Heytea, one of China’s leading tea drink brands, has announced plans to slow down its store openings in the coming months due to shifting consumer trends and increased competition in the market.
In an internal communication obtained by Yicai, the Shenzhen-based company revealed it would pause new store openings in the short term and focus on managing the density of its existing stores. This decision reflects the company’s response to the limited consumption demand and the crowded tea drink market, where brands often adopt similar marketing strategies and launch comparable products.
Instead of following industry trends, Heytea emphasized in the letter that it aims to differentiate itself by launching unique products and strengthening its brand identity. Despite the planned slowdown, the company has experienced significant growth in 2023, adding 1,100 new stores to its portfolio, bringing the total number of outlets to approximately 4,300.
The slowdown in store expansion comes as Chinese milk tea brands face a challenging business environment, with profit margins shrinking due to fierce competition and an ongoing price war. According to data from the catering platform Canyandata.com, there were 431,753 milk tea stores in China as of August 5, with a net increase of 35,518 new stores over the past year. However, the same period saw the closure of about 130,000 stores, highlighting the volatility of the market.
In response to these pressures, several Chinese tea chains have shifted their focus overseas. In July, Heytea launched its first pop-up store in Paris, while rival Naixue opened its first outlet in Singapore. Mixue Bingcheng, another major player in the industry, has already expanded its presence to over 4,000 overseas locations.
Heytea’s strategic decision to slow expansion reflects broader trends in the tea drink market, as brands seek to balance growth with sustainability in an increasingly competitive landscape.
