The milk tea market in the most booming period 3-4 years ago, until now, although it has cooled down, it still has its appeal. Milk tea chains have taken advantage of this opportunity, thereby capturing a significant market share in the beverage segment, making the coffee chain wary.
The main target audience of milk tea brands is Millennials and Gen Z generation, this is a group of young customers, accounting for a large proportion of the population structure and also ready to spend. This leaves open a fertile land for businesses, with great potential if exploited properly.
The last 5 years have witnessed the rise of Phuc Long, a milk tea brand that has “stormed” young people in the South and the North. Phuc Long originated from the famous tea area Bao Loc (Lam Dong) and rapidly expanded, from 10 stores in 2015 to 70 stores in 2019.
Last year, this chain brought in 779 billion dong in revenue, up 65 percent, and at the same time, comparable to the top coffee chains investing in The Coffee House or Starbucks.
However, Phuc Long has not yet achieved very high efficiency when the net profit is only 16 billion dong. In previous years, the company had a symbolic profit of a few billion, even though the revenue was up to hundreds of billion dong.
Phuc Long is superior if only compared to other businesses in the milk tea industry. But Tocotoco’s growth was also remarkable. The annual revenue of this brand is more than twice, reaching 238 billion VND in 2019 but the profit is also negligible.
The same revenue scale with Tocotoco, the owner of The KOI Café brand brought in VND244 billion last year. However, the growth rate has slowed much.
The highlight of The KOI Café is the high gross profit margin in the beverage industry, reaching over 70%, compared with Tocotoco over 50% and Phuc Long 35%.
Thanks to this, the company’s net profit in the period of 2017 – 2018 was approximately 40 billion VND, far ahead of its competitors, even with the biggest name Phuc Long. However, the result in 2019 suddenly dropped to 14 billion dong.
Big milk tea brands such as Gong Cha, Bobapop, and Ding Tea all showed a setback last year showing that the milk tea industry is not all growing but diverging. Nhu Phuc Long, with its strong point of tea flavor, also has a good position in the minds of customers, so it is more and more breakthrough and even occupies market share from competitors.
Gradually emerging in recent years, but Share Tea showed losses increased to 13 billion VND last year, on 35 billion revenue. Ding Tea also reported a loss in the last two years, ranging from 2 – 3 billion VND.
It should be noted that many milk tea brands have franchised after certain successes, so the parent company’s business results may not fully reflect the size of that brand on the market.
As Tocotoco said there are about 300 stores nationwide with 70% under the form of franchising. Or like Gong Cha about 50 points of sale updated by the end of 2019 the franchise rate is about 40%.
Source: ndh.vn – Translated by fintel.vn
- Nutifood becomes first Vietnamese milk brand available at Walmart
- Fierce ‘war’ coffee chain
- NutiFood becomes market leader in baby milk industry
- First human milk bank in northern Vietnam opens
- Another factory licensed to export milk to China
- Moc Chau Milk to sell shares, raise capital
- Vinamilk has built a long-term strategy for Moc Chau Milk
- Vinamilk to set up coffee chain
- Vietnamese factory’s milk licensed to export to China