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The rise and fall of the Boba Trend in Malaysia

Tealive, The Alley, Tiger Sugar, Xin Fu Tang. These are the popular brand names of Bubble Tea or Boba Tea in Malaysia. We’ve seen multiple Boba Tea shops mushrooming across streets, malls, and even petrol stations. The Boba Tea craze is real and it does not seem to slow down.

As of 2020, there are over 100+ Boba Tea shops across Malaysia and this does not include those restaurants which are providing their very own version of Boba Tea.

Walk the street of SS15, Subang Jaya and you’ll see at least 15 Boba Tea shops, side by side, or just across the street, all of them vying for dominance.

People used to queue up for few hours, even at night to just get a cup of Boba Tea and things were that crazy when during that time.

Going back in time, it all started with Chatime opening the first out let in Kuala Lumpur in 2010 and introducing Boba Tea to Malaysians. Boba Tea at that time was something new to us and we will occasionally drink it whenever we are tired of shopping and wanted something refreshing.

It took a few years for them to establish themselves and to get Malaysians to get used to Boba Tea. This caught the attention of multiple Boba Tea café operators from Taiwan and many have decided to have their presence in Malaysia.

While interviewed by CNA, Boba Tea café operators said that the craze was mainly fueled by the extensive marketing done on social media.

Being branded as a premium beverage, with special brewing methods and testimonials are written to boost consumer’s confidence about the beverage. These marketing strategy had caused a snowballing effect on social media.

Ugly businesses in Boba Teas

Source: Brand360
  • Chatime / Tealive

As we all know, bringing foreign brands into Malaysia isn’t an easy task and most will prefer the franchisor-franchisee arrangement. Being the pioneer in the Boba industry, they are the first to go through all the dramas.

It was early 2017 when La Kaffa, the Taiwan-based company behind Chatime terminated the franchise holder agreement with Loob Holding Sdn Bhd for sourcing unapproved raw materials for its beverages. This is said to have violated the terms in the master franchisor agreement.

Fast forwarding after few months of legal battle, Loob Holding Sdn Bhd and La Kaffa have agreed to an out-of-court settlement with the terms remain private and confidential.

Source: Concrete Playground
  • Xing Fu Tang

The Xing Fu Tang saga was a pretty short one, but things got even wilder than the one from Chatime and Tealive. It all started when CEO International, the principal of Xing Fu Tang brand threaten to terminate the master franchisor agreement with Collab Working Lifestyle Sdn Bhd after the Malaysia franchisees had refused to buy their pearl-moulding machines totalling to RM4.5 million.

After the incident went viral and ugly, 2 Xing Fu Tang stores from Klang Valley were being splashed with red paint. There were further accusations from CEO International trying to tarnish Collab Working Lifestyle Sdn Bhd’s reputation and the battle between them on Facebook continue for a short while before it died down.

Heavily impacted by Covid-19

Despite all those ugly businesses, the craze over Boba tea continues and more startups joined the craze. When the craze kept on growing, and so did the Covid-19 cases in Malaysia. It went up to a point where the Malaysian Government were forced to put all economic activity on hold, except for essential services. The streets and malls turned quiet overnight so did the Boba tea craze.

The SS15 in Subang Jaya, which is once called as “Boba tea street” had almost half of its Boba tea stores closed for good.

Source: Malay Mail

Unsustainable business activities and monthly rental are among the main reasons that most businesses closes down. Even though special tax deductions were given to property owners who opt to reduce the rent by at least 30%, it is not sure whether did the owners reduce the rents and whether businesses are generating enough income to cover the reduced rent.

It is not all grim too. There are brands that managed to stay on and they were the most established ones. However, the craze over Boba tea had since then diminished. As Covid-19 lingers around, business activities in Malaysia will remain slow.

Who knows, the Boba tea craze might come back after Malaysians win the battle against Covid-19.

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