The New Beverage War: How Chinese Brands Are Reshaping Malaysia’s Beverages Scene

Chinese Beverage Brands Take Over Malaysian Streets

In Malaysia's university areas and city centers, a new social trend is growing. Chinese beverage brands like Luckin Coffee, Chagee and Mixue, are seemingly  everywhere. Their stores have become popular hang out spots for young people. With smart online marketing, streamlined  operations, and a good grasp of the whole “social media check in”, these brands are changing how young people in Malaysia enjoy their daily drinks. Local cafes and bubble tea shops have to face this new competition and consider  their position in the rapidly changing market. The impact of this new beverage war has gone beyond the drink itself; reflecting the shifting consumption trend of young people in the context of globalisation.

Customers capture a selfie to ‘check in’ at Malaysia’s first Luckin Coffee (Source: NIKKEI AISA)

Digital First and Social Currency: The Winning Formula Behind the Boom

Walking into any Luckin Coffee in Malaysia, you will rarely see customers  queueing up to order in front of the counter. What you see– instead is them heading straight to the counter, giving their order number, grabbing their coffee and heading out. This small difference reflects the core strategy of Chinese beverage brands entering the Malaysian market, digital first and highly efficient.

The success of Chinese beverage brands comes from an accurate understanding of the target consumers–, students and young office workers. They are not selling the traditional slow paced lifestyle, instead, they are selling ‘social currency’ that matches the fast pace of modern life. Luckin Coffee’s minimalist business style and Chagee’s trendy ‘Guochao’ designs– inspired by oriental elements– have provided a natural background for social media from the beginning. Consumers are not just buying a drink, they are buying a lifestyle that can share which shows their taste, completing the closed loop from consumption to social display.

When it comes to their products, these brands keep a good balance. On the one hand, these brands use their signature products to show professionalism. Chagee focuses on using real tea leaves, and Luckin Coffee has added traditional sauces to tea and coffee beverages, with the ‘sauced flavoured latte’ going viral for mass quality assurance and its inventive taste. 

On the other hand, these brands are embedding local elements into their menus. For example, Luckin Coffee has incorporated pandan leaves into its beverages, and Mixue has localised its promotional videos with local languages and fruits. The blend of Chinese characteristics with local elements demonstrates the brands’ attentiveness to local culture and consumption patterns.

But the real strength of these brands comes from their smart use of technology and strong supply chains. Luckin Coffee does almost everything through its app, ordering, paying, and collecting points. This makes things fast and easy, and it also helps them learn about their customers. Mixue does things differently. It buys ingredients in bulk and uses the same production process for all stores. This keeps the cost low, so their  ice cream and tea stay affordable. . Using technology and keeping costs down makes them hard to beat for local businesses that still work in the old way.

Luckin Coffee’s mobile app interface (Source: Luckin Coffee)

However, the dominating competitive edges of these domestic brands are technology and supply chain-based business models. For example, Luckin Coffee allows consumers to place and pay for orders, and accumulate loyalty points, all through its mobile app. Consumers are drawn to the convenient and user-friendly digital experience, while the company can refine its operations using the consumer data gathered by the app. Mixue has brought together their supply of ready made mixes and ingredients to help their many franchise stores, which also allows them to offer cheaper products. Such business models, with technology and supply chain at the centre, are much harder for traditional brands to replicate.

Market Catalysts: Innovation, Competition, and Cultural Tension

According to research by Credence Research, Malaysia’s bubble tea market was valued at USD 64.57 million in 2022 and is projected to grow at a 6.6% CAGR from 2024 to 2028. This surge reflects how the fast growth of Chinese beverage brands has injected new energy into the market and pushed local businesses to rethink how they operate.

These brands have become real ‘market catalysts’. Their active marketing has encouraged more people to try freshly made tea and coffee, which has helped the whole market grow. At the same time, they have brought in more advanced digital systems. Many local brands are now following their lead by adding an app based ordering and membership systems to make things run more smoothly. In addition, the arrival of  these new brands has filled more commercial space and created jobs, from store staff to management roles.

However, this also brings challenges. The rise of chain stores and lifestyle coffee shops is directly competing with traditional kopitiams and small cafes. For example, research shows that in the PJ area the number of traditional kopitiams dropped from between 500-800 ten years ago to about 200 today, as modern cafés and branded chains expanded. Over time, smaller places that can’t give similar discounts and good value for money because of their size may see their customers slowly decrease.

A deeper concern is that related to the culture of the city. Some people fear that in the long run, the culture of Malaysia will be diluted  by the presence of like-style store layouts and products and that a significant aspect of the culture, the warm environment of existing coffee houses, will be erased. The owner of a traditional coffee house who was interviewed, commented, “People come to us, not for coffee but for a sense of community. That bond you can’t replicate!”.

However, whether such breakneck speed is sustainable remains to be seen. Most of these companies have capital to burn and can open new stores at a blistering pace. However, there is concern that there might be too many stores chasing too few people. Ultimately, the true test of these companies will come after the growth spurt has ended and they need to face challenges of retaining customers, supplying products that are in demand and operating profitably in a competitive environment.

How Young Malaysians Express Themselves Through Their Beverage Choices

In Malaysia's competitive beverage market, consumer behavior is complex. For many young people, the choice between a Chinese brand, a Kopitiam, or a local bubble tea shop is not just about flavor or cost. It is a form of self-expression.

“I pick Luckin Coffee partly because the app is easy, but it also feels modern and efficient,” says Chong Ee Lin, a student at Taylor's University. "Carrying that cup feels like being part of global, city life. Visiting a Kopitiam is different, it's local, familiar, and more about family or friends."

This kind of consumption behaviour shows two different identity positionings. Chinese brands like Luckin Coffee and Heytea, with their tech driven experience and minimalist design, have become symbols of being ‘international’ and ‘modern’ for many young people. Choosing these brands is a way to show that they are part of a global, forward looking generation.

On the other hand , for many Malaysian Chinese youth, ‘Guochao’ brands like Chagee offer a different kind of identity. The Chinese inspired aesthetics in their products and store designs give young people a way to connect with, or explore, their cultural roots, satisfying a curiosity about their unique heritage.

Therefore, the street beverage competition has gone beyond business itself and evolved into an expression of different lifestyles and cultural symbols among young people. Through a single cup in their hand, they switch between “global itself” and their “local itself”, perfectly capturing the complex, multi-layered identities of the globalised generation.

The Road Ahead: Toward a Hybrid and Symbiotic Market Future

Chinese beverage brands have changed Malaysia's beverage market for good. They have brought not just new drinks but new ways of running  businesses, from faster operations to smarter  digital tools, and creative marketing and branding. This has pushed everyone , from traditional Kopitiams to new local brands, to evolve.

Looking ahead, there won’t be a single winning model . The market is likely to become more mixed and connected. Some local cafes will focus on community, local flavors, and their own stories. The most successful brands, whether international and local, will combine efficiency with local cultural understanding. For example, Malaysian chains like Tealive and ZUS Coffee have already adopted app-based ordering systems while continuing to highlight local flavours such as gula melaka, pandan, and tarik-inspired drinks, showing how technological convenience and cultural familiarity can work hand in hand. The future seems to be a hybrid market, where different styles can grow and thrive together.