New Tea Drink Mid-Year Review 2025: Who’s Thriving and Who’s Struggling in China’s Bubble Tea Wars

The Chinese new tea drink market experienced one of its most dramatic six-month periods in 2025 as food delivery giants unleashed unprecedented subsidy wars. While consumers enjoyed heavily discounted bubble teas, brands faced both unprecedented opportunity and existential challenges in what became a pivotal moment for the industry. The mid-year results reveal a market in transition, where scale, strategy and operational excellence separated the winners from those struggling to maintain relevance in an increasingly competitive landscape. This comprehensive analysis examines how major players navigated these turbulent waters and what it means for the future of China’s beloved tea drink industry. The first half of 2025 revealed significant performance gaps among China’s leading new tea drink brands, with clear winners and losers emerging from the food delivery subsidy wars. While most brands reported growth in absolute terms, the quality of that growth varied dramatically across the competitive landscape. Mixue Bingcheng (蜜雪冰城) continued its dominance with staggering scale, reporting over 100 billion RMB in revenue and expanding its store count to突破50,000 locations. The brand’s franchise model proved exceptionally effective during the delivery wars, with commodity and equipment sales growing 39.6% year-over-year to 14.495 billion RMB, accounting for over 90% of total revenue. Their massive scale created formidable advantages in supply chain efficiency and brand recognition. Close behind,霸王茶姬 (Bawang Chaji) maintained double-digit revenue growth, solidifying its position in the second tier alongside Guming (古茗), which emerged as perhaps the biggest winner from the delivery platform subsidies. Guming’s strategic positioning allowed it to capture significant order volume without sacrificing profitability—a rare feat during intense price competition. The third tier consisting of Cha Bai Dao (茶百道), Naixue’s Tea (奈雪的茶), and沪上阿姨 (Hushang Ayi) faced distinct challenges despite overall growth. Cha Bai Dao reported both revenue and profit increases, but analysts noted that profit growth significantly outpaced modest revenue increases, suggesting possible cost-cutting measures rather than operational improvements. Hushang Ayi, while recording the smallest revenue scale among the six major brands, improved profitability with a 20.9% year-over-year net profit increase. However, the brand faced the highest store closure rate at 6.85%, indicating challenges in maintaining franchisee viability during aggressive expansion. Naixue’s Tea stood out as the only major brand experiencing revenue decline while remaining unprofitable, raising questions about its long-term positioning in the market. The food delivery platform competition between Meituan, Alibaba, and JD.com created both unprecedented opportunity and significant challenges for new tea drink brands. While order volumes surged across the industry, the sustainability of this growth remained questionable given its dependence on temporary subsidies. According to Naixue’s financial reports, approximately 44.2% of their direct-operated store revenue came from third-party delivery platform orders, with another 3.9% from their own platform. While this represented a 7.5% year-over-year increase in delivery business revenue, the company acknowledged the marketing costs associated with participating in these promotions. The situation highlighted the fundamental difference between franchise and direct-operated models during subsidy wars. Franchise brands primarily generate revenue through raw material and equipment sales to franchisees, meaning increased order volumes directly improved financial performance regardless of franchisee profitability. However, this created potential long-term brand damage as struggling franchisees faced increased pressure. For direct-operated models like Naixue, headquarters bore the marketing costs associated with delivery promotions. Despite order volume increases, the company described the situation as making more noise than money—gaining visibility but not necessarily sustainable revenue. Behind the impressive revenue numbers, many franchise operators struggled with declining profitability. As Shi Peng, Mixue Bingcheng’s Global COO acknowledged, while delivery wars boosted average store sales and profitability for the corporation, individual franchisees faced margin compression. Industry data revealed increasing store closure rates across major brands: Hushang Ayi: 6.85% closure rate, Cha Bai Dao: 3.14% closure rate, Guming: 2.78% closure rate, Mixue Bingcheng: 2.13% closure rate. These figures, all higher than previous year levels, indicated growing pressure on the ground level despite corporate revenue growth. The delivery wars accelerated an ongoing shift in China’s new tea drink competitive landscape, pitting established pioneers against ambitious newcomers with different approaches to growth and brand positioning. Early market leaders like Heytea (喜茶) and Naixue’s Tea, who pioneered the premium fresh-made tea drink category, found themselves playing defense as consumer preferences shifted toward value-oriented options. Both brands eventually embraced franchise models after previously focusing exclusively on direct operations—Heytea in 2022 and Naixue in 2023. They also launched sub-brands targeting lower-tier markets: Heytea introduced Heytea Light while Naixue developed Taigai (台盖). These moves represented strategic concessions to market realities but also created new challenges in maintaining brand identity across different market segments. Meanwhile, brands like霸王茶姬, Guming, and Cha Bai Dao that focused on second and third-tier cities continued their aggressive expansion. Their value-oriented positioning resonated with consumers increasingly conscious of spending during economic uncertainty. Notably,霸王茶姬 and Heytea stood out as the only major brands that largely avoided participating in the delivery subsidy wars.