Xiang Piaopiao (香飘飘), once royalty in the world of Chinese milk tea, is looking beyond its home market. The company has announced plans to build a ready-to-drink beverage factory in Thailand, marking its largest overseas investment to date. But it’s not all rosey. The move is a signal that its next phase of growth will come from Southeast Asia, not China.
Xiang Piaopiao built its name on instant milk tea, but that category has been steadily squeezed by the rise of freshly made tea chains. In response, the company has been shifting towards ready-to-drink products, which now account for the majority of its revenue. The pivot, however, has yet to stabilise performance. Recent years have seen both revenue and profit maintain a decline.
Overseas markets offer a bright future, if tapped well. Until now, Xiang Piaopiao’s international presence has leaned heavily on traditional distribution models, selling primarily to overseas Chinese consumers. It’s worked, but now they want to be a better fit for domestic consumers in these overseas markets. If they can pull it off they’ll be netting a while new market.
The Thailand factory is designed with that in mind. Rather than exporting finished goods from China, Xiang Piaopiao is localising production, using Southeast Asia as both a supply base and a growth market. The plan includes a push into fruit tea products tailored to local tastes, with an emphasis on low sugar and fresh ingredients, as well as made-in-Thailand positioning to appeal to the local crowd.
The Dao view: Xiang Piaopiao might find equally fierce competition abroad
Southeast Asia’s beverage market is already being reshaped by a wave of Chinese tea chains expanding abroad, alongside entrenched local players and global giants. Big players like Chagee, Heytea and Mixue will be tough competition.
Consumer preferences also vary sharply by country, making a standardised approach difficult. What works in Thailand may not work in, say, Malaysia. So for Xiang Piaopiao this is more than a factory build. It’s a test whether they can localise enough to stand out, and if new turf gives them space to be competitive. If all goes well, they may have found an answer to their financial woes.
