Whenever a retail lease comes on the market or a new commercial development is completed in Metro Vancouver, it’s quite possible that a new bubble tea shop will pop up in that space.
Bubble tea, a sweet tea-based drink accompanied by milk and chewy tapioca balls, originated in Taiwan and spread to Hong Kong and mainland China in the 1990s.
It has become especially popular in recent years among younger generations in Asia as a fun and social drink, and demand for the drink extends to Metro Vancouver. There are more than 200 bubble tea shops in the region – at least one in every city – and 80 per cent of them are in Vancouver, Burnaby, Richmond and Surrey.
In downtown Vancouver alone there are currently 25 bubble tea shops – about one-third of the number of coffee shops in the downtown core. On two blocks near Robson and Bute streets, six bubble tea stores operate almost side by side.
Is this a trend that will eventually fade away, or is there high-enough demand to sustain this many bubble tea stores in the region?
Shop owners believe demand is here to stay, but competition is getting fiercer as more players are eyeing the market.
A growing local market
Chao Li has been a loyal bubble tea drinker since he was in Grade 3 in Taiwan, and this continued after he moved to sa国际传媒 15 years ago.
“Coffee was a luxurious thing in Taiwan but bubble tea was everywhere and was cheap. After school, I and my friends would go to buy a cup of bubble tea on the way home every day,” said Li.
In Asia, many of the cheap street bubble tea shops of the 1990s have been replaced by big chains that offer a variety of creative, fancy drinks.
Li and his wife now visit different bubble tea shops twice a week, spending around $100 every month.
“It’s a lifestyle, a habit, like smoking,” said Li.
As the Chinese-Canadian population keeps growing in Greater Vancouver – with 512,260 Chinese-Canadians in the 2021 census accounting for nearly 20 per cent of the region’s total population – people like Li, who bring their love for bubble tea to sa国际传媒, are fuelling demand for the beverage.
This has attracted big bubble tea brands from Asia: At least 30 brands have entered the Metro Vancouver market in recent years and have expanded quickly using a franchise model.
“We saw the market potential here,” said Agnes Mao, Canadian managing partner for Truedan. The Taiwanese brand opened its first store on Robson Street in 2019 and now has five locations in Metro Vancouver.
“Most of the brands here are from Taiwan with at least 10 years of history. I know some newer brands from mainland China intended to enter the Vancouver market but were held back by the pandemic – I expect to see them entering the market in the coming year.”
Competing for market share
Last year, Carol Xu became a franchisee of Share Tea, a Taiwanese bubble tea brand founded in 1992, and opened her store in the Park Royal Shopping Centre in West Vancouver.
“People already knew the brand and the franchiser provides the supplies and recipes – as someone who was new to the industry, franchising was an easier way to get started,” said Xu.
Her business is seasonal – it’s quiet in winter but in summer, there is always a lineup in her store, with students hanging out after school and shoppers stopping by to get a cold drink and take a break.
Unlike Xu, many choose to open a store close to other bubble tea shops under a head-to-head strategy – a model often used in Asia where businesses of the same type concentrate to attract more traffic to the area. Locally, this has created “bubble tea streets” on Robson Street and on Kingsway.
“There is a well-known bubble tea street on Zhongxiao East Road in Taipei where the whole street is occupied by bubble tea shops and every shop is busy,” said Mao.
But not everyone can survive the competition – two bubble tea shops closed their doors on Robson Street recently, and there are also bubble tea shops closing or being replaced by new bubble tea brands across the region.
“You need to pay the operation costs and a percentage-based royalty fee on top of that – if you don’t sell a certain number of cups, it will be hard to last,” said Xu, who says she believes quality and innovation are key for a brand to stay competitive and keep up with customers’ expectations.
“We have new series every five to six months at least and each new series has three to four flavours – if it’s liked by customers, it may be added to our permanent menu.”
For Mao, location and its suitability with a brand’s target market is also essential to the success of a store.
“Some brands are more focused on traditional bubble tea drinks while others are more experimental – their products may not have bubble or tea, but focus on milk, fresh fruit and other ingredients,” she said.
Non-traditional ingredients such as taro, tofu, rice wine, osmanthus, purple rice, winter melon, Oreo and peach gum can all be found in bubble tea drinks.
“In markets like Richmond where many people have had bubble tea for a long time and are more eager to try new products, the more experimental brands will be more popular,” said Mao.
“Brands focusing on more traditional bubble tea have a better chance to succeed in newer markets like West Vancouver.”
She added that franchise support is also important – some franchises expanded impulsively during the pandemic and ended up having to closure some stores.
Expanding the customer base
Many bubble tea brands are doing everything they can to stand out – through unique flavours and ingredients, cup and drink design and store decoration.
But with the number of bubble tea shops already open in Metro Vancouver, and with more brands expected to enter the market, Mao said she believes the Chinese-Canadian consumer market has been saturated. Growth, she says, will require marketing to new customer segments.
“No matter how big the Chinese-Canadian population is here, it’s still quite limited.… But the mainstream market is a boundlessly vast sea,” she said.
Truedan has slowed down its pace for new store openings in Metro Vancouver and has opted instead to open three locations in Alberta, with plans to continue to expand eastward to Saskatchewan, Manitoba and Quebec to reach 15 stores in total by next year.
“The majority of new franchisees are people outside the Chinese-Canadian community,” said Mao.
“They saw their children getting bubble tea with their friends.… Children are the best marketers – they introduce bubble tea to their friends and classmates and the intercultural influence is very strong.”
Another area for competition, according to Mao, is producing healthier drinks – for example, many brands now use brown sugar, considered a healthier alternative to refined white sugar – and reducing a brand’s environmental footprint.
Although the traditional plastic bubble tea straws have largely been replaced by paper ones, the beverage’s classic plastic cups still create a large volume of plastic waste every day, and they are not included in sa国际传媒’s single-use plastic ban that took effect in December 2022.
Mao said she won’t be surprised if at some point the single-use plastic cups used in the bubble tea industry become further regulated or banned.
“At that time the look of the drink, which is one of the selling points, won’t matter because we won’t be using see-through plastic cups,” she said.
Xu also sees the potential of a broader market for bubble tea. Most of her customers are not Chinese-Canadians and bubble tea has been used more often in parties and events as an alternative to coffee or cocktails.
“I believe one day, bubble tea will become an essential part of people’s life, just like Starbucks,” she said.