霸王茶姬 founder Zhang Junjie (张俊杰) explicitly stated that short-term subsidy-driven competition was unsustainable for long-term market development. While acknowledging that participation would boost store GMV, he emphasized the damage to franchisee profitability and the brand’s commitment to price integrity and premium positioning. Heytea, which had announced a return to value competition in 2024, also avoided the price war until its conclusion, when it joined Meituan’s Pinhaofan program with a fixed-amount settlement system that charged no commissions—far less damaging to profitability than the full subsidy war. Facing market saturation and intensified competition, leading tea drink brands developed distinct strategies to secure their positions in an increasingly challenging operating environment. According to industry statistics, the top 10 tea drink brands by store count launched 232 new products in the first half of 2025 alone. Brands pursued different innovation strategies: regional breakthroughs featuring local flavors, deep exploration of regional tea varieties, and completely new concepts that blurred category boundaries. Successful examples included: Cha Bai Dao’s Mujiangzi series, CoCo’s Super Sea Buckthorn Cup, Heytea’s Tibetan tea series,霸王茶姬’s Taihu Biluochun, Shuyi Shaoxiancao’s Fujian Anxi Oolong, Cha Bai Dao’s Wuyi Dahongpao. Emerging brands also gained traction through unique concepts. Grandpa Doesn’t Brew Tea (爷爷不泡茶), pioneer of lychee ice brew, opened over 1,000 new stores in 2024. Qucha Mountain (去茶山), using local specialty ingredients, began expanding beyond Guizhou province with notable success. These successful newcomers typically combined extensive hybridization and integration, subtly creating new categories. Their unique product formats and brand aesthetics encouraged user-generated content and social sharing, transforming from mere beverage options into lifestyle symbols. With domestic market saturation increasingly evident, international expansion became a strategic priority for most major brands. Mixue Bingcheng and霸王茶姬 demonstrated particularly impressive overseas results. By Q2 2025, Mixue Bingcheng operated 18,000 international stores, leveraging its value positioning to appeal to global markets.霸王茶姬 took a different approach, pursuing a mid-range international strategy with 208 overseas stores generating 235.2 million RMB in GMV—a 77.4% year-over-year increase that established international markets as a genuine second growth engine. Rather than simply exporting their Chinese model,霸王茶姬 emphasized localization in product development and marketing. Their Singapore National Day orchid-flavored release demonstrated this approach—respecting Chinese cultural elements while adapting to local preferences. Though slower than outright replication, this method showed deeper understanding of international consumer needs and greater potential for sustainable expansion. Facing margin pressure, leading brands increasingly focused on operational improvements and supply chain optimization. Guming established cooperative planting bases and built their own processing facilities, with a storage and logistics system capable of providing cold chain delivery every two days to 97% of stores. Cha Bai Dao achieved next-day delivery to 93.8% of stores through supply chain enhancements. Membership systems became crucial for customer retention.霸王茶姬’s value-priority strategy showed impressive results, with 73.9% of mini-program orders coming from registered customers who had ordered at least twice. These operational improvements represented a necessary evolution from pure expansion to sustainable management—the industry maturing from land grabs to careful cultivation. The first half of 2025 marked a turning point for China’s new tea drink industry, revealing fundamental shifts in competitive dynamics and strategic priorities. The delivery wars provided short-term boosts but also exposed vulnerabilities in business models and highlighted the importance of sustainable growth over pure expansion. As the industry matures, scale alone no longer guarantees success. Brands must balance multiple competing priorities: expansion pace versus franchisee profitability, innovation versus operational efficiency, premium positioning versus mass appeal. The most successful players will be those who can navigate these tensions while maintaining brand identity and operational excellence. The new tea drink market has transitioned from explosive growth to measured development, from chasing trends to building enduring businesses. In this new phase, quality matters more than quantity, sustainability more than speed, and operational excellence more than opportunistic expansion. The brands that recognize this new reality and adapt accordingly will likely thrive in the next chapter of China’s dynamic tea drink story.