Boba Boom! Social and Economic Impact of Milk Tea's Evolution in Chinese Consumer Market

Introduction

Milk tea has become a popular beverage among the young generation, and understanding its evolution and impact in countries such as China and the United States can provide insightful observations on how modernization and cultural exchange shape food trends and influence social and economic structures. Furthermore, milk tea's popularity and growth as a market can provide valuable insights into consumer behavior and business strategies, making this a relevant and important topic to study.

Before delving into the discussion, some terminologies need to be clarified. In this paper, the term "milk tea and its variations" refers to all beverages made with tea bases, milk products (including cheese foam or cheese cream top), sugar syrup, and other toppings. It is important to note that the milk tea market is mainly differentiated into two segments: traditional and new-style, with all familiar brands belonging to the "new-style" cohort, such as Happy Lemon, Coco, HeyTea, The Alley, and others. These new style milk tea brands typically serve many variations of milk tea, including boba milk tea, fruit tea, cheese cap, and flavored pure tea.

The significance of milk tea lies in its becoming a cultural icon that transcends borders and becomes an integral part of many people's lives. Boba milk tea, originating in Taiwan and popularized globally, has undergone significant evolution and adaptation in both the Chinese and US markets, playing a significant role in shaping cultural norms, generating economic opportunities, and reflecting changes in modern consumer preferences. As boba milk tea travels beyond borders, it induces positive and negative cultural interactions. Milk tea and its variations can be a valuable case study for understanding the societal and economic factors shaping the modern food market and consumer behavior.

A Brief History of Milk Tea

Milk tea has gained popularity across many civilizations and geographic areas, including China, where tea drinking has long been an integral part of the culture. Tea was first consumed because of its caffeine content, which stimulates the central nervous system, reduces sleepiness, and increases vigilance. Like coffee, tea quickly dominated the world market and has led to numerous variations in recent years. (Grigg 283-5). Milk tea is a fusion of traditional Chinese flavors and Western influences, with milk and sugar added to tea to balance its bitterness. The beverage has expanded its influence worldwide, with various regional variations and convenient packaging options emerging in the modern era.

Tea was first imported to Europe by Dutch traders in the early 17th century, but only in England did it take root. The British created a new beverage called "milk tea" by adding sugar and milk to brewed tea to balance its bitterness. Over time, milk tea has expanded its influence worldwide, with some variations developed during the colonial period and others being indigenous culinary practices.

Examples of milk tea variations include Thai iced tea, Tibetan milk tea, Hong Kong milk tea, Hokkaido milk tea, and Taiwanese black sugar boba milk tea. These beverages differ significantly in texture, ingredients, and culinary practices. For instance, Tibetan milk tea is brewed with black tea, yak butter, and salt, while Taiwanese black sugar boba milk tea is a mixture of traditional pure tea, black sugar tapioca boba, and milk (Yip).

With the evolution of mass production in the food industry, new niche markets have emerged in the milk-tea industry. In the early 2000s, some companies began packaging pre-produced powdered milk and tea into paper cups for easy consumption by adding hot water. In addition, fresh handmade milk tea beverages have become ubiquitous in both Chinese and California food plazas, designed to be portable and convenient for on-the-go consumption.

Milk Tea and Culture

Milk Tea as a synthesizer of Traditional and Modern Chinese Culture

The emergence of milk tea cannot be examined without considering Chinese tea culture, as the latter has had a significant influence on boba milk tea. Chinese culinary tradition has been reflected in milk tea in various ways since ancient times. According to the concept of the "culinary triangle," every aspect of food represents a patterned activity complete with symbols and its own structures of meaning, projected either directly or indirectly (Colás 62). The use of tea as the primary ingredient alludes to China's long-standing practice of tea drinking, which holds cultural and social significance, representing friendliness, respect, and harmony. Many Chinese foods and beverages, including boba milk tea, blend traditional Chinese culinary practices with Western influences, reflecting the integration of different culinary practices.

Tapioca pearls in boba milk tea are another example of how Chinese culinary culture has influenced the beverage. Tapioca starch has long been used in Asian cuisine as a stabilizer or cohesive gel due to its stringy and cohesive paste and its flavorful nature, making it a great ingredient for pastry fillings and desserts. Traditional Chinese desserts such as sweet soups and puddings have long used tapioca pearls made from cassava flour. By adding these pearls, boba milk tea has a distinctive texture and taste that sets it apart from other tea-based drinks. (Moore et. al 575).

