What is the Mixue Phenomenon? What are the current demands of the market in ice cream and boba? How resilient are these product innovations?
Mixue, a famous Chinese company originating from Zhengzhou, China, that sells a variety of ice cream and bubble tea (boba) products, have been impressing the world with its rapid expansion across the globe. Not only its massive expansion of stores in Indonesia, but it has also successfully opened 500 stores in different countries.
Globally, the market size for boba products amounted to 2.1 billion in 2019 and is expected to have a compounded annual growth rate of 8.9% from 2020 to 2027. One of the biggest supporters for this industry is the rising consumption of tea and coffee as nootropic drinks among students. The main ingredient for the ‘bubbles’ in the tea are made out of tapioca balls which are chewy and have a good supporting flavor. Some people might find it odd to drink tea with this condiment, but the consumer’s willingness to experiment with various flavors has positively impacted the market.
This phenomenon of Mixue’s rapid expansion certainly drives us to question, how does Mixue thrive in the midst of the world’s economic situation by rapid expansion? How do they stay resilient with all the stores that’s opened? Read the full article to find out!
The Rise of Boba Innovations as Desert
One of the helping factors of the boba industry is the availability of a wide range of products that attracts millennials. In boba drinks, customers are able to choose the various types and flavors like fruit-flavored, green jasmine, and black tea. The wide range of flavor helps attract more consumers and the consumer’s willingness to experiment and try the products are also one of the driving focuses of the rise of these product innovations.
Aside from the product variations and marketing strategies, the shit of consumers towards healthier alternatives also contributed as one of the driving factors of boba products. Diseases like obesity and diabetes have been associated with the increased intake of sugar and has shifted their sugar preferences to other alternatives like honey or brown sugar. In addition to the type of sugar, the tea used in the bubble tea also was proven to have beneficial properties like antioxidants, anti inflammatory, and anti-carcinogenic.
Mixue and its Rapid Expansion in Indonesia and Southeast Asia
In Southeast Asia, bubble tea lovers approximately spend USSD 3.66 billion a year on the beverage. The largest market in the region is Indonesia, with an estimated USD 1.6 billion annual turnover, followed by Thailand with USD 749 million through more than 31,000 bubble tea stores. Many Chinese brands have entered these regions, in which the bubble tea market is estimated to have an annual turnover of USD 20 billion, saturating and hyper competitive.
In Indonesia, Mixue first opened its branch in Bandung, and now has almost all stores in other new areas in Indonesia. One of the reasons why Mixue was able to expand is because of its affordable products for Indonesian consumers. Their products ranged from IDR 8.000 to IDR 22.000. With this increasing expansion, Mixue is applying for an IPO plan.
Strategies on Mixue Expansion Chains
One of the strategies on most bubble tea expansions involve using high margins and having a low differentiation market. Despite the high margins, most bubble tea stores are profitable and have a good product gross margin of 60% to 70%. Pricing wasn’t also the only factor that affected the customer’s purchasing decisions, so each brand should try to come up with a unique strategy in gathering customers. Some customers also decide based on the product selection at stores, as well as the ease of access, meaning the number of stores a brand has. This means that reputation plays a big role as one of the strategies in the success of these expansion. The bubble tea market is fragmented, with enough room for larger and smaller players to exist, but the emergence of Chinese bubble tea players who are good at branding and product/supply chain could increase challenge to local players.
Another key for teddy profitability is a strategy for procurement and production. Mixue itself has central kitchens that handle all steps from purchasing and processing to shipment to franchisees. They also have kitchens near suppliers so that transport cost will be more efficient. Store costs are also a factor, as other competitors may operate in spacious eat-in stores in shopping centers, but Mixue will limit the operation costs and will concentrate in smaller cities with relatively low income levels, with most of them serving takeout only.
Enter Indonesia’s Boba Industry with BRIGHT Indonesia
It would take a lot of in-depth research about Indonesia’s boba industry. In order to enter the Indonesian market, you would need the right local partner to assist you.
BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.
BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:
- Provide assistance for you in expanding and developing your business by identification of potential partners.
- Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arrange business meetings, and act as a liaison.
- Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
- Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.
For more information, email firstname.lastname@example.org.