foods

Article
College Students’ Preferences for Milk Tea: Results from a
Choice Experiment
Xi Lin 1 , Jiangfan Yang 1 and Qian Chen 2, *

1 College of Management and Economics, Fujian Agriculture and Forestry University, Fuzhou 350002, China;
000q25003@fafu.edu.cn (J.Y.)
2 College of Marxism, Fujian Agriculture and Forestry University, Fuzhou 350002, China
* Correspondence: 000q271007@fafu.edu.cn

Abstract: (1) Background: Although China is one of the largest tea-producing countries in the world,
the Chinese tea industry is facing a decline in profits. However, an explosive market, namely milk tea,
has garnered the attention of certain famous tea companies, several of which have launched milk tea
products through sub-branding or co-branding. However, there is a scarce amount of literature on
consumers’ attitudes toward these marketing strategies of the milk tea market. (2) Methods: Utilizing
the choice experiment (CE) approach, the aim of this study was to explore consumer preferences for
milk tea and investigate consumers’ socio-demographic characteristics regarding the preference for
milk tea. (3) Results: Firstly, although consumers show positive attitudes toward tea bases that come
from famous tea companies, they barely pay attention to the types of tea bases of milk tea products.
As for ingredients, consumers show significantly negative attitudes toward non-dairy creamers when
compared with fruit bases. Moreover, new brands could undermine consumers’ evaluations of milk
tea. Secondly, education, the weekly frequency of drinking milk tea, and monthly allowance have a
significant influence on consumer preferences. (4) Conclusions: Tea bases from famous tea companies
can enhance consumer utility and promote consumer preference for milk tea. Thus, famous tea
companies could seek cooperation with milk tea manufacturers, which would be a win–win strategy
for both sides. On the other hand, tea companies should make use of their established reputations
to gain consumers in the milk tea market, and co-branding or sub-branding strategies could be
cost-effective methods to achieve this goal in the highly competitive milk tea market.

Citation: Lin, X.; Yang, J.; Chen, Q.

Keywords: milk tea; tea enterprises; choice experiment; market analysis
College Students’ Preferences for
Milk Tea: Results from a Choice
Experiment. Foods 2023, 12, 1491.
https://doi.org/10.3390/
1. Introduction
foods12071491
Tea is a significant cash crop in China [1]. Not only was the tradition of drinking tea
Academic Editor: Koushik Adhikari
developed in ancient China [2] but China also tops the list among tea-producing countries
Received: 22 February 2023 in the world, ranking higher than India and Kenya [3]. According to the China Statistical
Revised: 23 March 2023 Yearbook, complied by National Bureau of Statistics of China, annual tea production in
Accepted: 27 March 2023 China amounted to 302.6 million tons in 2021 [4]. While tea production is on a steady
Published: 1 April 2023 rise, Chen et al. (2018) mentioned that consumer price index declined in tea purchases,
which aligns with the data published in the China Statistical Yearbooks from 2017 to 2021.
However, the producer price index for tea simultaneously kept growing [4,5]. In other
words, this phenomenon indicates a higher cost of tea production and a lower price of
Copyright: © 2023 by the authors. tea in the markets. Hei et al. (2022) pointed out a decline in the percentage of earnings
Licensee MDPI, Basel, Switzerland.
from tea over CNY 10,000 [6]. As the second largest producer of tea, India is also facing
This article is an open access article
a similar challenge as half of their tea produce is sold below the cost of production [7].
distributed under the terms and
Moreover, the outbreak of COVID-19 pandemic has adversely affected the global markets
conditions of the Creative Commons
and changed people’s consumption trends, resulting in consumers spending more on
Attribution (CC BY) license (https://
daily necessities and medicines rather than certain non-essential goods, such as tea [6,8,9].
creativecommons.org/licenses/by/
4.0/).
Meanwhile, some studies have opined that the current Chinese tea industry has failed

Foods 2023, 12, 1491. https://doi.org/10.3390/foods12071491 https://www.mdpi.com/journal/foods

