Chatime: My First Love for Taiwanese Tea and Its Role in International Marketing in the Philippines
Chatime is a worldwide franchise' in the Philippine business environment
Since 2005, Chatime franchise has been serving millions of customers with their favorite cup of tea, making it part of every occasion, celebration or simply cupping a busy day at work. Chatime was founded in Taiwan in 2005 and in 2011 opened its doors in the Philippines. With a commitment to a quality of ingredients and mix-ins and a flare for innovative flavor combinations, we set out to brew nothing but the very best bubble teas. Chatime has now opened more than 130 stores in the Philippines and over 1,000 stores worldwide. With natural ingredients sourced from Nan Tou, Taiwan a unique method of infusing and blending tea is used only by Chatime. Continuous development and innovation of tea beverages has always been a part of the company culture in order to serve the best bubble teas to the customer. Be a part of the most successful bubble tea store in the world so you can achieve your franchising dreams with exceptional customer service and a friendly smile!
What started out as a Taiwanese tea fad became a worldwide franchise like McDonald's and Jollibee. Chatime is serving various countries across the world via a multinational franchise agreement with the Taiwanese firm. Franchising is where a person purchases certain rights via a joint venture between the franchisor and the franchisee. Chatime expanded worldwide through franchising just like Jollibee and McDonald's. Obviously, it faced competition otherwise it would never come up with such a creative menu. It also had its unique competitive advantage with its secret way of infusing tea. Though, I think some people may have figured it out in some way resulting in the fierce competition. Yet, Chatime still manages to keep that secret a secret among its key members.
It would also be interesting that Chatime actually made waves in the Philippines. The Taiwan News gives this interesting insight about Chatime's international market in the Philippines:
Henry Yao-hui Wang (王耀輝), chairman of La Kaffa International Co. that owns Chatime, said earlier this week that the Philippines is the third overseas market after Indonesia and Australia to have 100 Chatime stores in the country.
Wang said Southeast Asia is Chatime's largest market for growth and that Asia currently accounts for 56 percent of the company's revenues, followed by 16 percent in the Americas, 10 percent for Australia and 4.5 percent in Europe.
In recent years, bubble tea has proven to be a huge hit among consumers in the Philippines, the company said.
Christopher Cua, who helped bring the brand into the Philippines in 2011 and is now marketing and finance director of Chatime Philippines, said he saw the huge potential in the local milk tea market early on.
The signature "Chatime milk tea" is still the best-selling drink, which alone accounts for 40 percent of total sales, Cua said.
According to Chatime Philippines, local consumers used to prefer coffee, but in recent years, milk tea has quickly become the mainstream in terms of popularity among local consumers.
For an average white-collar worker, lunch costs around 100 pesos, while a cup of milk tea can be had for 90 pesos, which is "not too expensive," according to 25-year old office employee Jem.
Because milk tea is so popular, even Starbucks has started introducing this kind of beverage, he added.
With the opening of its 100th store, Chatime is not through with its expansion plans, Cua said, adding that he hopes to expand to 150 stores by year-end.
According to Chatime Philippines, it plans to have 200 branches by 2020.
Reading through the history reminds me of how Porter's Five Forces work. Coffee and tea are basically substituted for each other. The milk tea companies have become potential new entrants and threat of substitutes. People tend to use coffee or tea as substitutes. The competition in the industry intensified as coffee shops are also a competition to tea shops--they both sell coffee and tea these days. I was thinking about how I and my fellow MBA students reviewed in Starbucks Ayala Center and I ordered tea at other times. The power of customers comes into play with different levels of income. It's stated that it's not too expensive either--PHP 90.00 per cup of tea might be the cost of how much coffee is in a coffee shop. It's expensive for students but not for those in the white-collar.
I also find it noteworthy that Chatime knows where to open based on the franchisee's decisions. For example, I find it insensible to open a Chatime branch in a downtown area but not in an uptown area. For example, Bo's Coffee opens in better-suited areas where businessmen gather and can afford to drink expensive coffee. I remembered how I said such items were expensive but it was only because of my rather limited allowance from my thrifty parents. So, Chatime chose the right places to open like Ayala Center Cebu, I.T. Park (my first experience), or in the uptown malls than the downtown malls where lesser-priced tea franchises pop up and survive. Obviously, the company knows its product, price, place, and promotion knowing where to open to rake in the cash.
There may already be other milk tea franchises that I'm enjoying. Jolly Bubble in SSY Lahug, Cebu City, is currently one of my favorites due to it offering better meals. Chatime ends up more as a snack-oriented or post-meal beverage. There's also Gong Cha and Yi Fang which I also enjoy. No one can deny that Chatime will still be one of the most important players ever. There are drinks in Chatime that I find to be their "signature specialties" such as Yogurt Lychee QQ (my personal favorite) as well as I think their coffee milk tea is the best I've tasted so far. I confess it's still hard for me to adjust to other worthy opponents since Chatime really knows its game so well.
