A significant shift is underway in the freshly made beverage sector as tea and coffee concepts merge to accelerate market growth. According to a recent research report from Guotai Haitong Securities Co., Ltd., integrating coffee offerings into existing tea shop locations presents a lower-risk expansion strategy compared to launching independent coffee brands, a move that can optimize store-level economics. This trend of tea-coffee fusion is poised to reshape the competitive dynamics of the entire freshly made beverage industry.

Guotai Haitong's analysis highlights the strategic logic behind this convergence. The growth rate of the freshly made tea market is decelerating, while the freshly ground coffee segment still benefits from a "second-half dividend." Tea brands are therefore entering the coffee space to find new growth drivers. The two categories are complementary in terms of consumption occasions and time periods, and they share significant overlap in core operational capabilities. Launching coffee within existing tea stores, rather than creating a separate coffee brand, reduces trial-and-error costs and improves the single-store profit model. As this blending intensifies, the competitive landscape will be rewritten, with long-term success hinging on robust supply chain management and operational excellence.

The competition has evolved from the broad-based price wars of 2023-2024 to a focus on differentiation, consumer experience, and franchisee profitability. However, the mass entry of tea brands is expected to maintain structural price competition in the coffee sector over the medium term. Over the long run, tea brands are likely to capture a portion of the incremental "beverage-style coffee" market. Companies with strong supply chains and operational capabilities will ultimately prevail. Not every tea brand will successfully develop coffee as a second growth curve; a stable core business is a prerequisite, and the key lies in finding the right ecological niche and building differentiated barriers. For example, Luckin Coffee has a clear growth path centered on increasing market share, securing prime locations, and scaling its non-coffee product lineup.

The report underscores that category expansion in chain retail is primarily about building consumer mindshare, systemic organizational efficiency, and unique competitive moats. Different business formats have natural expansion limits based on their competitive factors. The difficulty of expanding into new categories is determined by the complexity of technology and operations, as well as the intensity of competition. The service industry prioritizes on-site delivery efficiency, while the retail sector focuses on merchandise organization. Category expansion should not be about adding more for its own sake, but rather about improving systemic efficiency, achieving economies of scale, enhancing metrics like revenue per square foot and per employee, and strengthening the stability of the single-store model. Location-specific strategies are equally important. For instance, in Japan's high-density urban environment, 7-Eleven evolved its convenience store system around fresh food, daily delivery, single-item management, and community services. In contrast, China's market features stronger regional disparities and channel stratification, with differing consumption habits between high-tier and low-tier cities. Instant retail, food delivery, community group buying, discount stores, and other formats all compete for consumers' near-field needs. Consequently, Chinese companies must leverage their own resources and competitive advantages to select unique ecological niches in different market tiers, honing their strengths to efficiently meet the ever-changing demands of consumers.

Key risks include potential errors in market space and structure estimates, store openings failing to meet expectations, oversight risks in franchise management, and intensifying industry competition.