Finally, the emergence of new style milk tea shops and brands that highly emphasize their tea, Chinese culture, or unique traditions of Chinese society can also be seen as a reflection of Chinese culinary culture. These businesses often incorporate elements of Chinese aesthetics and culture into their branding and marketing, such as the use of red and gold colors, Chinese characters, and traditional decoration patterns, which further reinforce the connection between boba milk tea and Chinese culture.

One noteworthy case study is the Chinese milk tea brand Chayan Yuese, or “Sexy Tea”, founded in Changsha, China. Compared to HeyTea, Chayan Yuese is more "low-key" and approachable to consumers, typically located in the small alleys of the city. Chayan Yuese aims to promote Chinese culinary culture through their product to younger generations, as reflected in their slogan "Zhongcha Xizuo(中茶西做)" or "Brew Chinese Tea in the Western Way." Chayan Yuese carefully selects the most representative tea types, including Oolong, Jasmine, and Highland Four Seasons, to blend with "western products" such as whipped cream, and also innovates by adding fresh fruits to their drinks. Furthermore, all of the drinks' names are derived from traditional Chinese literature, further reinforcing the brand's connection to Chinese culture. In addition to its products, Chayan Yuese's social media campaigns actively incorporate traditional Chinese poems and visual elements, further reinforcing its connection to Chinese culture (Yi). Brands like Chayan Yuese provide a prime example of how the fusion of traditional and modern elements can create a successful and culturally relevant product that resonates with consumers.

Figure 1: Heytea & Fenty Beauty Bubble Tea Collaboration from FentyBeauty Weibo Official Account, May. 2020

Milk Tea as a Reflection of Modern Trends and Social Practices

New style milk tea, in its meteoric rise to prominence, has come to serve as a reflection of modern trends and social practices. The beverage's highly customizable nature mirrors the current societal emphasis on personal expression and individualism. People have the freedom to tailor their milk tea to their liking, choosing from an array of flavors, toppings, and sweetness levels, which further reinforces the idea that personal preferences matter in today's world. Its popularity among young adults also made it a prominent alternative to coffee as a social drink. By the end of 2020, new-style tea retail stores and market size are both increasing steadily. Research done by Daxue Consulting suggests the number of new-style tea consumers has reached 340 million and is still growing, which resulted in a decreasing demand in tea bags and instant coffee category (“The Secret Recipe of HeyTea’s Buzz”). As milk tea has become a "social" and "recreational" drink in Chinese workspaces, it highlights the changing dynamics of professional environments. Workspaces are increasingly adopting a more relaxed and collaborative atmosphere, where colleagues bond and share experiences, and milk tea serves as a catalyst for these interactions.

In addition, milk tea's active participation in social media campaigns showcases the power of digital platforms in shaping contemporary consumer culture. The use of influencers, targeted advertising, and visually appealing content connects milk tea brands to their audience in a manner that resonates with the digital-savvy younger generations. The strategic partnerships between milk tea brands and fashion icons, like Fenty Beauty, underscore the growing interconnectivity between various industries in the modern age. This alliance represents how contemporary trends and social practices often blur the lines between categories, resulting in collaborations that drive innovation and push boundaries (Hall).

Milk tea not only reflects social trends and consumer preferences within the Chinese market but also beyond it. In the early 2000s, Taiwanese boba milk tea was introduced into American culture by Taiwan immigrants, leading to adjustments in its recipes and marketing strategies (Yan). Similarly, Subway altered its branding strategy and recipes after entering the Indian market, owing to cultural differences (Simi 578). The adjustments made to the new style milk tea in America are subtle yet vital, with changes in toppings and flavors, just like Subway's removal of beef and pork in its sandwiches to cater to local culinary practices. While Chinese-style milk tea emphasizes the tea base, American-style milk tea tends to offer more variations in its flavor, particularly in syrups. However, unlike American consumers who are more tolerant of sugar levels, Chinese consumers are more sensitive to the sugar content of their drinks. A 2020 Statista survey shows over 80% of Chinese consumers (Figure 2) prefer sugar-free drinks (Ma). Primary research and personal interviews also reveal that American consumers tend to have a higher tolerance for sugar levels, leading to the “American” style milk tea being significantly sweeter than the Chinese version.

