Bubble Tea
It's Not What You Think
by David Volk
Photos by Ness/ Pace Studio

If the former Miss America, Anita Bryant, were still selling her services as a pitch woman, she could easily make the switch from orange juice to a newer drink that's slowly penetrating the market. All she would have to do is replace the citrus slogan, "It's not just for breakfast any more," with "Bubble tea, it's not what you think."

Beyond the Pearls
Most people standing outside the bubble tea fad looking in see nothing more than a pastel-colored beverage with black pearl tapioca balls at the bottom, says Rich Principale, chief brand officer at Laguna Niguel, Calif.-based MoCafe. But the chewy orbs are only part of the picture, and coffee- and teahouse owners who can't see past them may be missing a chance to boost their bottom line.
   "The black pearls don't represent the bubbles [in bubble tea]. That's what's keeping a lot of people from getting involved," Principale says. For retailers, bubble tea retains many stereotypes that need to be cleared up. Once these are made lucid, the profit of bubble tea can be understood. Simply put, most merchants are under the mistaken impression that the drink gets its name from the "bubbles" at the bottom of the cup. The truth is that the bubbles come from the froth that results when all of the ingredients are mixed, shaken or blended together. Adding the pearl tapioca is just one way of making the drink, and it isn't always as popular as outsiders might think. "Maybe 25 percent of the people [who order them] will want the textural component of the drink," Principale says. Not all retailers agree with his estimate, though. Some say only a small minority prefer the drink without the balls at the bottom, but they all agree that it's just one of many ways to prepare the taste treat.
   And it's just one of many ways retailers are using the drink to increase their profits.
   The best way to start assessing if it makes sense to add the drink to the menu is to understand what bubble tea is today.

Bubble Basics
Legend has it that bubble tea got its start more than 20 years ago in Taiwan, when a vendor at one of the many tea stands outside a local school decided to add unusual fruit flavors to attract more business. The taste caught on and other vendors followed suit by adding their own flavors. In order to evenly distribute the taste throughout the drink, the sellers shook the cups holding the beverage, creating a kind of iced tea latte with the frothy bubbles that give the treat its name.
   In the years since, the drink has continued to evolve. More than just cold tea with fruit flavoring, bubble tea now comes in a variety of forms. It can be hot or cold, feature the consistency of a milk shake or slushy smoothie and be made of black or green tea. It can come with black pearl tapioca on the bottom or with colored, flavored pieces of gelled coconut meat, or without anything at all. It can also turn up as a simple milk tea.
   In fact, there are so many variations today that the only constants are the basic categories of ingredients--liquid, flavor, cream, and sweetener--and even these four components differ from place to place.
   According to Hawaii-based Bubble Tea Supply's Web site, (www.bubbletea.com), water, milk or tea are equally acceptable as the liquid base. At The TeaZone, a tea shop in the artsy Pearl District of Portland, Ore., however, the owner would never dream of using anything other than real tea, but that's because she runs a gourmet tea store and has plenty of varieties on hand. The same is true at the Tea Garden in Minneapolis, Minn., Sellers that buy prepackaged kits, however, often add water to powders that include tea and flavor.
   There are a number of options for the other components as well. The flavoring can come from powders, syrups or fresh fruit, while the cream can be either half & half, regular milk or a powder. At the same time, sweeteners of choice range from simple sugar to honey.
   There is even a wide array of options for the bubbles at the bottom. Although traditionalists can go with black tapioca pearls, colored pearls are now available. The coconut jellies also come in a range of colors and flavors. Bubble Tea Supply's Web site offers colored tapioca pearls in an array of pastel-toned greens and pinks. The pearls also come in a square shape, ranging in color from green to orange to purple to red.
   The only other constants are the fat straws and the clear, see-through cups that allow the colorful beverages to serve as their own walking advertisements.
   "The drink has a real built-in marketing piece," Principale says. "It's almost like its own point of sale. When one drink goes out the door, other people see it and want to buy it."
   With such a dizzying array of variables, many retailers may think they need an advanced degree, a supercomputer and a warehouse to keep up with the rapidly evolving bubble tea market. They might ask themselves why they should bother with the beverage at all. The answer, of course, is money.

