Humble beginnings

Mixue’s story begins in 1997 in Zhengzhou, a city in central China’s Henan province. Founded by Zhang Hongchao, the company started out as a small ice cream shop. Zhang’s vision was simple: to provide affordable, high-quality drinks and desserts to the masses. While other brands chased premium pricing and urban elites, Mixue focused on value for money, targeting students, young workers and smaller cities. This strategy proved to be a game-changer.

By keeping prices low – its signature ice cream cones sell for just 2 yuan (about 22 pence) – Mixue made itself accessible to a vast audience. Its menu, featuring bubble tea, fruit teas and soft-serve ice cream, is both indulgent and affordable. This combination of affordability and consistency has been key to its success.

Scaling at speed

Mixue’s expansion strategy is nothing short of remarkable. The company operates on a franchise model, which has allowed it to grow rapidly without the heavy capital expenditure typically associated with such expansion. Franchisees are drawn to Mixue’s low entry costs and strong brand recognition. The company provides extensive training and support, ensuring that every store maintains the same standards of quality and service.

This model has enabled Mixue to penetrate not only China’s megacities but also its smaller towns and rural areas. While Western brands often focus on affluent urban markets, Mixue has tapped into the vast potential of China’s lower-tier cities, where disposable incomes are rising, and consumer demand is growing.

But Mixue’s ambitions don’t stop at China’s borders. The company has expanded into Southeast Asia, Australia and even Japan, adapting its menu to local tastes while maintaining its core identity. This global outlook is another lesson for British businesses: think big, even if you start small.

The power of branding

Mixue’s branding is another cornerstone of its success. Its cheerful logo, featuring a snowflake and a smiling cartoon character, is instantly recognisable. The company has also embraced digital marketing, leveraging social media platforms such as WeChat and Douyin (China’s version of TikTok) to engage with younger consumers.

One of Mixue’s most successful campaigns involved user-generated content. Customers were encouraged to share photos and videos of their Mixue drinks, creating a buzz online. This grassroots approach to marketing has helped the brand build a loyal following, particularly among Gen Z consumers.

For British businesses, Mixue’s branding offers a valuable lesson: authenticity resonates. In an age where consumers are increasingly sceptical of traditional advertising, brands that can create genuine connections with their audience stand out.

Lessons for British businesses in China

Mixue’s rise holds several lessons for British businesses, particularly those looking to expand or compete in crowded markets.

First, affordability matters. In a cost-of-living crisis, consumers are more price-sensitive than ever. Mixue’s ability to deliver quality at a low price point has been central to its success. British businesses, especially in the food and beverage sector, could benefit from adopting a similar value-driven approach.

Second, don’t overlook smaller markets. While London and other major cities often dominate the UK’s retail landscape, there’s untapped potential in smaller towns and rural areas. Mixue’s success in China’s lower-tier cities shows that growth opportunities exist beyond the big urban centres.

Third, embrace digital innovation. Mixue’s use of social media and user-generated content highlights the importance of digital engagement. British businesses should consider how they can leverage social platforms (including Instagram, TikTok, and YouTube at home) to connect with younger audiences.

Finally, think globally. Mixue’s international expansion demonstrates the potential of taking a local brand to the global stage. For British businesses, particularly those with strong heritage or niche offerings, there may be opportunities to replicate this success abroad.

Challenges ahead

Despite its impressive growth, Mixue faces challenges. The bubble tea market is becoming increasingly crowded, with more upscale competitors like Heytea and Nayuki vying for market share. Maintaining quality and consistency across thousands of stores is no mean feat, and the company must continue to innovate to stay ahead.

There’s also the question of sustainability. As consumers become more environmentally conscious, brands are under pressure to reduce their environmental impact. Mixue has yet to make significant strides in this area, and this could become a sticking point as it expands further.

For British businesses, these challenges serve as a reminder that growth must be sustainable – both financially and environmentally. Brands that can balance rapid expansion with responsible practices will be better positioned for long-term success.

A sweet opportunity

Mixue’s rise is a testament to the power of a clear vision, strong branding, and a focus on affordability. Its story is particularly relevant for British businesses navigating an uncertain economic landscape. By learning from Mixue’s playbook, UK brands can find new ways to connect with consumers, explore untapped markets, and scale their operations effectively.

Mixue made its debut on the Hong Kong Stock Exchange on Monday, 3 March, raising $444 million in an IPO by selling 17 million shares in the deal at a fixed price of HK$202.5 each, with shares jumping as high as HK$298 on the first day of trading. But beyond the financial headlines, there’s a broader lesson here: in a world of constant change, businesses that stay true to their values while adapting to new realities are the ones that thrive. For British entrepreneurs and established brands alike, Mixue’s journey offers a refreshing dose of inspiration – and perhaps a hint of what’s possible with the right mix of ambition and strategy.