Figure 2: Chinese New Style Milk Tea Consumer Sugar Level Preference, Ma 2020.

Milk Tea and Economy

Milk Tea as a Product of Modern Food Commercialization and Mass Production

The emergence of new-style milk tea as a food product has significant economic implications in addition to its social and cultural influence. It epitomized food modernization, having originated in Hong Kong dim sum/tea shops in the 1970s as a snack and was later introduced to teenagers in Taiwan by street vendors, quickly gaining popularity. In 1987, Chun Shui Tang, a beverage/tea shop, innovated boba milk tea. These chewy and sweet beverages quickly captured the attention of teenagers and young adults in Taiwan, leading other companies to seek a market share. In 1996, the "Quickly" Group established a milk tea chain store in Taiwan and introduced it into mainland China in 1998. At that time, the drink did not contain true milk or tea but flavored tea powder and milk powders.

After 2000, as people's living standards improved, consumers began to demand more authentic and high-quality milk tea freshly prepared by trained baristas. This led to an increase in the consumption of milk tea and the establishment of numerous milk tea shops. Milk tea's success as a product of modern food commercialization and mass production has been demonstrated by the growth of the industry, with companies investing in training baristas and using high-quality ingredients to produce authentic milk tea beverages. In 2021, the estimated market size of Chinese new style milk tea is 365 billion RMB and 110.2 million consumers (Figure 3). The average milk tea price (Figure 4) increased from an average of 5 CNY in the 1990s to between 12 CNY and 18 CNY in 2022 (Du 223). In 2018, the highest average per customer transaction was 30.7 CNY, compared to the low-tier brand, YiDianDian, which has 13.5 CNY per customer transaction (“2018-2019 China Milky Tea”). The report also indicates that nearly 70% percent of the target customers are willing to purchase beverages over 15 CNY

Figure 3: Chinese New Style Milk Tea Market Size 2017-2019, DaXue Consulting, May 2021.

Figure 4: Price of Milk Tea in Chinese Market, Du, Feb.18, 2022.

Moreover, milk tea has witnessed a revolution in Chinese food pick-up/delivery platforms, with milk tea becoming the most-ordered category on these platforms. Milk tea stores have also launched innovative mini-programs on WeChat to make food delivery more convenient and efficient for consumers while establishing a well-formed consumer management system. The most successful brand in launching this is HeyTea. HeyTea has designed its mini-program on WeChat (Figure 5) to reduce in-store waiting time and meet the overwhelming consumer demand, catering to the fast-paced lifestyle of modern city dwellers who require convenience and rapid service. This strategy has decreased average customer waiting time by a third. Furthermore, HeyTea has launched HEYTEA GO offline stores to serve customers who live in residential districts far from city centers or large shopping malls, with 102 new HEYTEA GO stores opening in 2020 alone. Thus, milk tea's success as a product of modern food commercialization and mass production has been demonstrated through these developments in the industry(“The Secret Recipe of HeyTea’s Buzz”).

Figure 5: HeyTea WeChat Mini Program, HEYTEA GO

The success of any milk tea brand also depends on the quality of customer service, which includes factors such as wait time, packaging, and product quality. According to iiMedia Consulting, a significant percentage of consumers, around 74.5%, are willing to wait up to 30 minutes for their milk tea, while 12.4% refuse to wait at all(“2018-2019 China Milky Tea”).. In this regard, automation plays a crucial role in meeting customer expectations. The use of machines such as Automatic Tea Brewers, Fructose Dispensers, Shaker Machines, and Automatic Plastic Sealing Machines has substantially increased the efficiency of milk tea production, resulting in faster service and reduced wait times ("Milk Tea Equipment and Supplies List").

The incorporation of automation in milk tea production has significant implications for efficiency and product quality, meeting customer demands and enhancing customer satisfaction. Although no scholarly data is available to determine the exact amount of time saved using machines, my personal experiment at home suggests that hand-making a bottle of milk tea, including brewing tea, boiling milk, and adding flavor, takes around 10 minutes on average. A milk tea shop typically produces 150-200 bottles per opening day, taking around 1.8 to 2.4 minutes to prepare each bottle. However, this rough experiment did not account for the variations of flavors that new-style milk tea stores typically offer, and the manual labor required to prepare boba, cut fruits, and shake the drink without the assistance of machines. By reducing preparation time by up to 76%, automation speeds up the preparation process and ensures consistency in product quality as machines accurately measure and dispense ingredients. Therefore, incorporating automation in milk tea production is crucial for meeting customer demands and maintaining high product quality. Milk tea's automation is a prime example of how modern food commercialization and mass production adapt to automation to accommodate the growing demand among target consumers.

