All insights Food & beverage May 7, 2026 7 min read

Translated from the Vietnamese original

Gong Cha, Koi Thé, The Alley, Ding Tea, Bobapop, Hot & Cold… They are still around, but their pull has clearly faded. In their place: ToCoToCo with nearly 1,000 stores, Hồng Trà Ngô Gia with around 500, and Phúc Long holding relatively steady.

What matters is not that brands replace one another. It is that they replace one another so quickly, in a pattern that repeats almost exactly.

Vietnam’s milk tea market took off in 2012–2013. For more than a decade, the same cycle has played out: a new brand appears, peaks fast, holds its position for a few years, then loses momentum. Many call it the “three-year curse.” But that may be the wrong name for a real phenomenon. It is less a curse on the industry than the result of most players operating at the lowest level of competition.

How milk tea came to Vietnam, and why it matters

Most milk tea brands entered Vietnam by one of two routes: master franchises from Taiwan and China, or local brands built as copycats. Both routes make sense at the start. Both tend to carry the same structural problem, one that is very hard to see early on.

Master franchises: recipes and ingredients come from the center, but the ability to adapt to the local market is partly bound by contract. It is the same bind many large franchise models have faced: strict standards on one side, a constantly changing market on the other. The franchisee is caught in the middle, forced to sell a relatively fixed product to a moving market. When the product can’t keep up, the most visible way to hold on to traffic is to keep refreshing the surface.

Copycats: they can copy the menu, the design and the store format, but not the core. Much as many e-commerce players can imitate Amazon on the surface but struggle to recreate the depth of its logistics and technology, milk tea copycats fall into a similar trap: they capture the form, but never build what actually keeps customers coming back.

Both routes lead to much the same place: most players pour into the same battlefield, competing on novelty.

The novelty spiral: a mechanism no one realizes they are running in

Rigid master franchises, copycat strategies without a core, and young, tech-savvy customers who love to experiment are not three separate problems. They are three gears of one mechanism: the novelty spiral.

It works simply and is very hard to escape. Customers come for something new; when the new thing cools, marketing spend must rise to keep them; costs grow faster than the value created; brand equity never builds deep enough; and so the search for the next new thing begins again. Every win today slowly becomes a burden for tomorrow.

The spiral runs strongest where barriers to entry are low, and Vietnamese milk tea is close to ideal ground: modest capital, recipes that can be bought or copied, easy access to distribution. That not only attracts new players; it means that as soon as one brand loses momentum, another has the resources to start the spiral again. Young Vietnamese consumers are not the cause. They are mostly the fuel that makes the spiral burn faster.

Most analysis stops here, naming the problem and concluding that brands must “innovate more” or “build a stronger brand.” Both pieces of advice usually keep you inside the spiral; they just make you run it faster. The way out is not to play this game better, but to choose a different game.

Two proven models, and what they share

What the most successful models share is not that they do level 1 “better,” but that they started playing a different game early.

Level 1

Competing on novelty.

Level 2

Competing on systems.

Level 3

Competing on trust built over time.

Level 2, competing on systems: Mixue, founded in 1997, has survived almost 30 years in a Chinese market where thousands of milk tea brands appear and vanish every year. In 2025, Mixue posted revenue of 33.56 billion yuan, up 35.2%, with net profit up 33.1%. Around 97% of revenue comes from selling ingredients and equipment to franchisees. Some industry analyses suggest its logistics and materials costs are well below the industry average. That is a structural advantage that is very hard to match by copying a menu.

Mixue is not without problems. In some markets, such as Australia, it has faced quality complaints because its supply chain had not localized fast enough. Its product R&D is also not rated as highly as HeyTea’s, because it believes flavor innovation rarely creates a lasting advantage. That is exactly why its model is worth studying: it knows quite clearly what it wins with, and refuses to try to win with what it isn’t strong at.

Level 3, competing on trust: 50 Lan, founded in 1994, still holds a strong position in Taiwan after more than 30 years, in the birthplace of milk tea and one of its fiercest markets. A tight menu, real tea leaves, consistent quality in every store. Customers come back not because there is a new flavor today, but because they trust today’s cup will be much like the one they drank last year. 50 Lan adapts too, but always within a consistent position, without chasing trends. Trust may be one of the few kinds of brand equity that competitors’ novelty cannot quickly wear away.

Vietnam 2025–2026: who is moving, and who isn’t

ToCoToCo has nearly 1,000 stores across 56 of 63 provinces. What stands out is its direction: instead of racing to refresh in the big cities, it has expanded heavily into the provinces, where competition is lower, costs are more reasonable and customers are not yet worn out by the spiral. It can be seen as a shift from level 1 to level 2.

Phúc Long showed level 3 traits quite early: a focus on tea and coffee with clear origins and a consistent position over many years. Its staying power comes from a narrow but deep zone of trust.

Notably, Mixue had more than 1,300 stores in Vietnam by mid-2025, at prices well below many local chains. This is no longer simply a flavor war. It is competition on cost structure, a fight most Vietnamese brands are not really prepared for.

• Mixue (mid-2025)1,300+
• ToCoToConearly 1,000
• Hồng Trà Ngô Giaaround 500

Figures as cited in the article.

Most of the market is still deep inside the novelty spiral: new flavors every quarter, trend-driven campaigns, long queues that shorten again. When everyone competes on the same thing, that thing gradually stops creating an advantage.

The real question

The novelty spiral will not disappear. It is a structural feature of low-barrier markets and will keep pulling new brands in.

The question is not “Can the industry escape?” but: at which level are you choosing to compete?

If you stopped launching new products for three months, what would keep customers coming? If a competitor launched a hotter flavor next week, what share of your traffic would you lose?

If there is no clear answer to both questions, you may not have built a brand yet. You are renting attention, paying in installments, without assets deep enough to accumulate.

The three-year curse is not necessarily the industry’s fate. It may be the bill for a strategic choice: paid late, but rarely waived.