So, the next time you see a bright yellow-and-pink logo, take a moment to consider the story behind it. Mixue isn’t just serving up sweet treats; it’s serving up a masterclass in modern business.

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Hey Tea, the self-proclaimed innovator of “new-style” tea, is renowned in China for its effective marketing collaborations. In one of its most recent efforts, the brand teamed up with Jingdezhen China Ceramics Museum to put the faces of Buddhist disciples on bubble tea packaging. Some of the museum’s Buddhist sculptures have recently become internet memes, such as the “speechless Buddha” meme used to express being unimpressed. This collaboration seemed like another savvy move from Hey Tea, as it managed to playfully incorporate internet culture whilst also promoting China’s cultural heritage.

Unfortunately, the campaign did not get the chance to fulfil its potential. Less than a week after launch, it was pulled from shelves after the Shenzhen Municipal Bureau of Ethnic and Religious Affairs said it suspected the brand had violated a law on the use of religious themes for commercial purposes. Religious proselytising is strictly banned in China, but the act is not clearly defined in law, leading to confusion over whether activities like Hey Tea’s campaign cross boundaries or not.

Some netizens were dubious about the accusation. Surely a co-branded tea can’t really convince an atheist to start practising Buddhism? And didn’t all this begin with a collaboration with an art museum, promoting intangible cultural heritage rather than religion? The precise details of the collaboration are perhaps beside the point, as far as the Shenzhen authorities are concerned. What counts is more likely Hey Tea’s influence as a brand.

A digital marketing powerhouse with a significant social media presence, Hey Tea is one of China’s biggest tea chains for a reason. The brand has an uncanny ability to take the pulse of the zeitgeist and pump out fresh campaigns that keep consumers guessing. Its collaboration with Fendi this spring had Beijingers queuing up outside of outlets before opening time and posting on social media about snagging their first Fendi-branded product. It is this huge buzz generated by the brand – and, in the case of the Fendi campaign, the fanaticism it seems to inspire – that make it a target. Simply put, Hey Tea is too big to get away with profiting from the use of religious images.

In the end, the market watchdog revealed that Hey Tea had not violated the law, as the campaign sits in an awkward legal grey area between advertising law and religious law. After discussions with the regulators, the brand took the shrewd move of voluntarily withdrawing the co-branded product series.

Hey Tea’s run-in with the law reminds brands in China that they must exercise caution when attempting to tap into this year’s temple craze, as all religions are closely policed. However, there is still an opportunity for businesses to tap into young Chinese people’s renewed interest in Buddhism and Daoism. The boom in temple visits is ultimately about finding a soothing ritual and believing in something bigger than oneself. Exploring themes of self-care, connecting to nature, or being part of a community are other ways businesses can speak to the younger generation’s search for hope.

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Since the outbreak of Covid-19, there have been several shifts in consumer behaviour and preference in China’s food and drink market. This article looks at some of these trends, providing examples and predictions for the future.

It is important to realise that Chinese customers generally conduct a great degree of research into products prior to purchase. Brands need to ensure that detailed product information is readily available online and in Chinese, such as ingredients and the types of certifications that either the brand or product has received.

The health revolution

Although Chinese consumers have long been on a trajectory towards healthier diets, Covid-19 caused the focus on health to skyrocket. Especially among Chinese youth, healthier food and beverage offerings are becoming a core driver, with many looking for keywords like “low fat” and “low sugar”, and “0 fat”, “0 sugar” or “0 calories” in relation to their drinks. Many consumers are now showing an increased willingness to pay premium prices for products that are considered healthy.

The push for healthy products is not just among snacks and beverages, but also for instant or ready-to-eat meals or meal replacement products. More than ever, Chinese consumers are looking at food and ingredient labels prior to purchase and conducting research on each of the ingredients.

“0% sugar” is clearly displayed on the packaging of yogurt from the brand Simple Love. Source: 简爱酸奶Simplove on Weibo

 The ‘she’ economy

Over the past several years, China has seen the emergence of the ‘she’ economy. With a higher level of education and income, the more than 400 million Chinese women that are aged between 20-60 years old are increasing their consumption power within the food and beverage market.

Previously, women were often in charge of purchases for the entire family, but now they are becoming more willing to make purchases for themselves. Therefore many brands have begun developing products aimed at perceived female interests, including meal replacement products, zero fat and zero sugar beverages, as well as protein bars and milkshakes among many other offerings.

