first week and surpassing 10,000 social media mentions. BaWang ChaJi leverages cultural IPs like "BoYa JueXian" to reinforce its brand’s oriental aesthetic and premium positioning. As the market shifts to stock-based competition, repurchase rates have become critical. Average industry repurchase rates stand at around 15%, but top-tier brands have increased this to 30%–45% through layered membership systems, mini-app hubs, and community engagement. Nayuki’s Tea designed tiered membership benefits, growing its private domain to over 36 million in 2024 with monthly membership growth of 2–3 million. GuMing achieved a 53% quarterly average repurchase rate in 2023, while Auntie Shanghai surpassed 30 million private domain members with over 40% repurchase rate.

Community operations and paid memberships now drive deep user engagement. Enterprise WeChat groups offer time-limited perks, such as Luckin’s location-based coupons, boosting purchase frequency by 1.5 times. Nayuki drives conversion by launching new products in WeChat groups, raising mini-app order share to 70%. Paid memberships focus on high-value users, with HeyTea tripling repurchase rates and Luckin’s private domain repurchase rate reaching 58%–60%, far exceeding the industry average.

Leading brands have established integrated supply chains to combat raw material volatility. Public data show Mixue Ice City’s self-produced material rate reached 60% (100% control over key ingredients), cutting costs by about 50%. Five major production bases support its national network. GuMing enhanced its cold chain system to stabilize fresh fruit supply. In contrast, smaller brands lack resilience. According to the Ministry of Agriculture and Rural Affairs, China’s wholesale lemon prices averaged RMB 12.75/kg in June 2025, a 28.3% increase from April and a 61.4% year-on-year rise, posing supply risks for brands without self-owned orchards.

As the industry moves from expansion to efficiency and innovation, supply chain depth, health-focused technology, and private domain capabilities have become moats for top-tier brands. However, the transformation has also introduced structural contradictions such as uneven standards, intensifying product homogeneity, and profitability divergence among franchisees. These growing pains could trigger the next round of industry reshuffling.