Number of Participants
Global Trend: The Milk Tea Industry
Long Period of Time Causes of the Trend
Consequences
Number of Participants
Pattern of Behavior
Characteristics of a Trend SWOT Analysis
Long Period of Time
Causes of the Trend
Consequences
Characteristics of a Trend
ANGELES CITY, PAMPANGA
Coffee has become an indispensable drink to people across the world. It is a great stimulant that helps people to start their day and boost energy levels. In the Philippines, coffee culture exists as 93% of Filipino homes purchase 3-in-1 coffee mixes once a week, based on the study conducted by Kantar Worldpanel Philippines (Rappler, 2015). Moreover, in Metro Manila and even in highly urbanized areas, many new coffee shops are popping up. These establishments primarily cater to students who play online games, hang out to browse the web, study for upcoming exams, hang out with friends, or even unwind by taking a slow sip of their preferred beverage (Marinduque News, 2019).
In addition, according to Lumawag (2021), Joji Pantoja, the founder and CEO of Coffee For Peace, stated that millennials and those aged between 30 to 40 years old tend to look for coffee that would give them different experiences in terms of how it tastes. Thus, the local demand for coffee will continue to rise as the target market expands and continues to innovate and serve high-quality coffee.
Drinking coffee has always been a norm in the Philippines. History states that friars brought coffee to our country over two centuries ago. Comunicaffe International (2015) and Chengappa & Devika (2016) state that it is the most ingested drink next to water, the second most purchased product, following condiments and seasonings, and the second most traded item globally, next to crude oil. Meanwhile, here in the Philippines, both instant coffee and brewed coffee are enjoyed by Filipinos, who consume them almost daily, either for the purpose of being alert or relaxed.
Furthermore, Filipinos have developed a sense of attachment to their favorite coffee shops. In a study by Luat et al. (2022), most respondents (46%) remarked that drinking and eating is their primary motive for going to local coffee shops. Other motivations include relaxation, work, and study; 81% of their respondents consider coffee shops a place for public gatherings (Tumanan & Lansangan, 2012). Meanwhile, in terms of the financial aspect of consumers, Filipino coffee consumers are now willing to pay for a single serving of coffee worth $1.90, which is equivalent to PHP100 (Macdonell, 2022). This means Filipinos are now voluntarily entering cafes or shops to purchase coffee.
Coffee shops in the Philippines have been a rising trend since the mid of 2012 up to the present date, with an 11-year time period (Dacumos, 2021). According to MacDonnell (2022), the years 2020 and 2021 saw a substantial shift in coffee consumption. The Philippines was likewise impacted with consumption falling from 3.4 kg per person in 2019 to 3.05 kg per person in 2020 (Cigaral, 2021) .
According to Williams & Marshall Strategy (2020), there is an increase in the consumers’ preference in regards to organic coffee, this due to its environmental and ethical awareness, additionally it is considered safer as it does not contain chemicals and pesticides. Furthermore, the majority of the people that drink coffee prefer local coffee shops because of their highquality, specialized coffee products. This can be supported by Tumanan and Lansangan (2012), which stated that Filipinos have selective preferences for coffee. Despite instant coffee being the
the most prominent local household drink, coffee shops allow consumers to appreciate the vibrance of the coffee more.
It was also determined in the same study by Williams & Marshall Strategy that consumers are willing to pay more just for a unique coffee experience. This experience, including how long an individual stays in the place, will most likely develop consumer attachment to coffee shops which results in frequent visits. Furthermore, in the modern digital world, consumers tend to share their experiences on different social media platforms According to a study by Sumerli et al. (2022), social media has a significant effect on local coffee shops. This is because social media marketing allows business owners to interact with and attract their market with their social connections. Hence, it can be concluded that social media is a big factor in the popularization of local coffee shops in the country.
Results from a study by Tumanan and Lansangan (2012) showed that individuals consider coffee shops as social gathering areas in which it is accessible, have a desirable ambiance, can be a venue for group meetings, and can be a relaxing environment to be in. Additionally, it was noted that some advantages of visiting a coffee shop include feeling at home yet away from home, being
in a neutral or inclusive setting, and being in a highly spirited environment. This can be applied in the context of Filipino consumers who are mostly students doing their academic tasks, digital nomads working remotely, and simply individuals who love drinking coffee. Ultimately, it is clear that local coffee shops grew popular in the Philippines due to consumer preferences, experience and attachment, social media, and its inclusive and calm environment.
