Korea has a high-level cafe culture and high standards for quality and experience, while being open to new brands. We judged that this aligns well with the direction CHAGEE pursues.
Kim Jwa-hyun, head of CHAGEE Korea, said this about the background of entering Korea at a press briefing held on the morning of the 28th at CHAGEE's Gangnam flagship store near Gangnam Station in Seoul, saying, Korea is a culturally influential market and an important base in our global expansion strategy.
CHAGEE is a China-based global modern tea brand that opened its first store in Yunnan Province in 2017. After the China market, it expanded to Malaysia, Thailand, Singapore, Indonesia, the Philippines, Vietnam, and the United States. The number of CHAGEE stores currently in operation reaches about 7,000. On the 30th, CHAGEE plans to open company-operated stores simultaneously in three key commercial districts: the Gangnam flagship store in Seoul, and the Yongsan I'Park Mall and Sinchon locations.
CHAGEE's entry into Korea is meaningful in that it creates a new competitive landscape in the domestic milk tea and tea market. Until now, the domestic milk tea market has centered on the leading brand Gong cha. With CHAGEE, considered a major mainland China tea brand, entering the Korean market, not only are consumer options expanding, but there is also a sense that the market's competitive structure could change.
This move coincides with the overseas expansion trend of Chinese tea brands. As the mainland China milk tea market has grown rapidly over the past decade or so, stores in major cities have already reached saturation, and growth has slowed due to intensifying competition. It is, in effect, a situation where they have no choice but to look to overseas markets outside China.
Their presence is also growing in capital markets. Zhang Junjie, the founder of CHAGEE, became a billionaire through a Nasdaq listing in Apr. last year, and Chinese milk tea franchise corporations Mixue group also listed on the Hong Kong stock market, earning a corporate valuation of about $8 billion (Hanwha about 11.8 trillion won). Chinese bubble tea brand Auntea Jenny also listed on the Hong Kong stock exchange, and the founders' couple's net worth is expected to rise to $1.1 billion (about 1.6 trillion won).
CHAGEE is putting forward products, space, and its operating system as differentiators. Kim Jeong-hee, CHAGEE Korea chief marketing officer (CMO), said, We brew tea in-store with high-quality original tea leaves and created a space where customers can stay and experience tea, adding, Our strength is delivering consistently high-quality tea through a globally standardized operating system. From selecting original teas to extraction methods and store operations, CHAGEE has built a standardized system across the entire process, focusing on providing the same quality and experience at some 7,000 stores worldwide.
Signature items include jasmine milk tea, peach oolong milk tea, and dahongpao milk tea, characterized by balancing tea, milk, and materials and supplies rather than emphasizing sweetness or sharp flavors. In addition, the flat, proprietary straw is designed with three apertures to increase the time the drink lingers in the mouth, allowing the tea's flavors to be better appreciated.
In particular, the spaces incorporate elements that reflect Korean culture and sensibilities. The Gangnam flagship is laid out around a tea bar, and the walls feature designs inspired by eaves and roof tiles. The ceiling uses silk materials to express the Silk Road through which tea has spread around the world. At the Sinchon and Yongsan I'Park Mall locations, murals created in collaboration with Korean artist Janice Chae compose the space with elements symbolizing Korea, such as Gyeongbokgung, hanok, the Han River, Namsan Tower, mugunghwa, and the white tiger. This appears to be a localization strategy to broaden touchpoints with Korean consumers and strengthen the brand experience.
For the time being, CHAGEE plans to focus on operating company-owned stores rather than franchising. Kim said, We are directly operating our stores in Korea now, adding, This is to communicate more closely with Korean consumers and manage operations in detail. We will focus on communicating more closely with consumers and delivering a consistent brand experience without store-to-store variation. Kim added, There are no specific franchising plans for the time being.
CHAGEE also believes new demand centered on premium tea can form in the domestic beverage market, which is focused on coffee. Kim said, It is true that coffee consumption is very large in Korea, but at the same time, demand for new lifestyles and premium beverages is also rising.
For future strategy, CHAGEE says it will emphasize stability over speed. Kim said, We will prioritize firmly establishing standards over the speed of expansion, adding, Starting with key hubs in Seoul, we plan to expand in the long term while monitoring consumer response and operational stability. Kim added, Maintaining a consistent brand experience and high quality is more important than short-term buzz.
Consumer perception of Chinese brands is also a variable. On this, Kim said, The most important thing is to earn consumer trust through high quality and consistent experiences, adding, We will rigorously apply hygiene and safety management standards to convey the brand's value.