Sweet, milky and colourful, bubble tea is incredibly popular in China, where people drinking it through straws from large plastic cups is a common sight on high streets and in shopping malls across the country.

bubble tea vlogger Stacy Chen — This photo taken on August 15, 2024 shows bubble tea blogger Stacey Chen recording footage for her vlog at her business in Hangzhou, east China's Zhejiang province. Photo: Jade Gao/AFP

But new competition is brewing in the vast market, with ultra-cheap goods appealing to China's increasingly frugal young consumers.

Bubble tea, which traditionally includes tapioca pearls and comes in a wide range of flavors, with or without milk, has gained immense popularity in China, coinciding with the economic boom of recent decades that has led to rising living standards.

But post-pandemic hardships have dealt a major blow to the economy, with consumers reluctant to spend and Chinese authorities struggling to get people to spend.

Many of today's largest bubble tea chains once gained popularity thanks to premium products priced around 25 to 40 yuan (US$3.50 to US$5.50) and flashy branding that made them status symbols of modern urban living in China.

But the sector, valued at more than $21 billion last year, has been shaken up by a new wave of low-cost disruptors, some offering drinks for $1 or less.

“The current market is saturated,” Stacy Chen, a bubble tea vlogger based in the eastern city of Hangzhou, told AFP.

“Lowering prices is the only possible way (for companies) to emphasize their competitiveness in the market.”

Chen has amassed an army of bubble tea fans who watch her videos on the app Xiaohongshu and Douyin, China's version of TikTok, where she has about 180,000 followers.

In her videos, she sits in front of a row of drinks, sampling and comparing them before offering viewers a candid assessment of their appearance, taste and cost.

Chen showed AFP the breadth of options available to consumers on a shopping street near her office, where uniformed couriers on wheeled hoverboards delivered orders from more than a dozen tea shops within walking distance of each other.

“There are a lot of milk tea brands on the market now and they are releasing new products very quickly,” Chen told AFP.

“We, tea and coffee drinking bloggers, cannot film all the content.”

Spoiled for choice

China's bubble tea industry has been booming in recent years, with countless brands now available in around half a million stores across the country.

Leading the way among budget newcomers is Mixue Bingcheng, founded in 1997 by a pair of brothers as a modest ice cream shop in the hinterland of Henan province.

The company, whose name translates as “city of honey snow and ice,” is expanding rapidly: as of last year, its smiling snowman mascot and bright red signs adorned some 32,000 stores in China and about 4,000 stores in 11 other countries.

“The current consumer sentiment (in China) is such that many restaurants and cafes are cutting prices to match consumer behaviour,” Evelyn Chan, a market analyst at China Skinny, told AFP.

According to Chang, Mixue “has a first-mover advantage in the low-cost milk tea segment,” adding that “fierce competition and product homogeneity” have led to a price war in the sector.

China's long-awaited economic recovery from the COVID pandemic has yet to materialize, as problems in the property sector and heightened trade tensions weigh on consumer confidence.

Retail sales growth remains sluggish and unemployment remains stubbornly high, fueling fears of a protracted economic downturn.

A Punch for a Dollar

For many young professionals looking to save money by working in China's top cities, new companies like Mixue have become more attractive.

“Other milk teas are too expensive,” Guo Jun, 21, told AFP outside a Mixue store in Beijing.

Guo, who is originally from the northern province of Hebei but now lives and works in the capital, said she just bought ice-cold lemonade using a discount on Douyin, for a total of 2.8 yuan (US$0.40).

“Work stress is high, the current economic situation is unfavorable, things like salaries are low, so (young people) may choose a more practical stance,” Guo said.

Chen, the Hangzhou-based video blogger, says the trend toward cheaper bubble tea is partly driven by the growing popularity of domestic coffee chains offering bargain alternatives to pricier foreign companies like Starbucks.

This has affected Chinese consumers on a psychological level, making them expect more value for their money, Chen said.

“We all used to think of coffee as an imported or expensive product,” she said.

“Now I can buy a luxury item for 9.9 yuan (US$1.40) or 8.8 yuan (US$1.20).

“Why should I spend more than 20 yuan on a cup of milk tea?”