Foods 2023, 12, 1491 2 of 16

to attract the group that is rapidly increasing in size and purchasing power in tea and
beverage markets [5,6,10], namely, individuals born between 1996 and 2012, also known
as Generation Z (Gen Z) [11–13]. According to Tanui et al. (2012), it is crucial for tea
companies to diversify products in other market segments to attract new consumers [14].
One promising strategy is to develop a new tea-based market beyond traditional method
of making tea by soaking tea leaves in boiling water [15].
A recent study on the beverage market has found that milk tea is a popular product
most frequently mentioned by consumers [16]. Milk tea is a tea-based beverage invented
in the Taiwan Province in 1984 [17]. Since then, the milk tea business has been growing
rapidly in China [13]. It was estimated that the milk tea market amounted to more than CNY
140.5 billion in sales in 2019, highlighting a significant expansion [13]. The China Chain
Store and Franchise Association issued a report on the milk tea market in 2022, naming
milk tea as a new type of beverage, in order to separate this new tea-based beverage from
the traditional form of tea. This report highlights that the explosive milk tea market helped
to increase the sales volume of tea [18]. The key to improving profits for tea companies is to
develop products that are able to yield a high-added value [19,20]. The rapidly expanding
milk tea market presents tea enterprises with many new opportunities, rather than solely
needing to depend on the sale of tea leaves [18]. In the beer industry, co-branding can
be a cost-effective marketing strategy in a highly competitive mature industry [21]. A
recent report points out that several famous tea companies have launched their milk tea
products via sub-branding or co-branding. For example, Nayuki, a brand founded in 2015,
which now ranks second in the Chinese milk tea market with a market share of 18.9%,
created a co-branding product that combines tea with milk or fruit in July 2022. Another
famous tea enterprise, Chunlun, established a subsidiary milk tea brand to attract young
consumers [22]. As these strategies are still in their infancy, the question remains as to
whether these marketing strategies benefit tea companies in the highly competitive milk
tea market.
Previous studies on milk tea have mainly concentrated on two aspects. The first is
related to the physiological aspects of milk tea: for example, how nutrients in milk tea are
absorbed by human bodies [23,24]; whether milk tea poses health risks, such as obesity,
due to its sweetness [25,26]; or questions concerning caffeine intake from milk tea [27].
The second is focused on the factors that can influence consumers’ purchase decisions
when they buy milk tea. A study conducted in 2019 mentioned that Chinese consumers’
purchase decisions were influenced by price, the pursuit of a pleasant state of mind, and
novel experiences [28]. Van Dung HA (2020) used exploratory factor analysis (EFA) and
the multivariate regression model to analyze the seven determinants of milk tea selection,
whose results showed that shop location had the most significant impact on milk tea selec-
tion, while customer service had the smallest impact [29]. De Guzman et al.’s (2020) study
of the influence of marketing strategies of milk tea shops also drew a similar conclusion
wherein they found that consumers pay more attention to the location of milk tea shops and
price [30]. Lee et al. (2021) also mentioned that milk tea price-setting is the most significant
factor affecting consumers’ psychological purchase decisions [31]. Ong et al. (2021) studied
consumer preference for milk tea through a conjoint analysis approach and found that the
internal attributes of milk tea, such as pearl size, sugar level, the amount of ice, the type of
drink, and the price, influenced consumer preferences [32]. Another study by Istijanto et al.
(2021) found taste, texture, packing, store, price, health, trend and brand playing important
roles in explaining the purchasing behaviors of Gen Z consumers [33]. It can be concluded
from above that attributes of milk tea can influence consumers’ preferences regarding milk
tea. However, Gao et al. (2019) also pointed out that the attributes of products are not the
only features to exert influence on consumer preferences; they are also influenced by the
socio-demographic characteristics of the consumers [34].
Of all the internal attributes of milk tea, the tea base itself was usually ignored by
consumers. However, with the diversification of milk tea products and tea companies’
co-branding strategies, the extrinsic characteristics, such as the type of tea or tea enterprises’
Foods 2023, 12, 1491 3 of 16

