2024 is a key year for achieving the goals and tasks of the “14th Five-Year Plan,” with heavy and arduous tasks for reform, development, and stability.
2024 is an important year for implementing the “Suggestions for the 14th Five-Year Development Plan of China’s Tea Industry,” as the optimization and upgrading of the tea economic system are urgent.
Against the economic background of a downward trend and consumption downgrade, what new challenges and changes has the Chinese tea industry experienced in 2024? What new changes and trends have emerged? How can development be sought amidst these challenges?
As a mainstream media platform for the Chinese tea industry, China Cooperation Times & Tea Weekly bears the media responsibility of promoting industry development, having released the “China Tea Industry Observation Report” for three consecutive years. In addition to leveraging the expertise of professional journalists from Tea Weekly, the “2024 China Tea Industry Observation Report” also invited many experts and scholars who are deeply familiar with industry patterns and have worked in specialized tea sectors for many years to participate in its creation, identifying prominent issues, providing solutions, and contributing wisdom to industry development through profound reflection.
The “2024 China Tea Industry Observation Report” consists of eight chapters, covering eight important areas: industry development strategy, supply chain, technology, brands, e-commerce, space, consumption, and culture. It adheres to the principle that “observation stems from the front lines, and conclusions stem from practice,” focusing on finding problems in practice, seeking answers from practice, and observing trends through practice.
In 2024, tea houses (tea spaces) earn profit through “innovation power.”
Author: Liang Yan, reporter for China Cooperation Times & Tea Weekly; Bachelor of Tea Science from Anhui Agricultural University; specializes in research and writing in the fields of tea culture, tea science education, and tea industry talent cultivation.
Introduction: In the two years following the end of the pandemic, facing an economic downturn and changes in consumption demand, the Chinese tea house industry has shown a phenomenon of polarization. Some old tea houses are closing or reducing their operating areas, while simultaneously, a number of “small” tea houses (tea spaces) are emerging. In terms of business models, traditional old tea houses (tea spaces) still maintain survival through a “space + products + light meals” model, whereas newly opened tea houses resemble an integration of traditional Chinese culture.
(I)
Changes in the Chinese tea house industry in 2024
In 2024, with the implementation of General Secretary Xi Jinping’s important instructions on the coordinated development of “three teas,” tea houses are receiving increasing attention from local governments in tea-producing regions and tea industry organizations. In Sichuan and Chongqing, where tea houses have historically been widespread, the 2024 China (Sichuan-Chongqing) Tea House Industry Summit was held for the first time. The Shenzhen Huaju Chen Group continued to hold the 2024 (Beijing-Tianjin-Hebei) Tea House Industry Exchange at the Beijing Tea Expo, an event that has now been running for five consecutive sessions. In Guangzhou, the 2024 Annual Meeting & National Tea House Innovation Forum was held, focusing on a collective discussion by a hundred tea houses nationwide regarding the development path of China’s tea house industry. At the end of 2024, the 5th China Tea House Industry Convention was held in Beijing. Due to their focus on tea culture, some provincial and municipal tea industry organizations have begun establishing tea house branches to support the development of local tea houses with more professional and detailed services.
1
The emergence of New Chinese-style tea houses (tea spaces) and wellness tea houses.
In recent years, tea houses (tea_spaces), which primarily served as venues for business negotiations and social gatherings among friends, have undergone transformations across multiple business models, from traditional tea houses to cultural/antique tea houses, tea restaurants, tea ceremony halls, and tea art galleries.
Since 2024, the sense of everyday vitality and relaxation brought by drinking tea has made new-style tea houses (spaces) a spiritual utopia for many artistic youths. Gathering to drink tea has become a new way of socializing for a group of young people. With the widespread dissemination of Traditional Chinese Medicine (TCM) culture, “Guochao wellness” has also become a new choice for daily health maintenance among the youth. Many tea houses (tea spaces) have seized this opportunity to transform into New Chinese-style or wellness tea houses that emphasize fashion and innovation while highlighting the health benefits of tea.
2
The popularity of tea houses (tea spaces) is descending from first- and second-tier cities to third- and fourth-tier cities.