In accordance with the ever-growing trend of coffee shops in the Philippines, according to Williams & Marshall Strategy (2020), local Filipino baristas are exploring new innovations and processes to incorporate into brewing coffee flavors such as using nitrogen to make cold coffees. Similarly, (Pena, 2022) the recent trend of coffee shops has opened opportunities to offer more jobs to the people which allows the strengthening of the local economy. Additionally, according to Cigaral (2021), Filipinos are expected to have a trajectory in the consumption of coffee where an individual drinks 3.78kg of coffee per year by 2025. This means consumers are raising the demand for coffee which leads to a higher consumption and production rate of coffee in the Philippines. Furthermore, (The Philippine Coffee Industry, n.d.) The Filipino population prefers ready-to-drink or instant coffee to cafe-brewed coffees
, regardless, the country has produced 62,000 metric tons of coffee overall in the year 2019 and has consumed 100,000 metric tons.
Local coffee shops are popular because they allow consumers to relax, undertake tasks, and conduct other activities. Furthermore, according to Beldad (2022), coffee is essential to the lives of the majority of Filipinos, and local coffee shops are popular in the Philippines, particularly among workers and students. Coffee has an impact on people not just because it is an essential drink for the majority of Filipinos but also because of the productivity and relaxation it may provide.
According to Sapungan et al. (2019),iit affects the customer’s choice of coffee in terms of sensory evaluation, price range, and ambiance. Furthermore, the extensive usage of coffee in other nations has an impact on coffee shops in the Philippines, which are built around schools, marketplaces, and other places where most people pass by. Nonetheless, Filipinos are interested not only in the quality of coffee but also in how it is presented to its customers. Furthermore, according to Bolido (2012, as cited in Sapungan et al., 2019), it has become a trend because it impacts not just one’s personal emotions but also consumer productivity and buyer behavior.
To summarize, this might be termed a megatrend because it occurs over a long period of time and influences various parts of people’s lives. According to Mingoy (2022), coffee is more than simply a drink for Filipinos; it helps them be productive throughout the day and enhances their energy. In addition, since the majority of Filipino consumers are students conducting schoolwork and the habit of studying at coffee shops, it impacts the development of numerous coffee shops in urbanized areas and regions.
As the tourism industry has become one of the biggest and fastestgrowing sectors in the global economy, it is now being prioritized by most countries, including the Philippines. The travel and tourism industry significantly contributes to the Philippines’ GDP (Villegas, 2016, as cited in Suarez et al., 2017, p.131).
From a cultural perspective, coffee shops have become a center and perfect location for social interaction that provides people with a venue to meet, talk, write, read, or pass time, whether with or without company (Suares et al., 2017).
The increasing number of coffee drinkers, especially at the height of the pandemic, opened a door for business-minded people to use this to their advantage, such as opening local coffee shops In a value chain, unique business models can be seen as players using innovative ways to create, capture, and deliver value to customers while reducing costs to remain competitive in the industry (Tan, 2020).
According to Tan (2020), value chain players must respond to ensure competitive advantage as the country’s coffee consumption increases and its production base
decreases.
Due to the increasing amount of people drinking coffee, total exports of coffee beans are declining rapidly, along with the total production of coffee beans, despite the latter being able to stabilize around 2010 (ICO, 2021, as cited in Luat et al., 2021, p.14).
Regarding geographic distribution, some of the local shops are too hidden for people to discover, making it harder for these coffee shops to public Place determin interact with a p (Kleibert, J. M., 2015).
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The constructive critic
that come from the customers may either make or break the business.
More aggressive and fierce competition amongst other local brands that may end up targeting each other’s key segments.
