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The top-selling Chinese bubble tea brand Hey Tea generated more than $300 million in sales, followed by Nayuki at $226 million. Both have opened US locations. Kung Fu Tea, the largest US boba chain, currently operates 250 locations and expects to open 70 more in 2021.
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The bubble tea* bōbà shortage is a lesson in how pandemic-induced pileups create lingering logistical challenges.
The bōbà crisis (media quickly dubbed it Bobapocalypse) can be traced to Taiwan's worst drought in 56 years. As reservoirs drained to less than 20% capacity, the government ordered a shutdown of manufacturers that consume large amounts of water. Taiwan is the world’s hub for bōbà, a black pearl of tapioca made from cassava root that bubble tea consumers consider essential to their drinking experience. Bubble tea was invented in Taichung in the 1980s spreading to Japan and Hong Kong before reaching mainland China where bubble tea is a $1 billion market.
Fortune Business Insights estimates the worldwide market at $2 billion in 2019, with sales expected to swell to $3.4 billion by 2027. Market research firm Technavio estimates boba sales will grow by $963 million by 2023, a combined annual growth rate of 7%.
During lockdowns, many bubble tea drinkers in the US and Canada were forced to make their favorite treat at home, ordering the ingredients in bulk online. Sweet syrup, milk, and tea are readily available, but packages of authentic Buddha Bubbles Boba and Wu Fu Yuan boba to cook at home ship from Asia. The tapioca pearls are simply there to provide texture; the flavor is from the drink itself. There is, of course, a YouTube video on making the five- to 10-millimeter balls at home. The industrial process is complex, requiring the preparation of a wet flour from cassava starch formed in rotating cylindrical pans, followed by gelatinization that requires baking in a long tunnel followed by drying or freezing to preserve the pearls.
Since January as US and Canadian shops reopened, managers ordering direct from Asian suppliers found that consumer orders were clogging the supply chain, drawing down stocks at a time when the arrival of bulk re-orders was uncertain.
According to Smithsonian Magazine, tea Zone, one of the largest US suppliers, and Bubble Tea Canada, report shortages of the most popular boba balls due in part to over-orders and hoarding. Retailers Boba Guys estimate 99% of boba consumed in the US is imported from Asia.
A return to sufficient stock and average delivery times is not expected before summer.
FOOTNOTE
*Bubble Tea (from Wikipedia): the oldest known bubble tea drink consisted of a mixture of hot Taiwanese black tea, small tapioca pearls, condensed milk, and syrup or honey. Now, bubble tea is most commonly served cold. The tapioca pearls that make bubble tea so unique were originally made from the starch of the cassava, a tropical shrub known for its starchy roots, which was introduced to Taiwan from South America during Japanese colonial rule. Larger pearls (Chinese: bō bà/hēi zhēn zhū) quickly replaced these.