Starting in 2023, the popularity of tea houses (tea spaces) has extended from Beijing, Shanghai, Guangzhou, and Shenzhen to new first-tier and second-tier cities, such as Hangzhou, Zhejiang, and Xiamen, Fujian—cities with strong tea culture atmospheres. For example, “Ha Cha Fu,” which gained fame through handmade tea and focuses on “one-on-one” freshly brewed products, has expanded from Zhejiang to Shanghai and now has over 20 stores. Many new-style tea house (tea space) brands have also appeared in places like Jinan, Shandong; Nanchang, Jiangxi; Xi’an, Shaanxi; Changsha, Hunan; and Kunming, Yunnan. For instance, “Bingding Tea Shop,” “Chajuejue,” and “Dahua Tea Shop” have long been at the top of local Dianping popularity, high-rating, and check-in lists. Although these brands do not have many stores, they possess high recognition locally and have accumulated a loyal customer base. Even in the fourth-tier city of Yiyang, Hunan, there are as many as 300 various tea houses, tea art galleries, tea parlors, tea rooms, tea estates, and tea lounges. On December 20, 2024, the establishment of the Tea House Branch of the Yiyang Tea Industry Association marked the increasing importance placed on the development of the tea house industry in Yiyang, with the popularity of tea houses (tea spaces) continuously rising.
3
Moving away from the large-store model of the past, small tea shops are becoming popular.
With the rise of “Guochao,” drinking tea is no longer just an afternoon pastime; having a cup of “delicious and affordable” tea anytime, anywhere has become a new consumption demand for young people. Consequently, this has accelerated the iteration of tea house (tea space) formats, such as the emergence of small tea shops. Unlike the early market model of large-scale tea houses (tea spaces) that “emphasized spatial experience,” small tea shops are usually oriented toward providing cost-effective products. While retaining the style and tone of New Chinese-style tea houses (tea spaces), they “slim down” the stores by reducing seating areas, allowing consumers to buy and go. In terms of products, they focus on freshly brewed pure tea, cold brew tea, Gongfu tea, and specially blended teas, with prices approaching those of new-style tea drinks, meeting the young generation’s demand for “delicious and affordable” pure tea.
(II)
Problems facing the Chinese tea house industry in 2024
New-style “internet-famous” tea houses are gradually being phased out of the market due to a lack of core competitiveness. In 2024, posts regarding “transferring or closing new-style tea houses” were common on social media platforms, and a group of highly homogenized “internet-famous” stores is fading from public view. The problems facing the Chinese tea house industry mainly include the following aspects:
1
Insufficient repurchase rates, revenue failing to cover costs, high initial investment, and long payback periods. First, New Chinese-style tea houses (tea spaces) emphasize the concept of space; they are in the business of selling “space,” so store area cannot be too small, and the size of the’s store directly affects rental costs. Furthermore, to create the atmosphere of a tea house (tea space), significant investment is usually made in decoration. Drinking tea pursues leisure and relaxation at a slower pace, which inevitably affects the table turnover rate; however, if restrictions are intentionally imposed to pursue turnover rates, it will affect the consumer experience and ultimately impact repurchases.
2
The average transaction value of New Chinese-style tea houses (tea spaces) is generally not high, which is determined by the nature of the business model itself. If one tries to directly increase the average transaction value through drinks alone, consumers will feel it is not worth the price, which also affects repurchases. To increase the average transaction value, other services or retail channels must be provided. However, consumption in New Chinese-style tea houses (tea spaces) emphasizes freshly brewed and freshly consumed pure tea, focusing on unique spatial experiences and social functions, making it difficult for tea houses (tea spaces) to increase revenue through online channels such as food delivery.
3
“Internet-famous” New Chinese-style tea houses (tea spaces) suffer from hidden costs or restricted consumption, and the phenomenon of homogenization within the industry is also quite severe, thereby significantly reducing consumer willingness to pre-purchase. Overall, the entire industry is still in an exploratory stage, and no brand has yet created a model that can be scaled and replicated in bulk.
(III)
Solutions for the Chinese tea house industry
In recent years, the development of tea culture has upgraded to the output of product strength, lifestyle, and full-process experience. Tea houses (tea spaces), using tea culture as a medium, have entered the “deep water” of competition, where they must compete on “innovation power.”