Bubble Economics 101
After a decade on North American menus, bubble tea is clearly no longer the next big drink. Over the last five years, the treat has spread out along the West Coast with the help of people from Asian countries and Americans of Asian descent who flocked to bubble tea bars in international districts and Chinatowns for a taste of home.
   As the drink has slowly made its way to the East Coast and into the heartland, it has transcended the Asian market, leading many retailers to discover that it isn't even necessary to have a large Asian community to sell bubble tea.
   Just ask Jhanne Jasmine.
   Although the owner of TeaZone's store isn't far from Portland's Chinatown, she didn't add bubble tea to the menu to appeal to a certain demographic group. She did it because she wanted a cooler beverage for warmer months.
   "I think it gave us a nice offering for the summer. It's still a tea beverage and in the summer people start drinking more iced teas, and it gave us another option to offer people," she says. The results surprised her. "We'd really thought that it would be something that would mostly capture a summer audience, but when people get hooked on these things, they want them year-round."
   The drink isn't just inspiring loyalty among cold-beverage fans continuing into winter, though. It's also bringing in new customers and helping her fill the shop. While many in the industry assume that only younger patrons enjoy the drink, Jasmine's buyers range from college students who drink it as lunch to business professionals who drink it with lunch and little old ladies who enjoy it at any time of day.
   "We've had large groups of kids coming in here every Sunday after church to have a bubble tea," she says.
   "Being exclusively a tea shop, it's important to look at things that can boost the bottom line at times throughout the year," Jasmine says. "It's become pretty important in the winter for us."
   And it doesn't just appeal to one ethnic group, Jasmine adds. "It is definitely something that is spreading out of that niche. In our shop it's not considered an Asian drink. We never pushed it like that. [It's] just a really new, fun drink."
   Alan Yu, president of Los Angeles, Calif.-based Lollicup has noticed a similar trend.
   "We first started the business thinking that our clientele would be Asian," he says. "But now, the people that are ordering our products are mostly non-Asian."
   Bubble tea's move into the Midwestern cities with smaller Asian populations appears to back up Yu's claims. Tea Drops opened in Kansas City, Mo., in October 2003 and has reported brisk sales, despite missing the summer trade. The drink has even made inroads in the Deep South, according to Jeb Allran, sales manager for www.CoffeeAM.com in Atlanta, Ga. Although he doesn't have any sales figures yet, Allran says his company added bubble tea mixes to its offering about five months ago, and "It's going better each month."
   When people ask Principale if there will be continued interest in the beverage outside the Asian community, he just laughs. "It's almost akin to saying, 'Is chai only selling in Little India? Is espresso selling only in Little Italy?'"    The increased interest among the majority culture hasn't lessened bubble tea's appeal among its original audience, as Christina Nguyen has discovered in the two years since the then 17-year-old opened the Tea Garden in uptown Minneapolis with her mother's backing. While the location attracts students from nearby University of Minnesota and pulls in plenty of foot traffic, Nguyen's mother, Diana, says it also welcomes Asian customers from all over the metro area.
   "People come from 20 to 30 miles away and it's pretty normal for them to be doing this just to be at our tea place. I don't understand it, but that's what they want to do," the elder Nguyen says.
   It helps that the beverage is a social drink and that the Tea Garden has the feel of an adult bar without the alcoholic beverages or the smoking, Diana says. In fact, its contemporary Asian décor, comfortable futons, house music, and wireless Internet connection make it such a popular gathering spot that people regularly drive from St. Cloud, 40 miles away, just to hang out with friends.
   As a result, the Tea Garden sells 400 to 500 drinks on an average day, with prices ranging from $3.10 to $3.75 per 16-ounce cup. As in many cafés, pearl tapioca costs 50 cents extra.
   Profits vary depending on a wide variety of factors, bubble tea retailers and wholesalers say. Companies that go with programs involving powders and mixes stand to make the most, with costs averaging about 80 cents to $1 for a 16-ounce cup that can sell for $3 to $3.50.
   The margins narrow with the use of fresh ingredients including whole leaf teas and fresh fruit, however. At Momoko in Austin, Tex., for example, it costs owner Welinning Ko $1.50 to make a 16-ounce cup that sells for $2.77. Similarly, RAYS Tea Time in San Mateo, Calif. spends anywhere from 50 cents to $2 to make a 16-ounce cup that sells for $3.

