(Yicai) Dec. 6 -- Chinese tea beverage brands, including Chagee and Ningji, are planning to expand into the United States despite cultural, supply chain, and regulatory challenges.

For milk, bubble, and fruit tea brands seeking global markets, it is strategic to target regions with stronger spending power, such as Europe and the US, an industry professional told Yicai.

Milk tea chain Chagee reportedly plans to launch stores in the US next year. The brand confirmed the intention without providing detailed specifics.

Chagee aims to become a global Chinese brand, founder Zhang Junjie previously stated.

Adapting to local laws and regulations is fundamental for overseas development, said Wang Jie, co-founder of lemon tea brand Ningji. Each US state and city has unique permit requirements, Wang emphasized.

Ningji is planning to open its first overseas store in North America, with a goal of establishing no more than 10 stores in the US before 2025.

Foothold in North America

While most firms initially focus on Southeast Asia due to low labor costs, regional proximity to China, and a large ethnic Chinese population, the North American market presents unique challenges, according to an insider at Molly Tea. However, establishing a brand in North America can potentially facilitate expansion into other regional markets, the person added.

The US was the world's fourth-largest tea drink market in 2022, following China, India, and Japan—countries with a long history of tea consumption, according to a report by MenuSifu.

Last year, the US milk tea market was valued at USD1.4 billion, with a compound annual growth rate of 7.5 percent since 2018, per market research firm IBISWorld.

Establishing a local team in the US represents the largest budget component for market development, the Molly Tea source noted. Additionally, adapting to local culture and regulations presents significant challenges.

Molly Tea opened its first overseas store in New York in April, generating over USD480,000 in monthly sales and selling more than 2,000 cups of tea daily. On Oct. 25, the brand, known for its jasmine tea drinks, launched its second US outlet in San Francisco.

Beverage sellers must prioritize localization and supply chain management. HeyTea, primarily known for its fruit tea products, is among the first Chinese premium tea drink sellers to enter the US market. The brand operates more than 10 local stores and has established warehouses in the eastern and western US, the United Kingdom, Malaysia, and Australia.

HeyTea focuses on consumption markets with global influence, such as Europe and North America, to create a global brand, the company explained.

Editors: Shi Yi, Emmi Laine