Shippers line up to take bubble tea at a TocoToco shop in Hà Nội. — Photo vov.vn

For more than 10 years, bubble tea has been a popular drink among young people. With the participation of many famous international brands such as Gong Cha and KOI Thé and the launch of a series of domestic brands, the local bubble tea market has entered its golden age.

During this period, large and small bubble tea brands have sought every way to expand their market share. From big cities to rural areas, consumers can easily find bubble tea shops. Currently, there are over 100 large and small bubble tea brands with approximately 1,500 points of sale nationwide.

The boom of domestic bubble tea brands was attributed to sufficient capacity in product development, marketing and sales, Vũ Việt Anh, founder of the milk tea brand La Boong, said.

The supply chain and source of raw materials in Việt Nam are no longer completely dependent on foreign enterprises, Anh told doisongphapluat.nguoiduatin.vn.

Previously, most tea-growing localities in Việt Nam failed to provide the raw materials used for making bubble tea, so businesses had to import them from abroad.

But some growing areas such as Đà Lạt City in the Central Highlands Province of Lâm Đồng had focused on improving production technology, providing specialised raw materials for making bubble and fruit tea products, he said, adding that owners of bubble tea brands had also cooperated with growing areas to develop and take the initiative in sourcing raw material.

According to Việt Anh, local firms' capacities in business management, brand promotion and marketing have not lagged behind that of foreign enterprises. The boom of social networks has also become a cost-effective advertising method for domestic enterprises.

However, the more bubble tea brands enter the market, the more fierce the competition becomes. To attract customers, brands are forced to continuously launch promotions and discounts, thus losing profits.

Customers have more choices, while businesses have to struggle to compete with each other to earn more. Despite implementing many solutions, many bubble tea brands are struggling in the battle for market share, the online newspaper reported.

It cited data from market research firm Vietdata showing revenues and profits of major brands like TocoToco, Koi Thé and Ding Tea declined in 2023.

TocoToco saw a nearly 17 per cent decrease in sales at VNĐ380 billion (over US$15.4 million) last year, while its losses more than doubled to VNĐ112.6 billion.

Koi Thé, positioned as a premium brand in the market, suffered declines of VNĐ35.6 billion and VNĐ25 billion in revenues and profit.

Meanwhile, Ding Tea also experienced respective reductions of 35 per cent and 80 per cent in revenue and profit.

Among the firms that reported a better performance last year is Chinese bubble tea and ice cream franchise Mixue, which reported a 2.6-fold increase in revenues to over VNĐ1.25 trillion and a 200 per cent rise in after-tax profit.

Mixue had 1,500 stores at the end of 2023, just five years after its launch in Việt Nam.

Phê La, a newer milk tea brand, posted nearly VNĐ300 billion in revenue and VNĐ57 billion in after-tax profit, higher than those of established brands like Gong Cha, Ding Tea and Bobapop and trailing only Mixue.

Anh identified cutting other unnecessary costs as an effective strategy for businesses amid the fierce competition in the market. — VNS