
In China, Japan, and Taiwan, “new style” tea is gaining share from sweetened and artificially colored bubble tea, establishing a trend pioneered by HeyTea and Nayuki, a Shenzhen-based cheese tea and bakery chain with 400 locations in China and three in Singapore.
Less sweet tea combinations of fruit, milk, and whipped cheese marketed to health-conscious young people, are poised for entry into Western markets.
Nayuki recently released a Chinese language white paper on consumer trends researched by 36Kr, a publicly-traded database and market research venture that tracks and advises startups.
“Monthly consumption of new-style tea drink reached a new high in 2019,” according to 36Kr. Consumer surveys reveal “that 83% of drinkers purchase 5-14 cups of freshly brewed tea every month, and 72% of customers spent RMB200 ($29) on their monthly tea fix,” according to the36Kr’s 2019 New-Style Tea Drinks Consumption report.
Females are the core patrons across all age groups, accounting for more than70% of purchases, followed by post-90s males (ages 21-30). Customers prefer cold-brewed tea served with fruit, topped with cheese, and sold with a soft “euro-bake” pastry.
At Nayuki, fruit teas are the most popular drink, ordered by 83% of customers, followed by milk tea (65%). A consumer survey from November 2019 to January 2020 for the first time showed sales of non-sweetened products outselling calorie-rich cheese tea. Cheese is the favored topping by 75.4% of customers.

High-sugar beverages average 7.5 grams per 100 grams by weight, according to 36Kr. Nayuki sells beverages that average 5.9 grams per 100 grams along with six sugar-free teas.
The data suggest that innovative tea brands across China are changing perceptions about a drink traditionally consumed by older generations, observes co-founder Peng Xin.
Nayuki is a vertical that owns tea gardens “where tea is cultivated under strict conditions,” said Peng.
Nayuki, now four years old and valued at RMB600 billion, is the first unicorn ($1 billion startup) in the new-style tea segment, wrote Peng. In 2018 the company attracted several hundred million in Series A funds from TianTu Capital to finance its expansion.
The pastry is essential to the concept with offerings that feature European baking methods that use less oil, less sugar, and less salt.
“Deliciously soft with a chewy center wrapped in crisp outer layers, Nayuki’s soft bread delivers a buttery aroma, well-balanced nutrition and taste that pairs perfectly with a cup of cream-topped fruit tea,” wrote Peng, a woman in her early 30s who partnered with her husband Zhao Lin to launch the company.
In November, Nayuki opened an 11,000 square foot experiential “Dream Factory” in Shenzhen that expands offerings to include coffee, cocktails, and a more extensive line of desserts. The Shenzhen “Dream Shop” is the largest Nayuki outlet; most of its retail locations are sized from 1,200 to 4,000 square feet. According to Business Insider, stores average RMB1 million ($140,000) in monthly sales. The company opened 180 stores in the past two years.
Spokesperson Elaine Wang Yi said the United States store will open this year in the New Jersey American Dream shopping mall. Nayuki will also open its first store in Osaka, Japan in 2020.
She said, “Many new teahouse openings planned for 1QTR are likely to be delayed due to the coronavirus, but we believe that with careful planning we will be in a position to catch up with our original expansion plans once the epidemic is largely contained.”
“As soon as the coronavirus outbreak winds down, we believe our strong supply chain capabilities, well-recognized brand, massive customer base, and effective self-operated teahouse network will allow us to efficiently resume normal operations and recover from this temporary business disruption,” said Wan Yi.
Bubble Tea Evolving
The trend to more natural flavors, fruit mixed with tea, and less sugary blends are also evident in the bubble and milk tea market segment. Market research firm Technavio monitors the global bubble tea market and reports that it is poised to grow by $963.05 million during 2019-2023, progressing at a CAGR (combined annual growth rate) of more than 7% during the forecast period.
Milk tea sales dominate the new-style segment. HeyTea, founded in 2012 features imported cheese from New Zealand and is the primary competitor for cheese tea. The company recently received $75 million (RMB500 million) in second-round funding from investors.
Wenjun Technology estimates beverage store sales of traditional milk tea was $5.87 billion (RMB41.3 billion) in 2016, a 14.5% year-over-year increase. The total includes traditional tea shops, tea houses, dessert shops. Sales increased to $8.6 billion (RMB61 billion) in 2019 and will grow to $11 billion (RMB78 billion) by 2021, according to a report published by Equal Ocean titled A Blessing and Curse for China’s New Tea Industry.
The 36Kr white paper predicts sales of freshly made tea-base fused with milk, cream cheese, fruit, and toppings will exceed the coffee market by 200%.
Fusion tea has been growing at breakneck speed since 2016, numerous modern teahouses have made inroads into the rising beverage market, launching an array of creative and healthy tea-related beverages to attract young customers, according to 36Kr.
According to the whitepaper, the tea market, with the combined industry-scale of blended and traditional teas, was projected to exceed RMB400 billion ($58 billion) by the end of 2019, twice as big as the coffee market, which is estimated to reach RMB200 billion ($29 billion).
Sources: Nayuki, Technavio, Business Insider (Malaysia), 36Kr, Equal Ocean.