What Blew Up the Bubble: Inside the East Asian Tapioca Market

Tapioca Pearl

Taiwan

Japan

South Korea

Emerging Market Opportunities

Published Jan 25, 2021

While a decrease in Taiwanese Tapioca exports for 2019-2020 may seem to indicate a declining trend, the drop can be more reasonably construed as a sign of imports starting to normalize after the sudden jump in imports from major consumption markets in East Asia during 2018-2019.

The largest tapioca exporting country in the world, Taiwan’s exports of Tapioca decreased by 36% in 2020, recording at USD 65 million compared to the export value of USD 102 million in 2019. Taiwan’s biggest export markets are the United States, Japan, and South Korea, which saw a YoY growth rate of 21%, -68%, and -9% respectively.

While the numbers may seem to indicate a declining trend, it is important to note how the import market for Tapioca and starch substitutes blew up during 2018-2019 especially for Japan and South Korea. Worldwide imports of Tapioca and substitute products increased by 80% from 2018 to 2019, and 636% and 284% respectively for Japan and South Korea during the same period (value). Exports for Taiwanese Tapioca consequently rose by 136% in terms of value. Thus the drop can be more reasonably construed as a sign of imports starting to normalize after the sudden jump.

Data Source: ITC Trade Map

The 2019 Bubble Tea Craze of East Asia

In addition to the consistent upward trend of tapioca imports, the sudden increase in consumption during 2018-2019 is largely attributable to the bubble tea craze that swept South Korea and Japan. Japan’s imports of tapioca surged during this time as it became a recurring trend to post pictures of various boba drinks on social media channels, most notably instagram.

In South Korea, the introduction of the “black sugar” bubble tea substantially boosted overall sales for boba drinks and spurred interest in novel and unique recipes as well as Taiwanese bubble tea chains such as The Alley and Tiger Sugar. The Tiger Sugar store located in the Hongdae region, a congregating spot for younger shoppers, even recorded a monthly revenue of around USD 363K (KRW 400 million).

Data Source: ITC Trade Map

Growing Chinese Demand for Bubble Tea

China’s market for “newer” forms of tea such as milk tea, fruit tea, and tapioca milk tea is growing, and is estimated to be a USD 15.8 billion market in 2020. The number of consumers in China are approximated at 340 million, 70% of whom were born in the late 90s and early 2000s, setting the scope for the target demographic. The consumption of bubble tea specifically has grown by five times its size from when boba was first introduced from Taiwan in 1997. And while China is currently still catching up with other major import markets such as Japan, South Korea, and the US, it is regarded as one of the most promising growing markets.