Price increase due to supplier cost that makes customers more price sensitive and finding another brand that costs less than theirs, which results in coffee shops losing
The famous bubble tea originated in Taiwan and was first served in the 1980s. This refreshing drink is available in various flavors and innovative variations to appeal to people of all ages. Furthermore, the ASEAN Post reports that Asia Pacific was the largest regional market in 2019, with a nearly 35% share (Southeast Asia's Bubble Tea Craze, 2020). Hence, Thailand is one of the primary consumers, as the nation's average monthly bubble tea consumption is six cups per person. In addition, according to Wong (2020), bubble tea orders increased by 3,000% in Southeast Asia in 2018, and the drink has been popping up on menus outside of Asia for quite some time.
Similarly, Xu (2019) mentioned that boba first migrated to the west coast of America in the 1990s, yet it only persisted as a fad not until it grew more popular with a compound annual growth rate of the bubble tea market from 2017-2023 is estimated to be 7.3%. The rising popularity of milk tea will continue to emerge and grow further in the global market due to its distinct taste and health benefits.
Bubble milk tea first became popular in the 1990s in Asia. Its consumers have increased in the United States of America and Europe since the year 2000 (Alexander, 2001). Similarly, bubble milk tea has been viral in various countries, especially on social media. Social media users often post their boba milk tea consumption, making it a trend for teenagers and the middle class (Saesieo, 2016). This author adds that some partners exchange bubble milk tea experiences, including recommendations and exchanging pictures of teas of various brands.
From the decision-making perspective, purchasing is a problem-solving process where shoppers go through different stages to solve a need or a problem (Mowen, 1988). The boba milk tea consumers’ behavior are primarily affected by internal and external factors. Law et al. (2020) classified the reasons consumers buy milk tea into reactance, impulse buying, and variety-seeking behavior.
Reactance is the phase wherein consumers are motivated to purchase when they see their behavioral freedom as threatened. Meanwhile, impulse purchase is when a consumer purchases milktea without giving it a second thought.
In the mid-1980s, the city of Tai-nan, Taiwan, invented bubble tea (McNamee, 2022). As bubble tea gained acceptance, particularly in the west, its popularity exploded in 2017, with a 7-year timeframe, with bubble tea cafes reporting a tremendous increase in business (Bubble Tea's Popularity From Across the World - Gong Cha, 2019). According to Fortune Business Insights' (n.d.), demand for bubble tea has been lower than expected in all regions compared to pre-epidemic levels, which is unprecedented and staggering given the global COVID-19 pandemic. The trend peaked in 2019, whereas the global market's growth slowed in 2020.
Milk tea, also known as bubble tea or boba tea, is a highly caffeinated and sugary drink made from tea, milk, syrup, and tapioca pearls which originated in Taichung, Taiwan (Reinfrank and Chan, 2019, as cited in Koay and Cheah, 2022). Its sweet flavor captured the taste of the consumers which paved the way for the widespread expansion of milk tea shops throughout malls, parks, and neighborhoods. Well-known brands such as Chatime Group, CoCo, GongCha, and Tiger Sugar which all originated in Asia, became global, and people in other nations seized on the trend by creating their own brand.
When the global market for milk tea franchises expanded, additional firms
joined on board to take market share from the profitable industry. With this, milk tea business owners must find ways to maintain existing customers in the face of unavoidable market competition. According to Koay and Cheah (2022), bubble tea store owners or franchisers must guarantee that the products satisfy standard quality expectations, the pricing is acceptable, and the store ambiance is attractive and comfortable in order to boost consumers' views toward revisiting the establishment. Additionally, consumer preferences are also key in obtaining the success of a milk tea business. In a study conducted by Ong et al. (2021), brands, price range, tapioca pearl size, sugar level, amount of ice, cream cheese inclusion, and kind of milk tea were examined to evaluate
consumer preferences
Overall, the beverage quickly
became a worldwide sensation due to the variety and adaptability of the toppings and flavor combinations that customers could choose.
