Frost & Sullivan releases the 'White Paper on the Development of the Canned Live Yogurt Industry in 2025'

In a broad sense, milk tea is a beverage that combines tea with milk (or milk powder, brewed milk powder). Milk tea was originally a daily drink for the nomadic peoples of northern China and has a history of a thousand years. It spread around the world during the Yuan Dynasty and later evolved into various types of milk tea with different production methods and flavors, such as Mongolian salty milk tea, Malaysian latte, Hong Kong-style sock milk tea, British milk tea, etc. The commonly referred to 'milk tea' nowadays generally refers to 'tea and flavored tea beverages' under the category of ready-to-drink beverages, specifically referring to freshly made tea drinks. It is made from water, tea leaves or their concentrated/soaked extracts, tea powder (including instant tea powder), and other extracts, with or without the addition of ingredients such as milk, dairy products, fruits, grains, etc., and is processed on-site for immediate consumption by consumers.

Data source: Analysis by Frost & Sullivan

The ready-to-drink tea industry evolved from the traditional brewed milk tea business, which began developing in the 1990s. Initially, its products were made by mixing milk tea powder with water, with almost no brand concept or unified store decor at that time. In the 2.0 era, milk tea with a lid was the main form, and tea powder, tea residue, or tea bags began to be used as base ingredients for making tea. The concept of brand chains emerged, and store decor was mainly simple and standardized. Currently, leading companies are leading the Chinese ready-to-drink tea market into the 3.0 era by accurately grasping the major trend of consumer structure adjustment. Consumers pay more attention to product quality and the evolution of consumption scenarios. The 3.0 era also emphasizes brand and IP construction, and the raw materials for ready-to-drink tea products are gradually becoming healthier, mainly using tea leaves and raw cow's milk for brewing.

Data source: Analysis by Frost & Sullivan

After years of development, the ready-to-drink tea market has gradually entered the stage of stock competition. The market share of chain brands is 62.7%, making it a category with a relatively high level of chain operation in the catering industry. From a competitive perspective, the ready-to-drink tea industry has many participants and a relatively fragmented market. In terms of retail sales in 2024, the combined market share of the top five participants was approximately 33%.

Affected by factors such as the increasing chain rate of the ready-to-drink tea industry, rapid store expansion, and fast product updates, the consumer base - young white-collar workers and students - has gradually strengthened their willingness and ability to consume. Consumption scenarios have expanded from leisure activities such as shopping and gatherings to multiple time periods such as work, team-building activities, and afternoon tea. With enhanced social attributes and the gradual improvement of online ordering and delivery systems during the pandemic, the market scale of China's ready-to-drink tea industry has rapidly grown from 124.3 billion yuan in 2020 to 304.3 billion yuan in 2024, with a compound annual growth rate of up to 25.1%.

With the advent of post-pandemic era and competition for existing tea beverage stock markets, national consumer enthusiasm has recovered. Frost & Sullivan predicts that the market size of Chinese ready-to-drink tea will continue to rise in the next five years, but at a slightly slower pace. The compound annual growth rate from 2024 to 2029 is about 13.3%, and by 2029, the market size will reach 567 billion RMB.

Data source: Analysis by Frost & Sullivan

Ready-made yogurt refers to a ready-to-drink beverage made primarily from yogurt, with or without other food ingredients such as fruits and nuts. The rise of ready-made yogurt is essentially the result of the combined effect of upgraded dairy consumption and the overflow of ready-made tea beverage models. Traditional packaged yogurt gradually becomes unable to meet consumers' personalized experiences, while the success of ready-made tea beverages has verified the feasibility of the 'order now, make now, consume immediately' business model. Against this backdrop, yogurt has also been introduced into tea beverage retail scenarios, combining with ingredients such as fruits and grains to create new categories that combine nutrition with taste, giving rise to ready-made yogurt. Ready-made yogurt and ready-made tea beverages are highly similar in consumer demographics, store models, and price ranges, but yogurt highlights its health attributes more so. Therefore, it not only extends the logic of ready-made tea beverages but also forms a differentiated positioning in the segment of healthy beverages.

Data source: Analysis by Frost & Sullivan

The ready-to-drink yogurt industry has risen rapidly in the past 20 years, going through three stages: the budding phase, the startup phase, and rapid development. New brands have continuously emerged, and product categories have become increasingly diversified. From 2003 to 2011, as the industry's budding phase, fried yogurt was sold as an accessory product on the market. 2012 was a crucial milestone for the industry, as the first truly ready-to-drink yogurt brand was born that year, marking the start of a six-year period of continuous establishment of new brands.

Data source: Analysis by Frost & Sullivan

The upstream of the ready-to-drink yogurt industry chain includes raw material suppliers, including milk source providers, starter manufacturers, agricultural product suppliers, etc.; the midstream consists of ready-to-drink yogurt product providers, including brand operators specializing in ready-to-drink yogurt categories and ready-to-drink tea beverage brands that offer ready-to-drink yogurt products; the downstream includes product sales channels and end consumers. Sales channels mainly operate through two methods: takeaway platform order delivery and offline store pick-up. Ready-to-drink yogurt consumers are primarily young consumers who pursue health and high product quality-price ratios, as well as parent-child consumer groups.

Data source: Analysis by Frost & Sullivan

As of 2018, the number of ready-made tea shops in China had exceeded 400,000; by the end of 2023, the total number of ready-made yogurt shops had just exceeded 23,000. Compared to the ready-made tea market, which is at the forefront in terms of store scale and market volume, the ready-made yogurt industry started later and has a smaller base. However, the ready-made yogurt industry has higher growth potential, the ability to continue expanding, and currently has a relatively low industry concentration. It is a rapidly growing niche market.

The adjustment of consumption structure, the mature operational model and development experience of the ready-to-drink tea industry, as well as consumers' pursuit of healthy lifestyles have continuously expanded the market scale of the ready-to-drink yogurt industry. Since 2020, the market scale of the ready-to-drink yogurt industry has grown from 330 million yuan to 1.2 billion yuan by 2024, with an annual compound growth rate of up to 37.7%, which exceeds the growth rate of the ready-to-drink tea beverage category.

The ready-to-drink yogurt industry is still in a period of rapid development, and the market is not yet saturated. It is expected that the ready-to-drink yogurt market will continue to grow at a high rate over the next five years. Frost & Sullivan predicts that by 2029, the Chinese ready-to-drink yogurt market will reach 3.21 billion yuan, with a compound annual growth rate of 21.7% from 2024 to 2029.

Data source: Analysis by Frost & Sullivan

Yogurt jars pioneered the canned live yogurt industry in the ready-to-drink yogurt sector. Compared to traditional open-cup ready-to-drink yogurt, canned live yogurt can retain freshness for a longer time due to its sealed packaging; at the same time, the canned packaging form has high aesthetic value and is easy to carry, making it popular among young consumers.

Data source: official website of yogurt jar brands, Frost & Sullivan analysis