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From London to Helsinki and Buenos Aires to Cape Town, it’s almost impossible to find a major city where bubble tea isn’t on sale. Even our local Vredehoek Spar has a dedicated shelf that has become a gauntlet of tantrums for many a parent.

Indeed, China’s bubble tea business has grown into an industry that last year was worth about 145 billion yuan (R1.6 trillion), and there are now an estimated half a million bubble tea shops in China alone.

From its origins in 1980s Taiwan to today’s global craze, bubble tea or boba, has come a long way. But it seems the bubble might be bursting.

Bubble tea is a tea-based drink that originated in Taiwan in the early 1980s. Taiwanese immigrants brought it to the United States in the 1990s, initially in California through regions including Los Angeles County, but the drink has also spread to other countries where there is a large East Asian population.

Bubble tea has certainly hit a sweet spot with its many fans but it has left some investors with a bitter taste. Stock market debuts of two China-based chains have already flopped. And there are at least two more share sales in the pipeline.

But the success story has continued during a time when China’s economy is slowing and consumers are tightening their belts.  Bubble tea still provides an affordable pleasure to consumers in China, but investors are not showing the same level of enthusiasm.

Seeking to cash in on the craze, several Chinese tea chains have looked to sell shares to the public in recent years.

Last month, China’s third-largest bubble tea chain, Sichuan Baicha Baidao Industrial, known as Chabaidao, made its stock market debut. The shares plunged on their first day of trade and have yet to recover.

That followed another disappointing debut by Shenzhen-based Nayuki whose shares have lost more than 80% of their value since their launch in Hong Kong almost three years ago.

Analysts point to a number of reasons for these weak performances, including concerns about the Hong Kong stock market as a whole.

The amount raised from new listings in the city since the start of this year has dropped to levels not seen since 2009, according to consultancy firm Deloitte. But this hasn’t discouraged other bubble tea chains from planning their own share sales.

Earlier this year, China’s first and second largest chains by number of shops – Mixue Group and Guming Holdings – submitted applications to list on the Hong Kong Stock Exchange.

Others, however, say investors are focusing on problems within the bubble tea industry itself.

It “has relatively low barriers to entry, leading to increased competition,” said Kenny Ng, Securities Strategist of Everbright Securities International.

“Many companies rely on opening new stores to sustain revenue growth. However, this expansion strategy can lead to a decline in gross profit margins as companies face higher costs associated with store operations and management.”

For bubble tea fans, growing competition has its advantages. Han is a regular boba drinker from Beijing who used to stay away from certain premium brands because she found them too expensive. That has changed. She says price has become less of a factor when choosing between different brands because “they have a lot of discounts and vouchers”.

But for bubble tea makers and their potential investors, lower prices and higher costs could prove to be an unattractive recipe. “The Chabaidao case highlights the risks and does not bode well for the listings of other bubble tea chains,” warned Gary Ng.

But there is another far more important risk associated with the often sugar-packed drink that is holding them back from ordering more. Due to its high sugar and calorie content, frequent consumption of boba tea can contribute to weight gain.

The tapioca used in boba also cannot be digested easily by the body. If you consume too much tapioca, your body might not get enough fibre and cause digestive problems such as constipation.

@user9824236309068 What happens to the body if you drink bubble tea every day?#health #didyouknow #nowyouknow #healthtips #foryou #fyp #body #bubbletea ♬ original sound – Health knowledge3

Unfortunately, a shaky Chinese stock market and lack of fibre are not enough to burst my son’s bubble, so every visit to Spar will include a screaming match past the Switch and bubble tea fridge.

[source:bbc]