Milk alternatives

Plant-based milk alternatives have stepped into the spotlight in China, as more Chinese consumers become familiar with products such as oat milk, almond milk and rice milk. This is in addition to Chinese consumers expanding their view on soy milk, a traditionally popular beverage in China, beyond a simple breakfast item. In fact, the plant-based protein beverages market in China saw an 800% surge in year-on-year growth in 2020.

An advert for Oatly oat milk. Source: Oatly on Weibo

As cafes have risen in prominence in China, particularly in tier 1 cities, most locations offer milk alternatives, further popularising plant-based milk options. Part of the reason for this surge may be due to increased market education and exposure to Western drinking habits, in addition to the high percentage of Chinese consumers who are lactose-intolerant and prefer to avoid traditional milk.

Meat alternatives

Over the past decade, China has emerged as a heavy consumer of meat, with Chinese consumers eating 28% of the world’s meat supply and half of its pork. However, plant-based meat alternatives are beginning to make an appearance, slowly growing from a niche phenomenon to a more widely accepted lifestyle decision among Chinese consumers.

The outbreak of diseases such as Covid-19 and swine flu, an increased awareness of the environmental impact of consuming meat, and the belief that plant-based alternatives are healthier, are all factors contributing to the growth of this market.

Source: Beyond Meat on Weibo

In 2021, the plant-based meat market in the Asia Pacific region was valued at RMB 1.1 billion, of which China contributed RMB 780 million – more than 70%. When looking at the rest of the world, China already accounts for 53% of the global meat substitute industry compared to the 5.5% contributed by the US.

With that said, although the market in China is large, new brands need to face the challenges that come with China’s history of eating soy alternatives to meat due to the influence of Buddhism. Therefore, new brands need to continue to conduct market education to differentiate themselves, while also understanding under which circumstances plant-based meat alternatives are most likely to be consumed. Some of the top identified consumption scenarios include in hot pot, during Chinese-style barbecue, as snacks, and in prepared foods (ready-to-eat and ready-to-cook offerings).

The coffee and tea obsession

Tea has always been a staple among Chinese consumers, but coffee is rapidly becoming more widespread, growing at a rate of 15% annually, compared to the global growth rate of 2.2%.

Coffee drinkers tend to be white collar workers aged between 20 and 40 and living in higher-tiered cities. They are more educated and have higher disposable income. Gen Z and millennial drinkers are interested in novelty experiences, which means they will seek out new cafes and new methods of drinking coffee. Depending on the region in China, consumers can differ in terms of which factors they place more emphasis on, for example new concepts, pricing or quality.

The expansion of the coffee market is not limited to cafes, but also includes at-home drip coffees and ready-to-drink (RTD) canned options. In fact, China’s RTD tea and coffee market is estimated to reach a market size of RMB 182 billion by 2023.

Even as coffee consumption rises, tea consumption has not been left behind. The demand for tea has continued to rise, with new flavours and ways of drinking tea becoming popularised through the expansion of tea and beverage chains like Hey Tea and Gong Cha in China. In 2021, the sales value of domestic tea consumption reached RMB 300 billion.

Chinese consumers are increasingly looking for new experiences and flavours from the food and drink products they buy. As a result, brand loyalty to food brands has dropped, and new product development has become essential to staying ahead of the competition. This is especially true as the food and beverage market in China becomes more and more saturated, with both foreign and domestic brands vying for consumer attention. Prior to market entry, brands need to ensure that they understand the Chinese consumers that they want to engage and know the trends that they can take advantage of to capture attention and interest.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s market research services can help you build knowledge and understanding of the Chinese market prior to investment.

This article first appeared in the sixth edition of RedFern Digital’s magazine, The Red Edition

The post The biggest trends in China’s food and drink market appeared first on Focus - China Britain Business Council.

It is getting harder to tickle the taste buds of Chinese consumers due to their rapidly-changing preferences and the lightning-fast pace of social and cultural trends. This market dynamic means that China’s food and drink industry is constantly being shaken up, pushing market players to keep their fingers on the pulse of consumer palates and cater to the preferences of savvy shoppers like never before.

With cooling summer treats coming to the forefront under the blazing sun, Dao Insights takes a closer look at three food and drink categories gathering pace as the country heats up.

Ice cream

Ice cream has always been the best remedy for a hot summer’s day, but it has been undergoing a transformation in China in recent years. China’s ice cream market has grown into the world’s biggest, with a market value surpassing RMB 160 billion (£20.08 billion) in 2021.

