This is an English adaptation of a FoodBud historical article originally published on May 23, 2022.
FoodBud previously asked a friend in Kuala Lumpur to visit CHAGEE after the Chinese tea-drink brand entered Malaysia. Their feedback was positive: the product tasted different from local milk-tea leader Chattime, now renamed Tealive; CHAGEE was among the earliest local tea-drink players built around a Chinese-style brand identity; young consumers liked the unified style; the brand had created a large-cup format; and the local team appeared professional.
Founder Zhang Junjie has argued that the era of blind, high-speed expansion in tea drinks is over. Future competition, in his view, will be category, quality and brand competition on a global stage, driven by memorable products, strong service, efficient supply chains and differentiated positioning.
CHAGEE completed more than RMB 300 million in Series A and Series B financing in the first half of 2021. The Series A was jointly led by XVC and Fosun, while the Series B was led by Congbi Qiushi, with XVC participating.
By the first quarter of 2022, CHAGEE had more than 500 stores globally. During China’s 2021 Double 11 shopping period, its Malaysia stores sold more than 30,000 cups in a single day. In China, one store recorded peak daily revenue above RMB 130,000, and monthly sales exceeded RMB 1 million.
According to Narrow Door Food Eye data cited by FoodBud, CHAGEE had 519 stores in China, mainly concentrated in Yunnan, Guangxi and Guizhou, and was entering eastern China markets during the year.
CHAGEE began going overseas before the pandemic, in 2019. After being invited by a potential Malaysian partner to inspect the local market, the company found that local Chinese consumers were interested in China’s new-style tea drinks, while few relevant brands were serving that demand. CHAGEE chose Malaysia as its first overseas market and prepared a Malaysia subsidiary.
Its first Malaysia store opened in August 2019. The brand later entered Singapore and Thailand. FoodBud notes that Malaysia, Singapore and Thailand were familiar destinations for Chinese outbound tourists, including earlier group-tour traffic, and each market had many Chinese consumers or consumers relatively familiar with China.
In Southeast Asia, CHAGEE saw a gap in the mid-to-premium tea-drink segment. Strategically, it positioned itself against Starbucks overseas, while building scale in China.
The brand also localized overseas. It signed a popular Malaysian Chinese celebrity, partnered with well-known Malaysian brand Royal Selangor on a limited-edition cup, and in April 2022 updated its English brand name to CHAGEE.
In FoodBud’s interview, CHAGEE’s overseas lead said the brand had nearly 40 stores in Malaysia, 8 stores in Singapore, including 2 under construction, and 1 newly opened store in Thailand.
In East Malaysia, CHAGEE had signed an exclusive strategic partner and planned to start with Sarawak, mainly through directly operated stores.
Rather than relying mainly on regional agency models, CHAGEE said it was advancing primarily through joint ventures. Malaysia was intended to become the template for joint-venture operations, while Singapore and Thailand were gradually shifting from agency models toward joint ventures.
The company said it usually does not look for multiple backup partners in one country. Its preference is to support the local partner strongly and solve issues through discussion, including potentially adding shareholders where needed.
Malaysia operated as a branch-company structure with its own resident team. For future overseas expansion, CHAGEE said it would continue to focus on branch companies and joint ventures.
Beyond Malaysia, Singapore and Thailand, CHAGEE said it was considering North America. The company was still evaluating multiple factors, including local team setup and market conditions.
It also said it was considering whether to visit Europe in July or August 2022 for market research. Overall, the United States was its preferred next market. CHAGEE said it had already held several rounds of talks with potential partners for the next key market, and early market development would mainly target Chinese consumers before expanding outward.
CHAGEE said street-front stores in Southeast Asia can have advantages outside pandemic conditions. Because the region is hot year-round, daytime traffic can be limited, while evenings bring outdoor seating and more consumer activity. Mall stores have traffic from morning to night, but may close around 10:30 p.m., just when Malaysian evening activity is reaching its peak. The company sees advantages in both formats.
CHAGEE said Malaysia did not yet offer the conditions for rapid rollout through small stores. Mall stores were mostly larger-format units, unless in newly opened malls where smaller stores might be possible.
Its Malaysia stores were mainly above 100 square meters, with larger stores exceeding 200 square meters. Stores were generally not below 87 square meters. Monthly revenue per store was no less than RMB 300,000.
FoodBud asked about competition from Taiwanese milk-tea brands such as CoCo, Sharetea and KOI, which had operated in Southeast Asia for years. CHAGEE said many Taiwanese chain milk-tea brands had average tickets around RMB 10-12, while CHAGEE’s average ticket was around RMB 20, so the target audiences differed and the impact was limited.
On product localization, CHAGEE said Malaysian consumers have relatively high demand for sweetness, but the company would not make high-sugar drinks. Instead, it focused on guiding consumers toward other attributes, such as freshness. It said local awareness of the harms of excessive sugar was fairly high.
CHAGEE also acknowledged that many local consumers have a deeply rooted preference for pearl milk tea because it is cost-effective, thirst-quenching and filling. Promoting fresh-fruit tea in Malaysia, and more broadly Southeast Asia, remains an education-driven market. The company said the time lag and cultural differences need to be respected, similar to China’s own shift from pearl milk tea toward fresh-fruit tea after market education.
At the time of the interview, CHAGEE said it had not yet considered building a local overseas procurement supply system and had not reached the stage of establishing local supply-chain infrastructure.
The brand’s core product focus was tea latte. CHAGEE described it as similar in logic to coffee: brewed original-leaf tea with milk, no added toppings, and a lighter profile. The process filters out bitterness and astringency from the tea soup, creating a softer taste that is easier for young consumers to accept.
After repeated testing, CHAGEE focused on tea lattes and maintained a hero-product strategy. In R&D, the team used tea and milk as the main raw materials, directly sourcing tea leaves and high-quality cow’s milk. In production, tea remained the lead ingredient, emphasizing the natural flavor of original-leaf tea. CHAGEE set standard concentration levels for each product’s aroma profile and tea soup. For example, the jasmine used in the product Boya Juexian typically followed a 5-7 scenting standard.
In overseas stores, CHAGEE said original-leaf fresh milk tea accounted for nearly 70% of sales.
Note: financing figures, store targets and overseas market plans are historical as of the article’s May 23, 2022 publication date.