Economically, according to Future Market Insights (2022), milk tea, also known as boba, has developed a rapid compound annual growth rate of 8.8%. Additionally, this phenomenon was caused by its sudden boost in global popularity and demand, which has been consistently maintained throughout the years. Likewise, the trend of milk tea gave rise to the creation of unique flavors that are influenced by the brewer’s culture and accessibility to ingredients. According to Automize Growth (2022), there are thousands of milk tea flavors that use unique ingredients such as honeydew, taro, and passion fruit which are also accompanied by unique milk tea types such as British, Thai, and Bubble milk tea. Furthermore, in terms of health consequences, consuming milk tea has both health
benefits and health risks. The beverage reduces stress and slows down aging while simultaneously increasing the chances of anemia and promoting weight gain.
Milk tea has become popular, particularly among the younger generation and adults. Milk tea is famous due to its tasty twist; it is a perfect refreshment drink because it is cold and ideal for its chill. According to Nguyen (2022), the increasing popularity of tea enhances people's awareness of the health benefits of teas, such as black tea, green tea, and many more. Milk tea grew in popularity alongside it, particularly in emerging economies. Nevertheless, due to the continuous popularity of milk teas, several celebrities continue to promote and endorse various bubble tea brands. Since the young generation is most of the consumers of milk tea, it influences the market's growth and the international business of milk tea.
Furthermore, according to Venturini (n.d.), it captured the attention of youths because of its various colors, flavors, and textures, resulting in its tremendous appeal in numerous countries. According to Fortune Business Insights (n.d.), bubble tea influences the growth of Taiwan's cultural drink, making it known as
one of the food businesses in other countries. Additionally, it influences health-conscious consumers' tastes, along with some organic products, because it is tasty, contains creamer, and contains a range of various flavors of milk teas, such as classic milk tea, tiger milk tea, Thai milk tea, and many more, and these milk tea flavors become the preferences of consumers.
Customer preferences in terms of purchasing milk tea are also based on the weather. Milk tea is usually drank when the weather is hot, so findings pointed out that during the rainy season, many competitors and their rental fee has a massive effect on the milk tea business in terms of their income (De Jesus, 2020).
Considering the components of milk tea, its sweet and original flavor was its selling point in different regions. Its sweet flavor captured people's hearts and eventually entered the beverage market. With that, the significant spread of milk tea shops has been observed worldwide (Ong et al., 2021, p.2).
Marketing strategy, discount promos, innovation in the product, and extended operating hours are among the top three strengths of the milk tea business (De Jesus, 2020).
The rapid development of social media has played a prominent role in promoting the growth of new tea drinks as there are new-style tea drinks that emphasize the beauty in product and store design, capturing a lot of customers’ attention
It can be very unhealthy for people, especially with diabetes, as milk tea is all about the drinks’ sweetness measured by sugar percentage levels and the tapioca pearls that are also made with sugar.
High-maintenance ingredients used for milk tea include dairy products, fruits, and tea, which makes creating a quality milk tea timeconsuming. Dairy products are highly industrialized, and highquality imported milk is usually used. Fresh fruits are not easy to store, and transport and tea have unstable quality, and the output of famous and high-quality tea that meets the taste requirements is small (Shi et al., 2021).
Offer a variety of milk tea flavors to the consumers, such as the twist of flavors, new combinations, making a small cup size of milk tea available for young consumers, and the likes since fast changing of preferences
on each generation happen.
It can help a milk tea business to create more loyal customers. Trendy products, new product to introduce, and innovative technology are also the factors that can help the business to grow (De Jesus, 2020).
Provide more accessible promos, discounts, and coupon cards as a part of a marketing strategy to boost customer interaction and sales.
Competition between known brand names in terms of the first in coming up with a brand new innovation that will attract new and loyal customers’ attention. Many competitors, similar concepts or services, and price wars affect the milk tea industry (De Jesus, 2020).
Due to the high maintenance and timeconsuming ingredients used in making a milk tea, it is possible for an importation shortage or inventory spoilage that may lead to customers’ dissatisfaction.
The reputation of the milk tea industry is being tainted due to some instances of other consumers drinking too much milk tea, which causes them to be unhealthy.
ALICUMAN, Aliyah Mae N.
BIBE, Ma. Christa Soleil J.
DENOLO, Gracesea Marie B.
FESTIN, Andre Gade G.
GAVIOLA, Karylle Bridgett D.
LUCERO, Rebecca Marie V.
SAN MIGUEL, Sandy Therese R.