Analysis: Chinese Milk Tea Makers Push Farther Afield as Southeast Asia Gets Crowded

1. Chinese tea brand Chagee Holdings is preparing to open its first store in South Korea, signaling the ongoing interest of mainland Chinese beverage chains in expanding to new markets as the competition intensifies in Southeast Asia. Chagee will join other Chinese brands such as Heytea, Mixue, ChaPanda, and Auntea Jenny in South Korea, reflecting a broader strategy among Chinese tea chains to look beyond Southeast Asia for growth opportunities. Key developed markets such as Japan, South Korea, the U.S., Europe, and Central Asia are emerging as the next major areas of focus[para. 1][para. 2].

2. The expansion to new territories is driven by the saturation and intensifying competition in Southeast Asia, which had long served as the primary overseas entry point for Chinese beverage brands. According to a white paper by the China New Tea Beverage Industry Alliance and China Insights Consultancy, the global market for new-style tea drinks is projected to grow at a compound annual rate of 7.2% from 2023 to 2028. Southeast Asia remains the fastest-growing major market, with expected annual growth of 19.8%, followed by China at 17.6%[para. 3].

3. As of December 31, 2024, more than 60 Chinese food and beverage brands had established over 6,100 outlets across Southeast Asia, according to Singapore-based consultancy Momentum Works. The rapid rise in outlet numbers is largely attributed to brands like Mixue, Chagee, and Luckin Coffee[para. 4]. However, the region is getting more crowded. Market leaders such as Mixue are now optimizing and consolidating existing stores rather than continuing aggressive expansion, with store numbers in places like Indonesia and Vietnam declining during the first half of 2025[para. 5].

4. Despite the trend towards optimization, Mixue is not abandoning growth; it remains focused on Southeast Asia while expanding into Central Asia, opening its first store in Kazakhstan. As of June 30, 2025, Mixue operated about 4,700 stores outside mainland China[para. 6].

5. In markets like Japan and South Korea, Chinese tea chains face unique challenges and opportunities. Both countries have long-standing tea-drinking cultures and younger consumers who are open to new brands. For example, ChaPanda had 21 overseas stores by June 30, 2025, with 11 in South Korea. However, Taiwanese brands established their positions in these markets earlier, making brand recognition and consumer education important hurdles for new Chinese entrants[para. 9][para. 10].

6. The tea drink markets in Japan and South Korea remain dominated by low- and midpriced brands found in busy shopping and student districts, making it difficult for new arrivals to sustain novelty and compete on price and visibility. For example, established Taiwanese brands like Gong Cha saw their store counts decline in 2024, with Gong Cha operating 898 outlets and Tiger Sugar dropping to 13 outlets by September 2025, down from 52 in 2020. Newer entrants such as Chagee and Heytea need to prove their staying power, especially given the dominance of coffee in these regions[para. 12][para. 13][para. 14][para. 15].

7. Chinese tea brands are also expanding into Western markets. In 2025, Nayuki, Mixue, and Auntea Jenny each opened their first stores in the U.S., while Molly Tea entered the U.K., and ChaPanda launched in Spain and France. The U.S. freshly made tea market is particularly promising, expected to reach $2.9 billion by 2029. The number of freshly made tea merchants in the U.S. grew 18.2% in 2025 to 7,845 outlets[para. 17][para. 18][para. 19].

8. Among rising brands, Molly Tea stands out for rapid growth, adding more than 1,100 stores in 2025—a 101.3% increase. After successfully launching in Los Angeles, reportedly generating $500,000 in stable monthly sales, it quickly expanded to cities such as New York, San Francisco, Seattle, and Philadelphia[para. 20].