China's Xiang Piao Piao makes biggest overseas bet with Thailand plant

by LI Ye

Xiang Piao Piao Food Co., Ltd., a Chinese brand once known for its instant milk tea sold in cups, is making its biggest overseas bet yet as slowing growth at home pushes it to seek new demand in Southeast Asia.

The company said it would build a ready-to-drink beverage plant in Thailand with total investment of US$38 million. Construction is due to begin in May, and the facility will serve as an export hub for mainland Southeast Asia and the wider regional market.

The move marks the company's largest overseas investment to date and underscores a deeper strategic shift for a legacy consumer brand trying to keep pace with China's fast-changing tea market. Founded in 2005 and listed in 2017, Xiang Piao Piao rose to prominence on instant milk tea, but the rise of freshly made tea chains has steadily eroded demand for the category, forcing the company to pivot towards ready-to-drink products.

In the first half of 2025, ready-to-drink products contributed more than 58% of revenue, overtaking instant milk tea for the first time. The shift, however, has yet to deliver a broader turnaround. In 2024, revenue fell 9.32% and net profit attributable to shareholders dropped 9.67% from a year earlier. For 2025, the company expects net profit of 102 million yuan to 125 million yuan, down 50.59% to 59.68% year on year, and revenue of about 2.927 billion yuan, down about 10.95%.

Exports, by contrast, have become one of the few areas still showing momentum. In the first quarter of 2025, export sales were the only channel to record year-on-year growth. Public data for the first three quarters showed export-channel sales jumping 93.23%, making exports the company’s fastest-growing business line.

Until now, however, Xiang Piao Piao has relied mainly on a conventional export model, which the company has said is no longer fit for its overseas expansion. Under that approach, its products were sold largely to overseas Chinese communities, functioning more as a source of nostalgia than a brand with broad local appeal.

LIN Yue, a management consultant, told Jiemian News that the model left the company acting more like a supplier than a consumer brand, relying heavily on local distributors and limiting its ability to build brand recognition, manage channels closely or collect direct market feedback.

The company said it would focus its overseas push on premium fruit tea sold in transparent takeaway-style cups, using tropical flavors, real juice, low-sugar, zero-fat recipes and "made in Thailand" branding to distinguish itself from bottled drink rivals. It also plans to use Thailand’s tropical fruit supply to stabilize sourcing and costs.

The rationale for building in Thailand goes beyond market expansion. Local production would give Xiang Piao Piao access to preferential regional trade treatment, helping lower distribution costs versus shipping finished goods from China, while also allowing tighter quality control.

But the heavy-asset approach carries risks. The company had 2.485 billion yuan in cash at the end of 2024, but net cash flow from operating activities fell 30.89% that year, suggesting weakening cash generation just as profits come under pressure.

The bigger question is whether its products can gain enough traction with local consumers.

Chinese tea chains such as Mixue and Chagee have already helped expand milk tea consumption across Southeast Asia, but the region is far from a single market. In Thailand, consumers are showing greater interest in tea quality and health positioning; in Malaysia, reduced sugar is a bigger consideration; and in Indonesia, lower-priced sweet milk tea still dominates, according to Ries Strategy Consulting.

That means Xiang Piao Piao is unlikely to find a one-size-fits-all formula across the region. It will be competing not only with global beverage giants such as Coca-Cola and PepsiCo, but also with entrenched local brands and a growing wave of Chinese tea and drinks chains expanding across Southeast Asia.

For Xiang Piao Piao, the Thailand project is a test of more than its overseas strategy. It will show whether a legacy Chinese consumer brand can still carve out space in a Southeast Asian drinks market that is crowded, competitive and highly localized.