Consumers Seeking Low-Cost Brands Amid China's Economic Slowdown
As the Chinese food service industry faces a crisis, bubble tea, which has been regarded as a 'symbol of urban life' among young people in China for over 20 years, is now engaged in ultra-low-price competition.
On the 1st (local time), AFP reported that in recent decades, it was common to see people drinking large-sized bubble tea on city streets and in shopping malls across China, a scene that reflected China's economic growth. Many bubble tea chains flourished by launching premium products priced between 25 and 40 yuan (approximately 4,700 to 7,500 won), and numerous brands operate about 500,000 stores nationwide, AFP added.
As bubble tea's popularity grew, 'bubble tea influencers' who review the taste of products also emerged, but recently, the popularity of bubble tea has declined. AFP stated, "Following the COVID-19 pandemic and the slowdown of the Chinese economy, the bubble tea industry is now offering products priced below 1 dollar (about 1,300 won), engaging in ultra-low-price competition," and noted that consumers are now seeking low-cost brands like Mishe Bingcheng.
Guo Jun, who works in Beijing, told AFP in front of a Mishe Bingcheng store, "Other products are too expensive," and said he used internet discounts to purchase a 2.8 yuan (about 530 won) drink. He added, "Labor stress is high, the current economic environment is not good, and salaries are not high, so young people need to be more practical."
Stacy Chen, a bubble tea influencer with about 180,000 followers on Chinese social media platforms Douyin and Xiaohongshu, pointed out that Chinese coffee brands offering premium products similar to Starbucks at affordable prices have also somewhat contributed to the decline in bubble tea's popularity. She said, "Now I can buy premium coffee drinks for 9.9 yuan (about 1,900 won) or 8.8 yuan (about 1,700 won). Why should I pay more than 20 yuan (about 3,800 won) for a cup of bubble tea?"
Meanwhile, Chinese food service companies have been closing down one after another. According to the 'New Boutique Catering White Paper' released recently by consulting firm Beijing Douyin, a total of 780,000 restaurants closed from January to August last year, exceeding the total number of restaurant closures for the entire year of 2022 within just eight months. The firm pointed out, "The food service industry has a low entry barrier, so many new restaurants open recklessly, but excessive competition is causing a surge in closures."
Earlier, the Voice of America (VOA) also reported, citing Chinese food service media Changguanju, that 1 million food and beverage outlets, including 30,000 noodle shops, closed in China during the first half of the year. It added that this scale of closures is close to the total number of closures for the entire previous year.
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