Milk Tea as a Pioneer in Adapting to O2O Food Delivery Economy

Milk tea is an example of how food products adapt to the growing demand for online-to-offline (O2O) food delivery/pick-up services. The number of O2O food delivery customers increased by 22.7% from 343 million to 421 million from December 2017 to June 2019 (Zhao et al.). Among all drinks categories, milk tea comprised 67.7% of the entire category. Significant changes have been made in milk tea packaging to meet the increasing demand for O2O food delivery platforms. In the past, handmade milk tea was poured into a teacup for immediate consumption. However, for almost all new-style milk tea brands, packaging has become a critical way to express brand awareness, improve consumer satisfaction, and meet the growing demand for food delivery platforms.

A case study on HeyTea's packaging strategies includes their innovation of a drink-special temperature-retaining delivery bag and a rotating cap for customers to taste their special cheese cap. Compared to the standard plastic sealing consumers need to break to drink, the rotatable cap is a clear differentiation and an easy way to emphasize HeyTea's specialty in its cheese cap (Figure 6). The temperature-retaining delivery bag ensures that the milk tea remains optimal during transportation, improving customer satisfaction and re-enhance HeyTea’s luxurious brand image. In this manner, milk tea brands have utilized packaging to differentiate themselves and enhance the consumer experience, adapting to the growing O2O food delivery/pick-up services trend.

Figure 6: HeyTea’s Packaging Strategies for O2O Delivery Services, DaXue Consulting, 2022.

Figure 7: Number of Milk Tea Shops in China, Noël. Sep. 9, 2020.

The increasing demand for online-to-offline (O2O) delivery platforms has necessitated milk tea brands to optimize their store locations and configurations to expand their service areas. During the first half of 2019, customers born in the 1980s and 1990s placed over 86.3% of total O2O food delivery orders (Zhao et al.), and this demographic constitutes a significant portion of milk tea consumers. Consequently, milk tea shops must strategically select locations to maximize their coverage within their target market, focusing on areas such as subway stations, transportation hubs, shopping malls, and residential communities.

In 2020, China was home to approximately 500,000 milk tea shops (Figure 7), with HeyTea being one of the leading brands. As previously discussed, HeyTea employed innovative strategies, such as using WeChat mini-programs to reduce in-store waiting times by enabling customers to order ahead. This approach allowed consumers to place orders without needing to register on multiple food delivery platforms, accumulate rewards more conveniently, and ultimately decrease the average customer waiting time by a third (Noël 2020). However, not all new-style milk tea shops possess the resources to develop and operate mobile applications. As a result, many collaborate with O2O delivery platforms to extend their services. Almost all milk tea shops in China provide delivery/pick-up services through O2O food delivery platforms.

In addition to regular food catering services, milk tea shops actively engage in digital social media campaigns facilitated by delivery platforms. A prevalent strategy involves offering consumers a coupon in exchange for sharing a "five-star" review on the delivery application. These innovative strategies serve to enhance milk tea shops' brand presence and customer reach while addressing the evolving demands of the market.

In summary, the growing demand for O2O delivery platforms has put pressure on milk tea brands to adapt their store locations and setup, expand their service area, and improve customer convenience. As the demographic consuming O2O food delivery services overlap significantly with milk tea's user profile, optimizing store location becomes even more crucial. Brands like HeyTea have utilized innovative strategies to meet these demands, including mini WeChat programs, pick-up-only stores, and optimizing store locations to cater to their target market.

