The Future of Boba

Posted by
Kevin Byrne on 10/2/19 7:50 AM

Now that we’ve been introduced to boba and are aware of its increasing popularity, let’s explore the current landscape and where future opportunity lies.

Today's Leaders

 

Globally, just three brands boba conversations on social media.

Currently, three major brands own the global boba market.
Data Source: Social Standards Consumer Analytics – Global, Jun 2018–Jun 2019.

 

Boba is big internationally, and in the US it’s primed for the taking. South Korea-based Gong Cha, San Francisco-based Boba Guys, and Canada-based Chatime Canada are currently the three market leaders, in a dead heat for the largest share of global boba conversations.

Based on conversation volume, Boba Guys is currently the US leader despite only having locations in the Bay Area, Los Angeles, and New York. But this regionality represents a bigger trend. In the US, boba conversation volume is highly dependent on the Western part of the country:

A US map showing that conversations about boba are largely centered on the West coast and in New York, but hasn't penetrated the Midwest.

57.8% of conversations come from the West, while 42.3% of US boba volume is from California alone. That 42.3% ranks in the 85th percentile, meaning only 15% of topics across Food & Beverage have a higher percent contribution of volume from California.
Data Source: Social Standards Consumer Analytics – US, Jun 2019.

 

All that gray on the map above represents the opportunity for growing the US boba market as those are areas where consumers aren’t currently talking about bubble tea. But which brands could have the most success at taking boba to the mainstream domestically?

 

Key Factors to Consider

The market is ready for takeover, and large chains are best positioned to do so. We’ll dive into some reasons why.

As it stands today, the idea of boba being ‘local,’ ‘craft,’ or ‘artisan’ isn’t important to consumers. That’s a huge opportunity for large brands, which consumers perceive in a similar way and which frequently find themselves fighting off new, trendy upstarts attempting to disrupt today’s consumer landscape.

Shopping malls are also important to bubble tea conversation. Compared to all topics in Food & Beverage, shopping malls penetrate boba conversations at a rate 6.4x the average, indicating that brands with a meaningful presence in shopping malls nationwide could already be positioned for success.

Consumers strongly associate boba with shopping malls.

Starbucks appeared in 3.4% of Food & Beverage conversations that also mentioned shopping malls, over-indexing with the topic at a rate of 5x compared to the average F&B topic.
Data Source: Social Standards Consumer Analytics – Global, Jun 2019.

 

QSRs that have a strong affiliation with shopping malls are in a good position to own the boba market by taking advantage of an association that already exists in consumers’ minds as well as the foot traffic that comes with proximity to retail shops.

What’s more, large QSRs are already masters of providing a limited number of items with seemingly infinite small variations. That's especially important for boba, as sensations, innovative flavors, and colorful presentations are highly important to consumers. ‘Chewy,’ ‘squishy,’ and ‘popping’ all appear frequently in bubble tea conversations, a nod to one of the most popular toppings, tapioca pearls.

Other innovative ingredients commonly mentioned in boba conversations include banana milk and fast-growing cheese tea. Matcha, lychee, honeydew melon also occur frequently, likely because of their made-for-Instagram appearance. QSRs can capitalize on consumers’ thirst for bubble tea by offering unique options that put camera-ready options front and center.

 

Which Brands Could Win Big?

Starbucks

Let’s take a second look at that graph of brands currently leading boba conversations in the U.S. Despite not having a bubble tea product in North America and only recently having released coffee boba in Southeast Asia, Starbucks has a surprisingly strong association with boba:

Starbucks commands a significant share of global boba conversations, especially considering it only offers boba drinks in a single market.

Starbucks’s share of boba conversations only slightly trails that of established creators.
Data Source: Social Standards Consumer Analytics – Global, Jun 2018–Jun 2019.