Paths To Profit
There are two ways to add the beverage to the menu at a coffee café or teahouse, bubble tea sellers say. One route is to go with a program of powders and mixes offered by a range of wholesalers. The other option is to use fresh ingredients, then pick and choose products from a variety of suppliers to create a more individualized slate of offerings.
   The main advantage of "turnkey" programs like the one offered by Vancouver, B.C.'s Bruce & Clark, is that they are extremely easy to add to an existing operation and require almost no additional investment in equipment, sales manager Jerome Sia says. All an operator needs is a blender, powders and Choobees--flavored jelly squares similar to coconut jellies that require no cooking. From there, staffers merely have to blend the powder, water and ice, scoop Choobees out of a jar and into the bottom of the cup and pour the mixed drink over them.
   Using tapioca pearls adds more labor to the process because they must be boiled before they can be added to the mix. The process generally takes about an hour and must be done every day, sellers say. Day-old pearls must be thrown out because they don't have the proper consistency. If the café doesn't have a stove or cooking surface, Bubble Tea Supply Manager Evan Leong says it's just as easy to prepare the pearls in a rice cooker.
   In order to keep the program manageable, Yu and other wholesalers suggest limiting the number of flavors a shop initially offers. Five to 10 flavors seems to be a good starting point, he says. The top-selling flavors include strawberry and passion fruit. Mango is also popular with Asians but the taste is often a strange one for Americans to get used to.
   "It's a very easy drink to make. If they can make hot cocoa, they can make this drink," Leong says.
   The other option is to go with a more extensive program mixing fresh ingredients with flavorings, tapioca pearls and coconut meats from suppliers. The TeaZone, for example, combines its own loose-leaf teas and a homemade simple syrup with flavor mixes and pearls from a variety of wholesalers. Tea Garden also uses loose-leaf tea, real fruit juice and tapioca imported from Taiwan.
   Jasmine and Nguyen say fresh ingredients produce a fresher tasting product than they could get from mixes. The drinks cost more to make, but they say the quality inspires loyalty among their customers who occasionally visit other bubble teashops, but keep returning for their product. Both companies are proof that concern for serving a quality product to customers can pay off in the long run.
   "The biggest mistake you can make is not using fresh tapioca," Jasmine says. While some retailers may be tempted to use day-old pearls to save money, it would be a big mistake because, she adds, "It becomes very slimy and disgusting at the end of the day. If you didn't sell it, too bad. You've got to start fresh."
   In addition, Jasmine is quick to point out that not all pearl tapioca is created equal. Retailers who purchase inferior product soon discover that the little balls will turn to dust shortly after they open the container. "The better the quality of the tapioca pearl you can find, the easier it is for you to work with."
   One of the key challenges in the Midwest and other places where the drink is being introduced for the first time is awakening customer interest. Many retailers agree that the initial resistance can be overcome, but it takes a bit of education to do so. While promotional material from wholesalers can be helpful, there's no substitute for talking with customers and offering samples. Angela Shen of RAYS Tea Time not only offered free tastings inside her store, she also gave out samples at a local fair just to generate interest. Ko, who owns a combination gift shop/tea room offers first-timers their money back if they don't like the drink.
   One of the most important aspects of success, especially for coffeehouses, is location. The same goes for bubble tea bars: Foot traffic is the breadwinner. Having a location with a lot of pedestrians is a must. "If you can sell a lot in a short period, you can make a lot of money. If you don't have a lot of foot traffic, you might want to consider another beverage."
   Nguyen agrees with Shen's assessment. She wouldn't disclose her per-drink costs, but she was quick to point out, "If we weren't doing 400 or 500 cups a day, I wouldn't be making a profit."


David Volk is a freelance writer based in Seattle, Wash. He can be reached at: david@davidvolk.com.