If you live in a major U.S. city, chances are you’re not too far from a boba tea shop. The indulgent Taiwanese beverage, also known as bubble tea or occasionally “Black Pearl” tea, was invented in the 1980s and is defined by the addition of marble-sized tapioca “pearls” – boba – to sugary milk tea, and traditionally is drank through an oversized straw that allows the boba to be consumed one at a time.
And there’s a reason why you’ll often see long lines at those boba shops: replicating the fresh experience in a CPG product is a challenge few have been able to solve – at least, not yet.
What is the concept?
A 2021 Future Market Insights report found that the global boba tea market was worth $2.3 billion last year and is expected to grow at a CAGR of 8.8% to $5.5 billion by 2031. The category has received a significant boost among millennial and Gen Z consumers thanks to social media penetration, the report said, and the antioxidant and anti-inflammatory benefits of tea give the novel beverage a health halo (despite the frequently high sugar content of many mainstream boba teas). In North America alone, boba tea is expected to outpace global growth, with a CAGR of 12.4% through 2031.
As a consumer product, however, boba tea has broadly been confined to the on-premise channel for decades. Though there’s been attempts in the past, such as bottled rooibos bubble tea brand COOBO, the category has been broadly overlooked in CPG until now. And this new wave of boba tea brands arrives as Asian-inspired food and drinks are gaining traction in the mainstream, from a wave of new Thai and Vietnamese coffee brands to a proliferation of yuzu flavors across categories. As many Americans are already familiar with bubble tea, the category’s expansion into CPG reflects another significant Asian drink tradition targeting conventional channel shelves.
A shift to CPG now is also providing consumers with a healthier alternative. While some of these entrants are full flavor, such as Inotea’s sugary canned Bubble Tea product, many brands are also bringing a better-for-you ethos to their lines.
BUBLUV founder and CEO Diana Ark Chen, a former brand manager at Upfield for I Can’t Believe It’s Not Butter and Country Crock, told BevNET that she had been a regular boba tea consumer about 10 years ago, but quit “cold turkey” when she learned that the on-premise drinks she’s been purchasing could contain over 400 calories per 16 oz. cup. The bulk of the calories, she noted, came from the tapioca pearls.
“I saw an opportunity to make a better-for-you version,” Chen said. “It’s my passion for healthy eating, and the fact that I have experience in marketing and also developing new products. So, I was able to apply my passion and my professional experience and my love of boba all in one and I decided to pursue it full time in April 2021.”
How are brands approaching the space?
However, it’s not high sugar content that’s been the main issue holding boba tea back in RTD formats, but formulation challenges with the tapioca pearls. While boba are chewy and sweet when made fresh, they’re a notoriously fickle ingredient that is difficult to keep consistent in a CPG format. The boba can become hard and tough if kept refrigerated for long periods, or inversely they can get mushy from sitting in liquid over the course of weeks or months.
As such, the brands that believe they have cracked the code have taken unique approaches to their R&D in order to maintain flavor, texture and consistency. In BUBLUV’s case, the brand’s pearls are made from an original recipe made with a blend of tapioca and konjac, an East Asian root vegetable, that Chen said helps the boba to stay soft when chilled, while also keeping the calorie count low; all three varieties – Black Milk Tea, Matcha Soy Latte and Passionfruit Oolong Guava – contain 50 calories per 9.5 oz bottle and no added sugar, with erythritol and monk fruit as sweeteners.
California-based startup BEK Foods, maker of Boba Bam, meanwhile, has avoided the challenges of ready-to-drink by selling frozen tea and boba packets that can be microwaved and mixed with milk. Like Chen, Boba Bam co-founder Bob Yau saw an opportunity for a packaged boba tea drink amid the pandemic lockdown, telling BevNET that he began working on the product while waiting in long lines at his local boba shop during the summer of 2020. However, rather than wrestle with formulating an RTD, Yau turned to an existing category overseas in frozen boba.
Larger companies are also recognizing the packaged boba opportunity. Last month, Del Monte Foods announced its latest brand Joyba, a ready-to-drink boba tea available in four flavors and featuring custom packaging designed to look like on-premise cups – including the customary straw to provide an authentic experience.
