Ottawa, November 18 - If bubble tea is still a mystery to you, it�s time to step out from under that rock! Bubble tea, also known as boba tea, has rapidly grown from a local Taiwanese beverage to a global phenomenon. In Canada, this trend is more than a fad, it�s a cultural shift in the food industry that presents many business opportunities. With the Canadian bubble tea market projected to grow at a compound annual growth rate of 7.3% from 2023 to 2033, the industry shows no signs of slowing down (Canada bubble tea market size, share: Analysis report [2030]). Ottawa�s food culture and population are becoming increasingly diverse, and multiple bubble tea hotspots have been growing. However, while the signs of the industry are promising, there are many considerations for those considering getting into this business opportunity. From determining key aspects of the business model and considering the current and future challenges, one should think again before ordering tapioca and milk tea by the crate.

Market Trends and Growth

As previously mentioned, the bubble tea market in Canada is on a steep upward trajectory. Factors fueling this growth include increased urbanization, evolving consumer preferences, and a strong cultural affinity for novel beverages. The Canadian market benefits from its multicultural demographics, which love bubble tea as a nostalgic comfort and a trendy indulgence. There is a growing trend of out-of-home consumption, with more people enjoying bubble tea at cafes and specialty shops.

In Ottawa, the national trends are reflected. Bubble tea shops have appeared in every corner of the city, with areas like Merivale/Meadowlands and Rideau/Dalhousie having a high density of shops. The city has become a hub for both chain franchises and independent brands. In December 2022, the first location of the Malaysian bubble tea company Tealive was established in Ottawa (Canada bubble tea market size, share, forecasts to 2033). The brand made its way to the United States afterwards and has been incredibly successful in North America since.

Canadian bubble tea lovers enjoy a wide variety of flavours, such as classics like black tea, green tea, oolong tea, and white tea as the foundation, as well as fun fruit flavours and coffee-infused options. Toppings are very beloved, with traditional options like tapioca pearls and lychee available, but also fancier options like brown sugar pearls, popping boba, and puddings. Ottawa�s bubble tea scene keeps up with its innovative product offerings. A local favourite, Prestotea, uses espresso-style machines to brew tea, ensuring a fresh and high-quality flavour in every drink (Presotea Canada 2023). Local shops also partake in global partnerships to create themed drinks, such as the Minions-inspired beverages of Kung Fu Tea (Canada bubble tea market size, share: Analysis report [2030]). These efforts are not only to appeal to loyal customers but also to attract newcomers eager to try something different.

Why Bubble Tea is Thriving

Bubble tea has captured the zeitgeist of modern urban living for many reasons. I have noticed four aspects that most interest me:

• A sweet, customizable treat: Bubble tea�s endless customization options, from sugar levels to toppings, make it an accessible dessert for a broad audience. Its packaging makes it easy to consume and transport, so it�s more of a lowkey sweet treat than an in-your-face dessert.
• Non-Alcoholic Third Space: Bubble tea shops have become famous as casual hangout spots, especially for those who do not drink alcohol. They offer a low-cost, stress-free socializing environment that requires no dressing up or reservations. In a society with dwindling accessible third spaces, bubble tea fills a gap where bars are not sought after.
• Late-Night Appeal: Many bubble tea shops in Ottawa are bustling well into the evening and night, providing a much-needed late-night option for social gatherings. It�s great for a post-work pause, a date, or even to do work.
• Seasonal and Collaborative Offerings: Limited-time drinks look so delicious on the menu, and collaborations with brands and personalities make getting a drink or merchandise a must, a prime example being the Gong-Cha and Snoopy collaboration. The buzz keeps the customers coming back!

Franchising vs. Independent Ventures

A key consideration when opening a bubble tea shop is whether franchising or opening an independent shop is the better option. In Ottawa, there is a mix of these types of stores. Each option presents its opportunities and challenges, and based on your timeline, budget, and long-term orientation for your business, one may be more suitable than the other.