This growth has brought about a market reshuffle, and the glory of formerly sought-after foreign players is fading, due in part to scandals such as Unilever’s Magnum being accused of having “double standards” after it was found to be using powdered milk instead of fresh for its products in China. As a result, Chinese consumers are turning their backs on imported brands, and there has been a rise in homegrown ice cream brands, with local players like Chicecream, Zhongjie1946 and Modern becoming the country’s most popular choices.

A Weibo poster for Chicecream’s low fat, low sugar chocolate ice cream

While this new market structure has yet to be solidified, the industry is certainly going through a round of “premiumisation” driven by increasing consumer awareness of ingredients and health benefits, sustainability, and the socio-cultural value of products. This has given rise to more sustainable practices in the industry, such as adopting low carbon manufacturing technology and using more organic, plant-based ingredients, as well as cutting down on “unhealthy” components such as sugar and fat.

There is also an increasing trend of crossover marketing among ice cream brands with the goal of rejuvenating and refashioning their images to cater to the social requirements of China’s young generations. This has given birth to innovative ice cream flavours including bubble tea, coffee and alcohol. Other trends include icy snacks in the shape of places of cultural or historical interest, such as the Temple of Heaven’s iconic circular Hall of Prayer for Good Harvests, which creates a strong connection to Chinese culture that appeals to nationalistic young consumers, as well as plenty of shareable photo opportunities.

Summer energy drinks

Energy drinks are emerging as the dark horse in China’s drink industry, spurred on by the country’s growing enthusiasm for fitness. At home fitness in particular took off thanks to Taiwanese singer-turned-live streamer Liu Genghong and his up-tempo workouts that got popular during recent lockdowns.

China’s energy drink market is reported to have reached RMB 51.3 billion (£6.44 billion) in 2021, with strong penetration five years in a row and a compound annual growth rate of over 10% – the fastest in the beverage category. As the temperatures go up, energy drinks are also expanding their foothold in the market, popular among fitness fanatics keen to restore electrolytes in the hot weather.

For a long time, energy drinks, whether intentionally or not, tended to be designed for male consumers, reflected in their flavours and packaging designs. However, the sector is changing as young people, in general, pursue exercise and healthier lifestyles. Female consumers contributed to a three-fold year-on-year increase in sales of energy drinks in 2021 with white collar, professional middle-class and Gen Z crowds forming the backbone, according to a report by Alibaba’s e-commerce arm Tmall Innovation Centre.

Like the evolution of the ice cream industry, the needs of a more health-conscious generation is what is driving the sector forward. Thanks to the perceived “scientific” solutions they provide, these products have also been drawing in non-sporty consumers, with numbers in the new consumer market growing 12-fold on Tmall between 2019 and 2021.

Chinese new-style tea

Chinese consumers have long been fond of milk tea drinks, but these beverages have been evolving beyond a simple combination of tea leaves and dairy in recent years. The “new-style” tea category has expanded to include tea-based drinks made with fresh fruits, edible flowers and textural add-ins like tapioca balls and fruit jelly, enhancing their health and aesthetic value.

First emerging in 2016 and pushed by local market disruptors such as Hey Tea and Nayuki, the new-style tea trend has been growing rapidly over the past few years and is set to reach an estimated market value of RMB 294 billion (£36.9 billion) by the end of 2022, and hit RMB 375 billion (£47.07 billion) in 2025.

A perilla and peach-flavoured tea drink created by Hey Tea in collaboration with popular drama series A Dream of Splendour

Even American fast-food giant KFC has hopped on the bandwagon with the launch of its first tea-only spin-off brand in Suzhou. Called Grandpa’s Comfy Tea House, and with a logo featuring a cartoon version of Colonel Sanders holding a bubble tea, the brand focuses on healthier drinks made with fresh fruit and rice milk with zero trans fats.

China’s fever for new-style tea has also been fuelled by the recent Chinese historical drama A Dream of Splendour (Meng Hua Lu), which became an immediate nationwide hit, clocking up 1.6 billion views in just two weeks. The ancient Chinese tea drinks seen in the drama soon attracted consumer interest, especially among the young, who are curious to figure out how those “elegantly-made” drinks were produced, particularly one made of perilla leaves and peach. Chinese tea brands like Hey Tea and Nayuki were quick to identify this trend, introducing collaborative new drinks featuring the two most craved flavours, which generated hundreds of millions of views on China’s biggest microblogging site, Weibo.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s market research services can help you build knowledge and understanding of the Chinese food and beverage market prior to investment.

The post Three hot summer food and drink trends in China appeared first on Focus - China Britain Business Council.