Hu Jing, Associate Professor of Tongji SEM

Source: Wen Hui Bao

Speaking of milky tea, the history of this small drink has unexpectedly thousands of years and it acted as a communicator between the west and the east. It just like a tributary of the civilized process, and it might be looming sometimes, but never ends. When you least expect it, it will appear again in people’s field of vision. With the flow of this tributary, it is the exchange and integration of culture, regardless of day and night.

The past and present life of milky tea

Tracing back to the past of milky tea, it is not a brand new thing, but a drink with long-established history. Milky tea is a mixed global drink — saying history, milky tea was originated from China, and born in the U.K.; saying ingredients, tea from China, milky from Europe, and sugar from South America — this small cup of tea is so mixed and abundant. Western milky tea entered India through the Silk Road and then the Indian milky tea was born, which also known as Indian Teh Tarik. Actually, it is a mixed spice tea — people chop tea leaf and cook it with green cardamom pods, cinnamon, clove powder, ginger and black peppercorns. Rose petals, licorice, etc.

Then, after the colonial era, the milky tea was re-introduced into Europe. At that time, Europe was in the midst of the rise of capitalism, creating a commodity economy fever, and giving birth to the Dutch tea and English milky tea. Because the Netherlands has a good milk source, and people there don’t adapt to the heavy taste of Indian tea, it uses more milk instead of spices. In the upper class of the UK, the afternoon tea time starts at 4:30PM every day. The British nobles are enchanted by the various teas in Chinese porcelain. In 1680, on the basis of Dutch milky tea, the Duchess of York invented British milky tea by mixing fresh milky and sugar. Milky tea spread rapidly in Europe and formed the earliest statement of the “milky tea economy”.

After the British colonization of Hong Kong, British milky tea was introduced to the city, resulting in the famous “Disco Milky Tea”, “Yuanyang Milky Tea”, and was then introduced into Taiwan, and a new trend — pearl milky tea appears! Taiwan milky tea has a rich taste. It can choose the foundation tea — black tea, green tea, oolong tea, etc., and also can choose ingredients — pearls, red beans, aloe and so on. Once spread, it became popular quickly.

After 2000, the milky tea business in mainland China also began to enter a period of large-scale and diversified development. Many milky tea shops are merely 5 or 6 square meters with relatively simple decoration, but the number of milky tea shops continue expanding along with the subway network and cinema chain. As a result, the milky tea finally has risen to the status of enjoying type consumption.

With a brief retrospective, we can find that in different historical stages, a bite of the milky tea is constantly innovating to meet the consumers’ needs, and finally stands out in the long river of time. Constant innovation may be the source of long-term vitality of milky tea.

The outbreak of milky tea economy

As a matter of fact, in terms of history and taste, in China, a country teeming with plenty of masters and enthusiasts of tea ceremony, milky tea is not a high-end product, but just a drink for a minority of young people, and occasionally become the nickname of a popular singer. Now, the milky tea and the business behind it really prevalent.

The newly opened tea shops sprang up in large numbers, and they promoted their own originality and personality. Milky tea shops emerged all over the country — shopping malls or downtowns in almost every city. Even the traditional candy brand White Rabbit also joined the milky tea economy and launched the “White Rabbit Milky Tea Store”.

With the advent of the big data era, the trend of informationization and internetization of offline business has become unstoppable. The new milky tea shops have made full use of the technological advantages, expanding rapidly. Furthermore, the new milky tea brands established after 2014 has positioned themselves as “new style of tea”. They provide the combination of healthier brewed tea and fresh milky with delicate shop decoration. For the young generation, milky tea is fashionable, distinctive and relatively cheap. As a result, milky tea economy broke out completely.

In April 2019, the Meituan.com Consumption Report of Milky Tea released by Meituan food delivery platform show that in the food delivery orders of 2018, the milky tea accounted for 210 million orders, and the sales volume was much higher than coffee. At the end of the third quarter of 2018, the number of fresh tea-making stores has reached 410,000 all around the country, with a 78.26% year-on-year growth.

In the Song dynasty, there was a saying that where there are people, there are poems of Liu Yong, who was a famous poet at that time. However, nowadays, where there is potential business opportunity, there must be capital. Capital is always seizing every opportunity, and the fast-growing milky tea economy naturally attracts the favor of capital. At present, the mainstream milky tea brands have obtained the investment of venture capital in the early stage of their establishment, and has obtained the several rounds of financing. According to incomplete statistics, even in the macro context of deleveraging, the ten leading milky tea brands raised more than 1 billion yuan in 2018, and the financing of the entire industry exceeded 2 billion yuan. In this intense competition of capital, top institutions such as IDG Capital, Oriental Fortune Capital and ZhenFund have already entered the game.

Driven by capital, a fierce competition is inevitable.

Milky tea and the original aspiration

However, the rapidly expanding milky tea industry also has various problems. On the afternoon of May 31, Suzhou Release, the official microblog account of Suzhou government posted a news, the relevant law enforcement officers inspected a top milky tea shop and found poor sanitary conditions. Officers ordered the shopkeeper to make corrections within the specified in time. This is already the fourth time that the top milky tea brand has been exposed to hygiene problems in the store for half a year.

From a development perspective, the overnight fame of internet celebrity milky tea shops represents the rapid rise of China’s leisure consumer food, which will bring a broad development space for China’s leisure consumer food. However, it is difficult for industries that are too fast expanding to balance the contradiction between development and management.

For the milky tea business and the milky tea economy, even if the problem is exposed, it should not stop moving forward. In essence, milky tea economy is still a consumer industry. For a tea company, the core of the sales is always tea! Products and services are the most important foundation of an enterprise.

A small cup of milky tea has thousands of years’ history. How many economy bubbles have burst, how many capitals have died out and how many industries have passed away? The law of value is always there. However, anyone who forgets the law of value’s power, neglects the weight of history in economy bubble, or ignores the equivalent of collapse in the hustle and bustle will be punished in the end, as to how much the cost is, only the interested parties know.

Therefore, no matter how big the cake of capital or how beautiful the network rainbow, the milky tea will eventually get back to the original aspiration of providing consumers with better products and more satisfying services.