Mixue Bingcheng, the ubiquitous Chinese beverage behemoth known for its low prices and viral mascot, is discovering that its domestic formula for dominance does not translate easily to developed markets. After adding over 14,000 stores in a single year within China, the brand's ambitious international expansion has hit a significant roadblock. In Japan, where the company once touted a goal of opening 1,000 stores by 2028, the reality is stark: as of mid-2026, only four locations remain operational.
This contraction is not isolated to Tokyo. Recent financial data reveals that Mixue’s total overseas store count dropped by nearly 9% in 2025, marking the first net contraction since the brand began its global push. While domestic growth continues at a brisk pace of over 33%, the international market, once hailed as a critical 'second growth curve,' is facing a necessary retrenchment. The struggle highlights the limitations of a business model built on razor-thin margins and massive scale when confronted with high-cost environments.
At home, Mixue is less a tea retailer and more a supply chain powerhouse. Nearly 98% of its revenue is derived from selling ingredients, packaging, and equipment to franchisees rather than selling drinks to consumers. This 'flywheel' effect—where more stores lead to higher procurement volume and lower costs—requires a critical density that the brand has failed to achieve in Japan and the United States. Without that scale, the logistics and import costs of Chinese ingredients become a liability rather than an advantage.
In Japan and Hong Kong, the 'low-price' weapon has become a double-edged sword. High labor costs and astronomical commercial rents make the high-volume requirement for profitability nearly impossible to meet. For instance, in high-traffic areas like Hong Kong, a shop would need to sell tens of thousands of cups of lemonade just to cover the monthly rent. When coupled with a mature beverage market where consumers already have access to high-quality, low-cost options in every convenience store, Mixue’s high-sugar, budget-tier offerings struggle to generate repeat business.
Beyond economics, regulatory and cultural hurdles are mounting. From food safety citations in Japan to intellectual property disputes and geopolitical pushback in Southeast Asia, the brand is navigating a minefield of local sensitivities. In Malaysia, local authorities have even begun reviewing foreign investment guidelines to prevent the rapid expansion of brands like Mixue from suffocating local businesses. This shift suggests that the era of 'growth at all costs' is ending, replaced by a strategy focused on unit-level sustainability and localized adaptation.
In response to these headwinds, Mixue’s parent group is shifting its focus to its coffee brand, Lucky Cup. By targeting Southeast Asian countries with pre-existing coffee cultures, the group hopes to replicate its supply chain efficiency in a market segment that requires less consumer 'education' than milk tea. The pivot to coffee represents a tactical acknowledgment that the 'Snow King' mascot alone cannot conquer markets that prioritize quality and compliance over sheer affordability.