Image credit: Euromonitor International
AUTHOR: Nathanael Lim, APAC Insights Manager- Drinks
Southeast Asia’s passion for coffee and tea shows no signs of slowing, drawing both global and local brands since 2010. Amidst market saturation, the aggressive expansion of Chinese chains like Mixue and Chagee since 2022 underscores the region’s untapped potential, underpinning this Next Asian Wave trend.
Fueled by a young, digitally savvy population, a rising middle class, and increasing disposable income, Southeast Asia offers fertile ground for growth at a time when China’s domestic market is becoming fiercely competitive. In fact, specialist coffee and tea shops in Southeast Asia account for USD 4.7 billion in 2024, with a projected 9% annual growth rate through 2029.
Source: Euromonitor International Consumer Foodservice 2025edition
Chinese players are leading the charge—between 2019 and 2024, Mixue and Chagee grew their Southeast Asia footprint by 80%, while pursuing IPOs and listings to secure the capital needed for aggressive scaling. This highlights Southeast Asia’s role as the next frontier for Chinese beverage innovation and investment.
To succeed in an increasingly competitive market, Chinese coffee and tea brands have deployed a set of proven strategies: rapid outlet expansion, competitive pricing, mobile-first ordering, and relentless product innovation.
Image source: Company facebook page
Moreover, at-home brewing is gaining traction among Gen Z, with coffee machines becoming tools for experimentation and self-expression. This trend is driven by both cost-saving motives and a desire to replicate café experiences at home.
Chinese chains have replicated their high-speed growth model from China into Southeast Asia. Central to this approach is an asset-light store format—compact outlets with minimal seating, designed primarily for mobile-order takeaway. This lean structure keeps operational costs low while enabling aggressive scaling, enhancing brand visibility, and ensuring accessibility across new markets in Southeast Asia.
Brands like Luckin Coffee have carved out a strong position by offering prices significantly lower than international competitors such as Starbucks—an attractive proposition for price-sensitive consumers in an inflationary environment. This strategy is reinforced through promotional pricing, bulk purchase discounts, and digital coupons, creating a perception of value.
Moreover, purchases are exclusively made via mobile apps, which streamline ordering, enable personalized offers, and deepen customer engagement through a fully digital experience.
Chinese coffee and tea chains keep the market buzzing with constant product innovation, introducing new flavors and concepts almost every month. These launches are amplified through limited-time promotions, exclusive merchandise, and prize campaigns, creating urgency and excitement. Moreover, strategic collaborations with local partners and social media influencers—a proven playbook from China—extend reach and resonate with younger demographics. This multi-pronged approach blends novelty, experiential marketing, and digital engagement, ensuring sustained consumer interest and long-term brand loyalty.
How are local brands responding?
Regional coffee chains are not standing idle as Chinese brands expand aggressively. For example, Café Amazon, Thailand’s market leader with 4,430 outlets, has doubled down on its core strength—strategically positioning stores at forecourt retailers to serve drivers seeking convenience. Beyond Thailand, its move into Cambodia and Laos as a lifestyle destination has secured a first-mover advantage, giving it an edge over incoming Chinese competitors.
What’s next?
Southeast Asia’s coffee and tea market is more than a growth story—it remains a battleground of innovation, scale, and cultural relevance. Chinese brands have proven that speed, technology, and bold expansion can unlock opportunities, while local brands remind us that deep-rooted market insight and brand authenticity are powerful differentiators. As competition intensifies, success of coffee and teashop brands will hinge on striking the right balance: global ambition paired with hyper-local strategies, affordability blended with aspirational appeal, and digital convenience enriched by experiential engagement.