 

Although it doesn’t have a mainstream boba product in the US, global consumers already associate Starbucks with bubble tea almost as much as brands that are mainly known for their boba. For this reason, Starbucks is uniquely positioned to help take boba mainstream. Many of the posts for Starbucks are aspirational, with consumers tagging boba and Starbucks despite not purchasing boba from Starbucks, suggesting that there’s already a demand.

Equally important, Starbucks also has massive reach, with over 14,000 locations nationwide. That penetration means it can easily capture the Midwest and Eastern markets, even with an unusual drink option like bubble tea. In addition to that convenience, Starbucks also has the largest share of Food & Beverage conversations about shopping malls, a location that’s already highly associated with boba consumption.

Finally, boba isn’t perceived as healthy, and Starbucks already has a very successful track record with other guilty pleasures, such as Pumpkin Spice Lattes and Frappucinos. Throw in a fan base that flocks to Instagrammable pink drinks and LTOs (limited time offers) such as Unicorn Frapps, and Starbucks and boba are a match made in heaven. And who knows, come this time next fall, could we be ordering Iced Pumpkin Spice Boba?

 

McDonald’s

McDonald’s is another candidate that could take boba to the next level nationwide for a multitude of reasons. Like Starbucks, they have a reach across the entire country and easy access to most Americans, also with about 14,000 locations nationwide. And like bubble tea, McDonald’s is perceived as a guilty pleasure by consumers, so health concerns shouldn't be a barrier.

Consumers view McDonald's as more of a guilty pleasure than Starbucks.

McDonald’s appeared in 1.1% of Food & Beverage conversations that explicitly mentioned the phrase “guilty pleasure" and over-indexes with "guilty pleasure" at a rate that's 3.6x the average Food & Beverage topic.
Data Source: Social Standards Consumer Analytics – Global, Jun 2019.

 

McDonald’s also commands a large share of other categories that could be a major advantage. Among the brands discussed here, McDonald’s’ share of tea conversations is second to only Starbucks, suggesting that their consumers are already primed for this sort of offering. Timing could also play a role: This summer, McDonald’s brought international menu items to the U.S. as limited time offers, and boba (currently available in China) could be a logical addition in 2020.

 

Dairy Queen

While the first two might seem like obvious choices, it’s worth including a dark horse. Boba’s potential intrusion on ice cream consumption could actually prove to be a huge opportunity, rather than a threat, to the maker of the famous Blizzard.

Dairy Queen is a smaller player than Starbucks and McDonald’s, but it has over 4,500 locations nationwide and a strong audience in many states across the central US. This provides the opportunity to capitalize on boba in those states and fill the gap where consumption is currently sparse.

A US map showing that consumer conversations about Dairy Queen are spread fairly evenly across the US, including the Midwest, a potential market for boba expansion.

34.1% of Dairy Queen conversations come from the Midwest, putting it in the 93rd percentile relative to topics across Food & Beverage. Only 7% of F&B topics have a higher percentage of conversations from the Midwest.
Data Source: Social Standards Consumer Analytics – US, Jun 2019.

 

DQ’s strong relationship with ice cream could also work in its favor. Of brands with major on-premise presences, Dairy Queen is only behind Ben & Jerry’s, Baskin-Robbins, and McDonald’s in terms of share of ice cream conversations—and that’s with both Ben & Jerry’s and Baskin-Robbins getting support from their grocery offerings as well.

That could be viewed as bad news, except that there’s already some overlap between Dairy Queen consumers and boba consumers. In fact, 0.2% of consumers posting about boba in June 2019 also posted about Dairy Queen in the same month, a rate that’s 1.4x higher than the average boba consumer posts about other Food & Beverage topics.

 

Final thoughts

Boba’s currently a niche product, but it doesn’t have to stay that way. Brands with large reach, strong relationships with guilty-pleasure offerings, and boba-friendly consumers are the most likely candidates to bring bubble tea mainstream.

A steady rise in consumption and the ability to appeal to multiple audiences suggests that the boba bubble isn’t likely to burst just yet, so expect to see more and more of this colorful drink.



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Topics: social analytics, consumer analytics, trends, food, beverages

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