Perfecting a consistent, widely appealing boba recipe is a hurdle other brands in the space would rather avoid. California-based startup TWRL Milk Tea was founded by CEO Pauline Ang, a former brand designer, and CMO Olivia Chen, a former marketing director for nonprofits. The plant-based, nitro canned drinks are a better-for-you, low calorie product positioned as tea-based lattes for the conventional and natural channels. The founders told BevNET last week that they had originally considered making a boba product, but ultimately decided against including the pearls due to the difficulty posed by formulation.
“A lot of people don’t want the boba in their drink, but they like the tea, or a lot of people like the boba, but you know they’re very picky about how it tastes and the consistency and the chewiness,” Olivia Chen said. “So we wanted to make sure it was the best kind of tea that we could offer a customer.”
What’s the market for this category like?
According to Boba Bam co-founder and CEO Brian Khoddam, frozen boba tea is not an uncommon product in Asian grocery stores in the U.S. but there’s no brands currently targeting conventional grocers and mass accounts. The company worked with a Taiwanese manufacturer to develop its own clean label, better-for-you version of the mass-produced mix packs by removing artificial caramel coloring and reducing the sweetener content.
“We essentially took something that sort of existed in the marketplace and we perfected it for what we think is the mass market,” Khoddam said. “It took a lot of work and R&D for us to come up and make the product that we have, and the product is all made authentically in Taiwan.”
Boba Bam launched in Texas Costco stores last year and sales picked up quickly after a TikTok video in which the product appeared gained millions of views, Khoddam said. The brand has since expanded its presence in Costco to Southern California and is also adding Sam’s Club accounts. The company is also looking to introduce new flavors later this year.
Prior to the launch, Boba Bam commissioned a consumer survey that found 74% of respondents across the country were familiar with boba tea; of those respondents, 91% said they drank it at least once per month and 63% said they had it at least once per week.
“It’s an affirmation that the product is crossing a line,” Khoddam said. “There’s no age or ethnicity that it’s limited to, it’s basically enjoyed by a lot of different people. Of course, it still skews young, when we look at our core market, it’s between 18 and 44. I would say that is the core age group for boba today, but it is amazing. We were a little bit surprised how widely consumed boba was when we got started.”
With the awareness of boba tea and milk tea continuing to rise in the U.S., TWRL also sees opportunity in selling its RTD products in on-premise accounts while also providing an on-the-go or at-home solution for the growing market.
“There’s a whole world that exists in cafes and restaurants that we can serve, and so I think we are the alternative of a ready-to-drink coffee from a cafe or a milk tea,” Olivia Chen said. “We are not looking to replace [on-premise], we’re looking to coexist.”
Meanwhile, BUBLUV remains available exclusively through D2C ecommerce, which is not necessarily a bad thing; global ecommerce sales of CPG bubble tea have an estimated CAGR of 11.9% in the period, per Future Market Insights. Asian food and beverage startups such as Fly By Jing, Tea Drops and Copper Cow Coffee are also among the fastest growing D2C brands online, according to a report by Similarweb.
“The fact that this is ready-to-drink is something that consumers are really looking for,” she said. “During the pandemic, people missed having bubble tea and being able to go to the shop…. I think there’s a ton of forces at hand where consumers are primed and ready for this, which is super exciting.”
What’s the significance of Asian products?
Many of the brands identify as part of the emerging class of RTD Asian tea brands looking to shake up a category dominated by imported drinks from Japanese tea giant Ito En.
After reaching the finals of the NEXTY Awards at Natural Products Expo West 2022 in March, TWRL’s Ang and Chen said they’re now working to grow the retail business and have signed new distribution partners to expand in grocery.
Their Asian American heritage is also vital to the brand’s position, they said. Beyond the milk tea format, the brand has also embraced flavors like jasmine and hojicha. While the company is hoping to grow awareness of these ingredients among non-Asian consumers, Chen said they also want the product to provide a better option for the Asian American community as well; she noted that the plant-based formulation is significant as many Asians face higher lactose intolerance rates.
“This is our heritage, but we’re also combining it with our own perspective of really valuing health and sustainability,” she said. “We were both looking for something that we felt comfortable with drinking every day, that our kids would feel comfortable drinking every day. We often talk about what is in all these different drinks and we want to feel that our kids could drink this and not worry about the health aspects of it.