Franchising

Franchising remains popular for entrepreneurs due to its reduced risk and established brand recognition. Chains like Chatime, the Alley, and Gong Cha dominate the market with their streamlined operations and consistent quality. Franchisees benefit from a proven business model, established suppliers, market resources, and lower customer pricing options. However, competition is fierce from other shops and franchises of the same company, particularly in saturated areas. Entrepreneurs also have little decision-making in their offerings, with great struggles to hear suggestions and opinions from head offices.

Independent Shops

Starting an independent bubble tea business allows for greater creative freedom and authenticity. However, this route has challenges like higher costs and building brand awareness. Entrepreneurs must face challenges like high competition, supply chain issues, economic hardships, and operational costs, all independently with no provided network of resources. Successful independent shops in Ottawa often differentiate themselves through unique flavours and premium ingredients, or by fostering a sense of community in their spaces.

Offered Experience

Bubble tea shops in Ottawa offer diverse experiences, catering to a wide range of preferences, much like North American coffee shops. If entrepreneurs do not seek to differentiate through their product offerings, they can do so through their offered experience, creating immense value.

Some establishments focus on an express, grab-and-go model, conveniently located in malls and high-traffic areas, perfect for busy shoppers. Others emphasize creating a welcoming space to sit and relax. A good example is Hangout. This establishment has board games for customers to enjoy, giving it a unique edge compared to its competitors. Similarly, the Byward Market Presotea location offers spacious seating areas ideal for social gatherings. Certain shops elevate the experience by offering luxurious desserts and gourmet foods, blending indulgence with creativity. Collaborative ventures, such as Dao Caf�, a Euro-Asian caf�, collaborated with Tealive, further enriching the local Ottawa bubble tea scene, and providing unique culinary experiences beyond just drinks.

Location is Key

Choosing the right location is crucial for a bubble tea shop�s success. The type of business model often dictates the ideal spot. If the shop opts for a quick service type of place, high-traffic areas like malls, such as the Byward Market and Lansdowne, are perfect for grab-and-go models. The space needed is minimal and advertising is less required due to its recognizable spot.

If the shop wants to promote community hangouts, shops with ample seating are needed. Places like Prestotea in the ByWard Market have a prime location with a large seating area in the back, but this is rare in downtown areas. Spots just outside of business or school hubs, like Centertown, Westboro, or Little Italy, can have great potential for these types of spots as those neighbourhoods are growing rapidly.

Finally, there is the suburban appeal. Suburban locations, like those in Kanata, Orleans, and Nepean are gaining popularity as convenient alternatives to downtown spots. These areas often provide parking and a family-friendly atmosphere.

These three types of locations are still susceptible to high competition. It is incredibly difficult for bubble tea shops to thrive in high-competition areas, such as Chinatown or downtown Ottawa. Consumers usually stick to their favourite locations, and if the product offering is too similar, more well-known brands can easily squash out incoming competition.

Challenges in the Bubble Tea Market

Despite its growth, the bubble tea industry faces several hurdles. Supply chain issues cause major disruptions, as many key ingredients, such as tapioca pearls and matcha, are imported from Asia. Disruptions, like the 2021 Suez Canal blockage, highlight the fragility of these supply chains (Canada bubble tea market size, share, growth analysis - industry forecast 2023-2030). To continue, rising costs, such as import tariffs, fluctuating shipping fees, and classic inflation, drive up the cost of ingredients. As the industry relies heavily on plastic for their cups, lids, and straws, they face significant environmental challenges, particularly as cities implement bans on single-use plastics. The city of San Francisco, which jumped on the bubble tea trend early, was stressed when the city abruptly banned plastic straws and had to adapt quickly, as the larger straws are essential to consume tapioca pearls. With new shops opening regularly, their market is becoming saturated, and differentiation is critical. Labour shortages are a challenge, as recruiting and retaining skilled staff is difficult in a competitive job market, which is even more pertinent for shops offering high-quality teas that are made with specific techniques that require training.

