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The Chinese market for coffee and tea beverages is already substantial, yet industry insiders remain optimistic about future growth, with some predicting it could surpass CNY 1 trillion (around USD 141.4 billion) as soon as this year.
Investor confidence is slowly recovering after deal activity slowed down following 2022. Zhu Yonghua, a partner at the venture capital division of a major Chinese on-demand services company, shared these insights at the 2026 Beverages Conference in Shanghai on December 2nd.
This year has seen a series of initial public offerings that are fueling early-stage investments. Zhu noted that six additional companies in the sector are likely to go public over the next five to ten years, pushing the coffee and tea market toward the CNY 1 trillion mark.
Projections suggest the market could reach CNY 1.39 trillion (approximately USD 196.6 billion) by 2029, rising from an estimated CNY 1 trillion this year and CNY 623.5 billion in 2023. The market for fresh tea drinks alone could exceed CNY 300 billion (around USD 42.2 billion) this year.
Major players like Nayuki Holdings, Baicha Baidao Industrial, Guming Holdings, Mixue Ice Cream & Tea, Chagee Holdings, and Auntea Jenny have all gone public. These industry leaders are expanding into smaller cities across China and internationally, signaling a new phase of growth after capturing significant market share.
Moving forward, tea brands are expected to differentiate themselves through unique branding, premium offerings, and efficient single-store operations. Meanwhile, the coffee segment is likely to see intense competition driven by economies of scale among top companies.
Milk tea, known for its value proposition and supply chain innovations, could emerge as a global symbol of Chinese culinary culture. Yan Jianguo, CEO of a dairy company formerly supplying dairy products to prominent coffee brands, emphasized this potential.
Many brands are shifting away from aggressive expansion, price wars, and chasing fleeting trends. Instead, they are focusing on maximizing value from existing stores and targeting specific consumer moments. Since many Chinese consumers prefer tea and coffee as daytime energizers, the busiest hours are typically between 10 a.m. and 4 p.m., with quieter periods in the mornings and evenings. As a result, brands are experimenting with new products for these slower times.
For example, Mixue has introduced a “Breakfast Plan” in cities like Dalian and Xi’an, offering items such as a CNY 5 (about 71 cents) coconut milk. Similarly, Chagee aims to boost store traffic during breakfast and evening hours.
Enhancing in-store experience is now a key focus. Hongxing Qianjin Bread & Milk has opened outlets in Shanghai to strengthen its image as an affordable option by optimizing prices and increasing transparency around ingredients. Yee3 has expanded product lines, including coconut water and rose coconut water, emphasizing long-term brand value over short-term popularity.
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