Tea chain Chagee sticking to its high prices despite sales plunge

Tea maker Chagee Holdings is holding firm to a strategy of premium products at high prices, despite a plunge in sales and profit from consumers flocking to other chains offering beverages for a third of the price.

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The freshly-brewed-tea chain has largely remained on the sidelines as domestic peers such as the Luckin Coffee chain and bubble tea maker Mixue Group partnered with China’s tech giants, doling out subsidies to provide ultra cheap drinks through online orders in 2025.

“We haven’t been fully engaged in the price wars,” Chagee co-founder Shang Xiangmin said in an interview earlier this week at his Shanghai headquarters. “Price wars may be a way to compete but we want to stick to our long-term strategy to build a premium brand.”

The strategy is now being severely tested as rivals’ prices undercut the tea chain’s business.

Chagee’s second-quarter sales growth slowed to 10 per cent from 35 per cent in the previous period, while adjusted operating income dropped 10 per cent compared with double-digit gains in the first quarter.