1
Combining healing and wellness to appeal to the emotions of young people. In addition to focusing on products and space, a group of tea houses (tea spaces) has begun to pay attention to the “mental state” of young people. For example, in Changsha, Hunan, there is “a cup of tea that can sing with singing bowls”; while drinking tea, consumers can experience singing bowl healing projects. Since its opening in October 2023, it has consistently ranked at the top of Changsha’s beverage store high-rating lists. Recently, healing tea spaces have received increasing attention, with new stores continuously opening in Hangzhou, Shenzhen, Zhengzhou, and elsewhere. By leveraging trends, bringing “medicine and food from the same source,” singing bowl sound therapy, and wellness Baduanjin into the stores, they create a healing and wellness attribute for the shop, providing emotional value to young people while also generating topics and popularity for the tea houses (tea spaces).
2
Emphasizing regional characteristics and diversifying categories to supplement revenue. Creating differentiated products by combining regional attributes is also a precise strategy for New Chinese-style tea houses (tea spaces). Many tea houses (tea spaces) are upgrading their brand positioning, shifting from “slow tea” to “fast consumption,” focusing on freshly brewed tea and new-style tea drinks, while selling specialty retail merchandise. By aligning with local popular tourist attractions, cultural tourism features, and film/television works, they achieve “explosive” revenue in the short term. For example, “Kaiji Tea House,” a local Shanghai brand that has long operated with a multi-category “tea + traditional snacks” model, quickly launched the snack ribs with rice cakes featured in the hit TV drama Blossoms Shanghai.
Tea houses (tea spaces) are a great opportunity to make consumers fall in love with tea; providing a comfortable experience in a tea house (tea space) can drive the spread of tea among consumers, thereby promoting subsequent tea consumption. Therefore, tea houses (tea spaces) should keep pace with contemporary trends, keenly observe market dynamics, and actively seize opportunities to expand their consumer base, increasing revenue while allowing more people to recognize and fall in love with tea.
3
Creating a “one-stop” experience to attract consumers continuously and repeatedly. How to retain consumers for longer periods and attract them more frequently is a major challenge in the management of tea houses (t_ea spaces); a comfortable “one-stop” dining, leisure, and entertainment experience may be the key to solving this. Taking “Nayuki” as an example, by leveraging its location near over 10 prestigious universities such as Tsinghua University and Peking University, as well as the Zhongguancun Dongsheng Science Park, it has opened book-style new tea spaces. This precisely targets the characteristics of young consumers and students—the primary audience for paper books—providing a “afternoon tea + reading” one-stop experience that is widely loved by consumers. Furthermore, during the construction of tea spaces, different facilities such as projectors, massage chairs, and game consoles can be arranged based on location and target group characteristics to enhance the leisure and entertainment attributes of the venue, giving consumers a reason to stay longer, making tea houses (tea spaces) more attractive and thereby generating more “repeat customers.”
4
Meeting the demand for “small snacks and drinks” by creating a “tea + snacks” model. In the “third space,” consumers often have a need for “small snacks and drinks,” and new-style tea drinks have developed a “tea + snacks” model specifically for this. Currently, most tea houses (tea spaces) only provide traditional pastries to accompany tea. However, in fact, the palate-cleansing property of tea is equally compatible with snacks like potato chips and French fries. Tea houses (tea spaces) such as Qingteng Tea House and Canyiyuan have already configured various types of food, such as braised snacks and fried rice, to accompany tea. Tea houses (tea spaces) can learn from this model, providing a variety of products in independent areas, enriching the consumer experience through diverse freshly brewed and freshly eaten pairings, and creating a “third space” that appeals to both refined and popular tastes.
5
Creating portable products to continuously deepen brand memory for consumers. On one hand, tea spaces can increase the creation and sale of low-cost, portable, and long-lasting small snacks; while promoting sales, this also helps penetrate lower-tier markets and expand the consumer base, bringing tea spaces into more public view. On the other hand, brands can attempt to create characteristic merchandise, such as gaiwans, umbrellas, and hair clips, based on their unique brand identity. Tea has great versatility; tea spaces can continue to explore more ways to enjoy a single leaf, providing consumers with a rich shopping experience from multiple dimensions and allowing them to “take the brand home,” thereby increasing the brand’s memorability in the minds of consumers.
Task Group
Chief Planner
An Mingxia
Members
Zhang Xinzhong
Chen Hao
Xiao Qiang
Tian Youlong
Wang Jing
Liang Yan
Deng Zengyong
An Mingxia
Copyright Statement
The “2024 China Tea Industry Observation Report” was released by China Cooperation Times & Tea Weekly,
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Author: Lam Sam (LamSam), the Old Tea Head
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