Chagee

Chagee (茶百道), founded in 2017 and headquartered in Yunnan, China, has rapidly become one of China’s leading contemporary tea chains. While the coffee market in China is dominated by players like Luckin Coffee and Starbucks, Chagee has carved out a distinct identity by elevating traditional Chinese tea for younger, urban consumers. The company operates over 7,000 stores across China and Southeast Asia, and is often referred to as the “Starbucks of tea”—but with a focus firmly rooted in tea, not coffee.

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Chagee’s vision is to modernize the tea-drinking experience while honoring Chinese heritage, combining high-quality loose-leaf teas with fresh ingredients and stylish, minimalist stores. The brand aims to bridge generational gaps and make tea relevant for today’s fast-paced, health-conscious consumers.

Chagee employs a fast-scaling franchise model, which has enabled the brand to rapidly expand across major cities and provincial towns. Its menu centers on fresh-brewed tea drinks—including cheese-topped teas, milk teas, fruit-infused teas, and classic brews—each made with whole-leaf tea rather than concentrates or powders.

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Key elements of Chagee’s model:

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• Premium Sourcing: Tea leaves are sourced directly from Yunnan and other renowned tea regions, with a focus on traceability and quality.

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• Health and Freshness: Many drinks are low in sugar, with no artificial creamers. The company appeals to consumers seeking healthier, more authentic options.

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• Experience and Branding: Modern, stylish outlets offer a “third space” experience, much like Starbucks did for coffee, with digital ordering and personalized service.

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• Technology-Driven: Chagee uses data analytics, mobile ordering, and customer loyalty programs to boost retention and drive new product development.

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Chagee’s focus on premiumization and authenticity allows it to stand out in China’s highly competitive tea and beverage market, which includes major players such as Heytea and Nayuki, but it is especially noted for its quality-first approach.

China’s new-style tea market has boomed in recent years, with young consumers turning to healthier beverage choices. Chagee is well-positioned at the intersection of traditional tea culture and modern retail, capturing the loyalty of Millennials and Gen Z.

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• Rapid Store Growth: With more than 7,000 stores (as of 2024), Chagee is now one of the largest tea chains in the country.

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• Urban Penetration: The company has a strong presence in first- and second-tier cities, but is also aggressively expanding into lower-tier cities where Western-style coffee culture is less entrenched.

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• Consumer Engagement: Seasonal and limited-edition drinks, plus regular menu innovation, keep customers coming back and drive social media buzz.

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• Brand Partnerships: Chagee has formed strategic collaborations with local and global brands, enhancing its cultural relevance and reach.

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Chagee’s ability to consistently deliver quality at scale has helped it weather intense competition and establish itself as a category leader.

Chagee’s future growth is centered around continued domestic expansion and internationalization, particularly across Southeast Asia. The brand is investing in digital transformation—enhancing its app ecosystem, personalized marketing, and supply chain integration. With Chinese tea’s increasing global appeal and the growing premium beverage market, Chagee is well-placed to leverage its authentic, quality-focused image.

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Key growth drivers:

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• International Expansion: New stores are opening in Thailand, Malaysia, Singapore, and beyond.

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• Product Diversification: Ongoing R&D is driving new beverage categories, including wellness-focused and non-dairy options.

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• Sustainability: The company is prioritizing eco-friendly packaging and ethical sourcing as part of its long-term strategy.

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Chagee faces competition from domestic brands and global coffee players experimenting with tea menus, but its unique market position, high brand loyalty, and robust operational model position it well for sustained growth.