How Much Does It Cost to Open a Coffee Shop? Reading China's Tea Price Wave
Mid- to low-end milk tea brands including Yidiandian, Mixue Bingcheng, and CoCo have raised prices one after another, drawing wide attention. Cola has also been rumored to face a possible increase. Pandemic-era cost pressures and deeper shifts in the tea beverage industry sit behind the wave, as consumers grow more price-sensitive.
A decade ago a cup of Grand Taipei milk tea cost about 3 yuan; today brands such as Heytea sell for around 30 yuan. Mainstream prices still hover near 30 yuan, while budget brands keep drinks at 5 to 20 yuan. Yidiandian announced its increase openly, while others adjusted quietly. The same cost math shapes how much does it cost to open a coffee shop.
Recently, many consumers have noticed that milk tea brands that were once affordable are raising their prices one after another. From Yidiandian to Mixue Bingcheng, and then to CoCo都可, the wave of price increases among mid- to low-end tea drinks has sparked widespread attention. At the same time, cola, the "evergreen" of the beverage world, has also been rumored to be facing a possible price increase. Behind this round of price adjustments are not only the cost pressures brought by the pandemic, but also deeper changes facing the tea beverage industry. As consumers become more price-sensitive and competition from mid- to high-end brands intensifies, how tea beverage companies find a balance between quality and cost will become the key to determining their future development.
In recent years, beverage prices have generally risen, and milk tea is naturally no exception. Looking back ten years, a cup of Grand Taipei milk tea cost only 3 yuan, while today brands such as Heytea sell for 30 yuan, an increase of as much as ten times. However, the highest price of mainstream milk tea on the market today seems to mostly remain around 30 yuan.
Fortunately, there are still many brands taking the affordable route, such as Mixue Bingcheng, which focuses on small profits but quick turnover, and Yidiandian and CoCo都可, which follow a people-friendly approach. Their drink prices generally range from 5 to 20 yuan, and as a result they have built up a loyal customer base. After all, not everyone is willing to pay 30 yuan for a cup of milk tea. However, after the Spring Festival, many mid- to low-end milk tea shops began quietly raising their prices.
Although beverage costs rise somewhat at the beginning of every year, such a large-scale price adjustment is truly rare. This shows that the impact of the pandemic on businesses has been quite severe. The material costs and raw material costs of milk tea shops have been continuously climbing, so various tea beverage brands have issued price increase notices one after another, leaving consumers feeling rather helpless.
For example, Yidiandian directly posted a price increase announcement to inform customers openly, while brands such as CoCo都可, Mixue Bingcheng, and Heytea chose to raise prices quietly. This move is bound to drive away some price-sensitive consumer groups, and for most tea beverage brands it is undoubtedly a heavy blow.
Take Heytea and Nayuki as examples. They were already positioned in the mid- to high-end segment, with drink prices mostly above 20 yuan. Because of this, many consumers previously turned their attention to lower-priced mid- to low-end brands. But now that mid- to low-end tea drinks have also begun to raise prices, and these brands themselves already have relatively low gross margins, once they increase prices, more customers may shift to mid- to high-end brands with better quality in the future. Judging from feedback from all sides on Weibo, many people are resistant to the price increases, arguing that if even mid- to low-end brands are raising prices, why not just buy something of better quality?
It can be seen from this that rising prices for packaging materials and food raw materials needed by tea beverage brands are already a major trend. Therefore, this large-scale wave of price increases in the tea beverage world will also push the industry toward a major innovation—it must improve drink quality in order to retain its original customer base and open up new sales models. This is a stage the tea beverage industry must go through.
Because if a company remains in a stable state for a long time and lacks a sense of crisis, it will be difficult for it to make progress. Only companies that stand firm and consolidate their foundations through repeated crises can achieve healthy development within a field.
In addition, cola, the most popular drink in the beverage world, has not raised its price for ten years, but this year there is news that cola may also increase in price. This news comes from the internet, but in fact it was already announced by BC NDP as early as last year. The original text mentioned that a tax would be imposed on sugary carbonated drinks. The measure was originally scheduled to take effect on July 1, 2020, but was postponed to April 1 this year due to the pandemic. From this perspective, a price increase for cola in Canada is also inevitable.
Even so, Canada is, after all, far away from us, and the likelihood that cola will raise prices in the domestic market is actually not high. This is because cola itself has very low costs, and the domestic cola market is already dominated by the two giants Coca-Cola and Pepsi. In order to compete, the two would naturally not easily raise prices. These two giants themselves also follow a small-profit, high-volume strategy; if they both raised prices, many new competitors below them would seize the opportunity and take the affordable route, their market share would be divided up, and profits would become lower and lower. This is precisely why the two cola companies have not raised prices for a long time.
In summary, milk tea price increases are an inevitable trend; it is only a matter of time. But whether a brand can seize this crisis and protect itself is also a test. Overall, no matter what kind of company it is, if it wants healthy development, it will inevitably go through a process of wave-like advancement and spiral-like rise.
*Image source: internet
The above content is compiled by CoffeeHunters, a coffee news website.