Milk Tea and Health

Milk Tea as an Example of Unhealthy Ultra-Processed Modern Food

The consumption of high-calorie, sugar-laden beverages, including boba milk tea, has generated public concern due to their potential adverse health effects. A study conducted by Health Food America revealed that despite an overall decline in consumption since 2000, the majority of Americans still consume at least one sugary drink daily. Although sales and consumption of sugary sodas and fruit drinks have decreased, other categories, such as sports drinks, energy drinks, teas, and coffee, have experienced growth. Adolescents and young adults are the primary consumers of sugary beverages, with individuals in lower-income brackets consuming more sugary drinks than those with higher incomes (“Sugary Drinks in America”). A 2022 CDC report supports these findings, as shown in Figure 8, which illustrates the rise in sugary and high-calorie beverage consumption in the United States. Sugar-sweetened beverages (SSBs) encompass a range of products, including regular soda, fruit drinks, sports drinks, energy drinks, sweetened waters, and coffee and tea beverages with added sugars. Between 2011 and 2014, 63% of youth and 49% of adults consumed at least one SSB daily, with US youth and adults consuming an average of 143 and 145 calories from SSBs per day, respectively (“Sugar-Sweetened Beverages and Consumption”).

Figure 8: Prevalence of self-reported intake of SSBs at least once daily among US adults, 2010 and 2015. CDC; Apr. 11, 2022;

Figure 9: Nutrition Facts of Teahow Milk Tea, Da Xue Consulting, Sep. 9, 2020;

The concern extends beyond American consumers to milk tea customers in China, who are becoming increasingly aware of associated health risks. DaXue Consulting provided a nutrition table (Figure 9) demonstrating that a standard 16 oz. cup of milk tea contains 212 calories and 36 grams of added sugar, which accounts for 72% of an individual's daily recommended sugar intake. In 2018, a social media trend highlighting the detrimental health effects of milk tea on Chinese young adults went viral, comparing the caloric content of a bottle of milk tea to that of five cans of Coca-Cola or six packages of potato chips (“2018-2019 China Milky Tea”). This trend has prompted greater consumer interest in "healthier" milk tea options.

A 2016 study reported that a 16-ounce serving of boba milk tea with tapioca balls contains 299 calories and 38 grams of sugar, which may contribute to weight gain, obesity, and other obesity-related diseases, such as type 2 diabetes and cardiovascular disease. The study advocates for moderation in boba tea consumption or the selection of healthier alternatives. Additionally, concerns have arisen regarding the high consumption of sugar-sweetened beverages among Asian youth, who may face an elevated risk of obesity-related diseases due to differences in body composition and muscularity compared to white populations (Min et al.). Consequently, monitoring boba milk tea consumption and exploring healthier alternatives are crucial to mitigating the risks of obesity and related diseases.

Conclusion

In conclusion, the remarkable ascent of new-style milk tea exemplifies modern trends and social practices, illustrating the profound influence of cultural exchange, modernization, and economic opportunities. The widespread appeal of milk tea is the result of a multifaceted interplay of cultural, economic, and health-related factors with implications extending across borders. While it symbolizes economic globalization and cultural exchange, milk tea has also become associated with health concerns due to its high-calorie and sugar content. Its highly customizable nature reflects the contemporary emphasis on personal expression and individualism, with its popularity among young adults positioning it as a prominent social drink alternative to coffee. Furthermore, milk tea's engagement in social media campaigns and strategic collaborations with fashion icons underscores the growing interconnectivity between various industries and the influential role of digital platforms in shaping modern consumer culture.

The adaptability of milk tea and its variations in different markets, such as the United States, emphasizes the importance of understanding and catering to local tastes and preferences, which in turn leads to nuanced yet crucial adjustments in recipes and marketing strategies. Additionally, the emergence of new-style milk tea embodies food modernization and mass production, highlighting the significance of customer service, product quality, and automation in fulfilling customer expectations and enhancing satisfaction.

As a cultural phenomenon, milk tea transcends borders and offers valuable insights into the societal and economic factors shaping the contemporary food market and consumer behavior. By examining its history, cultural significance, and economic ramifications, we can better understand how this beverage has become an integral part of many individuals' lives and how it continues to evolve and influence global food trends.

Nevertheless, the high-calorie and sugar content of milk tea raises public health concerns, as excessive consumption of sugary beverages contributes to weight gain, obesity, and obesity-related diseases. It is essential to moderate the intake of sugary drinks like milk tea and to explore healthier alternatives in order to mitigate the risks associated with these conditions. Despite the challenges posed by health concerns, new-style milk tea endures as a prominent symbol of modern trends and consumer preferences, both within China and across the globe.

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