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Flood of bubble tea competition for Chatime franchise

Flood of bubble tea competition for Chatime franchise

Cambodian operations of Taiwanese bubble tea chain Chatime have felt the impact of increased competition, with the local franchise holder projecting slower growth this year in a market saturated by a wave of similar beverage brands.

Lim Nira, CEO of Brand Management, which holds the franchise for Chatime in Cambodia, said yesterday that the chain’s growth in the Kingdom peaked in 2013, but has slowed during the last four years on increased competition from other international chains entering the market.

“The market is now saturated,” he said.“Our business is still stable because our sales have not declined. There is still growth, it is just not as strong as before.”

He added that as other international franchises have flooded Cambodia, offering nearly identical products in a limited market, there has been a decline in demand to open new Chatime branches.

While Nira declined to disclose the company’s revenue figures, he confirmed that Chatime’s footprint has shrunk from 19 outlets in 2015 to 16 this year.

“But Chatime will manage to survive because we have a client base that knows our brand very well,” he said, adding that his customers tend to be bubble tea enthusiasts below the age of 30.

Phnom Penh has emerged as a battleground for coffee and tea franchises, with Chatime going head to head with other Taiwanese bubble tea chains, such as Dakasi and Koi Café.

The competition has already claimed casualties. Last June, Cambodia-based Brown Coffee closed all five locations of its Taiwanese bubble tea franchise Gong Cha claiming that profits had underperformed. Rival chain ShareTea has also closed locations in the capital.

In addition to bubble tea, consumers have a vast variety of beverage choices that include such name brands as the UK’s Costa Coffee, Australia’s Gloria Jean’s and American giant Starbucks.

However, a new emerging player is Thailand’s Café Amazon which has aggressively rolled out 34 branch stores as of the end of March, becoming one of Cambodia’s newest and most popular coffee chains.

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