Where does coffee grow, and why do tea prices keep shifting?

Heytea cut the price of its cheapest Pure Green Tea to 9 yuan, but the order still climbs once toppings, delivery fees, and insulated bags are added, with no free topping options. The unit price of a cup in hand therefore falls less than the headline suggests, and the cuts look closer to marketing than a genuine giveback.

For coffee and tea drinkers, the ledger is similar everywhere. A researcher at the Guangdong Tea Beverage Industry Committee estimates that high-end milk tea carries costs far below its retail price, which is why brands can trim base prices while charging separately for extras. Consumers still pay more than the number on the menu, whether the beans were grown in Yunnan or anywhere else.

Milk tea brands are shouting about price cuts while charging separately for toppings, delivery fees, and insulated bags—is that cup in consumers' hands really cheaper? This article starts with the ordering experience on the Heytea GO mini-program, breaks down the actual unit price of a 9-yuan Pure Green Tea after adding toppings, delivery fees, and other extra charges, and analyzes how this round of price cuts looks more like a marketing move than a genuine giveback, considering tea shop density, delivery efficiency, and the industry's cost structure. It also cites estimates from a researcher at the Guangdong Tea Beverage Industry Committee on the costs and gross margins of high-end milk tea, helping coffee and tea enthusiasts see the ledger behind the price.

Every worker bustling through life has probably had a morning like this: still groggy, they need a cup of coffee or milk tea to perk up before they can truly boot up. After brands like Xiangpiaopiao and Chayan Yuese successively broke news of price hikes, a batch of milk tea brands followed suit with this wave of price adjustments, making many consumers feel a pang of anxiety. Yet Heytea went against the grain at this moment, declaring price cuts as the "odd one out" in the tea beverage circle, which more or less shows that the costs of new-style tea drinks are not as high as outsiders imagine. Other new tea beverage brands subsequently followed with price reductions.

However, when it comes to drinking milk tea, the milk and tea in the cup are never the real stars. What people truly crave are the toppings—pearls, pudding, coconut jelly, grass jelly.

I had assumed that after brands cut prices, drinking milk tea would become more relaxed, but it turned out otherwise: on the surface, it seemed like milk tea freedom had arrived, but in reality, it had not. The prices of some basic tea drinks did drop somewhat, but at the same time, tea shops rolled out more DIY options and services that required extra payment for consumers to choose from. Faced with the lure of DIY, how many can resist ordering? But after carefully crunching the numbers, can you still smile?

When ordering in delivery mode on the Heytea GO mini-program, after selecting the cheapest 9-yuan Pure Green Tea, scrolling down reveals an entry to add more toppings, and none of them are free. Although Heytea allows a maximum of three toppings per cup, these toppings are not cheap—each costs between 2 and 6 yuan.

If you want to use delivery service, the order amount must reach at least 20 yuan to be eligible; when you proceed to checkout after selecting items, you also have to pay a 6-yuan delivery fee, plus 1 yuan for the Inspiration insulated bag. Calculating this way, after adding toppings, delivery fees, insulated bags, and other extra expenses, the price per cup of milk tea hasn't actually dropped much. After Heytea's price cuts, some consumers couldn't even meet the minimum order threshold and had to order another cup or more, which seemingly raised the total spending instead.

Although the trend of coffee consumption in China is growing, the tea beverage market is even larger. According to data from Yicai's "Tea and City: Heytea Urban Consumption Report," in comparisons of non-restaurant dining outlets in some cities, tea shops hold the dominant position, indicating that in some places, milk tea shops already outnumber coffee shops.

China's mainstream consumer group has strong purchasing power and is willing to spend on new products for a taste. However, this generation doesn't have much time to sit in stores and consume slowly; most choose delivery or grab-and-go. China's delivery service is highly efficient and large-scale, delivering everything from three meals a day to household goods, which further accelerates the development of the coffee and new tea beverage industries.

With such a large market, naturally more brands want a slice of the pie. But right now, competition in the tea beverage industry is fierce, and the high-end market is becoming saturated. To continue expanding and capture a larger share, brands may of course attract more consumers through promotions and price cuts. Yet such tactics are not necessarily genuine givebacks—more likely, they are just a marketing strategy.

A cup of authentic milk tea naturally uses higher-quality ingredients and costs more. Many tea shops are located in popular commercial districts and prime locations, where rents remain high. Add to that the sharp rise in labor, raw materials, and packaging costs, and the final retail price of a cup of tea naturally climbs as well.

However, in an interview with Feng Xiaomei, a researcher at the Guangdong Tea Beverage Industry Committee, Guangzhou Daily mentioned that the cost of a cup of high-end milk tea is currently around 10 yuan or less, with a gross margin of 60% to 70%, and most milk tea prices can cover the increased costs.

When you do the math, the whole thing is like "The Emperor's New Clothes": consumers think they've caught a price cut, but in reality, merchants haven't lost anything.

Image source: Internet

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The above content is compiled by CoffeeHunters, a coffee news website.