History and Cultural Appropriation

Bubble tea, originally known as zhenzhu naicha (pearl milk tea), was invented in Taiwan in the 1980s and quickly became a cultural staple across East Asia before spreading globally. Its origins are deeply rooted in Taiwanese culture, which represents an innovative blend of traditional tea-drinking practices and modern flavours. However, as bubble tea has gained popularity worldwide, instances of cultural appropriation have emerged. Some brands and influencers present bubble tea as a novel or "exotic" trend without acknowledging its cultural significance or origins. Additionally, certain businesses strip away the cultural essence by heavily modifying recipes or branding to cater solely to Western palates, sometimes erasing the beverage�s heritage. Recognizing and respecting bubble tea�s cultural history while enjoying its evolution is essential to fostering appreciation rather than appropriation. Recently, a Quebec-based company, Bobba, faced backlash after its appearance on CBC�s Dragons� Den, where actor Simu Liu criticized the brand for culturally appropriating the Taiwanese beverage. The company experienced major backlash afterwards and apologized later, stating it never intended to imply its product was superior to traditional bubble tea. This is a cautionary tale for companies to better align their branding with the cultural roots of bubble tea and work with advisors from the Asian community to restore and maintain trust.

Future Opportunities

The bubble tea industry has several avenues for growth and innovation. Sustainability-wise, eco-friendly packaging is becoming more present in bubble tea shops, such as reusable cups or large straws, to mitigate the environmental impact of bubble tea shops. Another opportunity can be to offer more health-conscious options, such as low-sugar drinks, organic ingredients, and plant-based milk alternatives, which can capture the health enthusiasts and gym goers who might not consider bubble tea part of their diets. To continue, technology integration is vital, as it is in many industries. Mobile apps, online ordering and loyalty programs are growing in presence, enhancing the customer experience, and improving operational efficiency. Community engagement is an excellent opportunity to increase returning customers in the competitive market. Creating a welcoming atmosphere, having food options, including gimmicks or having collaborative events can foster customer loyalty.

What it Takes to Succeed.

Bubble tea shops that remain open and thrive probably engage in careful planning and execution. If someone would be interested in entering this industry, here is a summary of key elements to consider in your planning:

• Market research: Understand the target demographic and analyze competitors to identify market gaps, though they might be slim now.
• Quality ingredients: Invest in premium tea leaves, get the milk fresh, and use authentic toppings to ensure customer satisfaction and avoid falling into the depths of cultural appropriation
• Unique selling proposition: Develop signature drinks or concepts that set your shop apart from competitors, or opt for a unique dine-in experience.
• Strategic marketing: use social media, promotions, and community events to build brand awareness and communicate your unique selling proposition effectively.
• Adaptability: Stay ahead of trends and be prepared to pivot in response to changing consumer preferences

A bubbling future

Ottawa and Canada's growing consumer base and culture have kept the bubble tea industry thriving and innovative. As the market continues to evolve, shops that embrace sustainability, quality, and unique customer experiences will stand out in this competitive landscape. Business owners should remain aware of the roots of the industry and the possibility of cultural appropriation. So, whether you are an entrepreneur looking to enter the market or just a bubble tea enthusiast exploring Ottawa�s vibrant scene, the city offers many opportunities to sip, savour and socialize. 

Remember: Get the straw in on the first try, and chew your tapioca pearls!

References

Benchetrit, J. (2024, October 17). Bubble tea company apologizes after dragons� den cultural appropriation spat | CBC News. CBCnews. https://www.cbc.ca/news/business/bobba-bubble-tea-company-dragons-den-simu-1.7352304

Canada bubble tea market size, share, forecasts to 2033. Spherical Insights. (n.d.). https://www.sphericalinsights.com/reports/canada-bubble-tea-market

Canada bubble tea market size, share, growth analysis - industry forecast 2023-2030. Canada Bubble Tea Market Size, Share, Growth Analysis - Industry Forecast 2023-2030. (n.d.). https://www.skyquestt.com/report/canada-bubble-tea-market

Canada bubble tea market size, share: Analysis report [2030]. Canada Bubble Tea Market Size, Share | Analysis Report [2030]. (n.d.). https://www.fortunebusinessinsights.com/canada-bubble-tea-market-107499

Presotea Canada. ??? Presotea Canada. (2023, August 1). https://www.presotea.ca/