brands, as shown on menus, cause consumers to pay much more attention to the tea-based
aspects [22]. Nevertheless, there is little research on these factors. Lin et al. (2019) argued
that in order to prevent milk tea companies from substituting domestic high-priced teas
with low-priced imported teas, the Food and Drug Administration of Taiwan Province
issued a bulletin in 2016 stating that the origin of the tea leaves should appear on the
packaging of beverages [35]. This means that tea leaves themselves represent a part of
the reputation of milk tea products. However, it is rare for the literature to discuss how
this impacts consumers’ milk tea preferences, although some studies have proven that
brand awareness can influence consumers’ purchasing intentions [36–38]. A study on milk
tea in Malaysia revealed that brand awareness had a significant positive impact on brand
loyalty, which can be applied to gain a competitive advantage [39]. However, whether the
reputations of famous tea companies are relevant in the milk tea industry is open to debate.
The choice experiment (CE) method, an approach involving stated preferences used
to determine consumer preferences for certain products or services, has been adopted in
many recent studies on beverage products [33,40–42]. Consumer intention is driven by
multiple attributes, and the CE method is effective in measuring consumer preferences for
each attribute and interaction effect between various factors [34]. Caputo et al. (2022) states
that CE can be used to analyze consumers’ demands for novel products [43]. Even though
milk tea beverages have started providing information concerning tea leaf origin or tea
companies, no studies have examined how this information affects consumer preferences
for the tea-based aspect of milk tea. Therefore, this study applies the CE method to precisely
analyze consumer milk tea preferences.
All in all, the milk tea market is still developing rapidly and is highly competitive,
which makes it crucial for tea companies to understand how to implement new and
effective strategies to engage in the milk tea industry so as to reverse their falling profits
from traditional sales of tea. This study attempts to explore consumer milk tea preferences
through a CE method in order to help tea enterprises implement effective marketing
strategies to improve profits. In other words, the aim of this study is two-fold. Firstly,
it aims to determine the factors affecting consumer milk tea preferences, ranging from
attributes such as the origin of the tea leaves, types of tea base, and added ingredients to the
milk tea brands and the price. Secondly, it discusses how consumers’ socio-demographic
characteristics impact their milk tea preferences. The results of this study could be useful for
tea enterprises to understand young consumers and could help them make their marketing
strategies more effective.

2. Experimental Procedures and Data

2.1. Attribute Selection
Fujian plays a significant role in the Chinese tea industry, as the production of tea in
Fujian is the highest in all of China [4], and many famous tea brands have been established
in this province [44]. On the other hand, most people who live in Fujian are in the habit of
drinking tea, and are thus more sensitive to the extrinsic aspects of tea, which is conducive
to measuring consumers’ preferences more precisely. Thus, this research was conducted in
Fuzhou city, the provincial capital of Fujian Province.
The attributes examined in this study were obtained from real market research and
previous studies. When conducting market research on milk tea, our research team
recorded and analyzed the menus of famous milk tea shops in the Fujian Province, such as
CoCo, Gongcha, Alittle, Nayuki, and Heytea, which are the most popular brands across
China [22,32,45]. As milk tea consist of a tea base and other ingredients [46,47], attributes
were chosen based on those two categories and comprised the type of the tea base, the
origin of tea leaves, added ingredients, and the milk brand. Based on previous studies,
price appeared to be an important factor, so it was also studied in this research. All the
attributes are shown in Table 1.
 price appeared to be an important factor, so it was also studied in this research. All the
attributes are shown in Table 1.

Foods 2023, 12, 1491 Table 1. Product attributes and levels in the choice experiment. 4 of 16

Attributes Number of Levels Levels

None
Table 1. Product attributes and levels in the choice experiment.
Black tea
Type of tea base 4
Attributes Number of Levels Green tea
Levels
JasmineNonetea
Nonetea
Black
TeaType
leafoforigin
tea base 2 4
Green tea
Provided by famous tea company
Jasmine tea
Fruit
None
Tea leaf origin
Added ingredients 3 2
ProvidedFresh
by famousmilktea company
Non-dairy creamer
Fruit
Added ingredients 3 Established brand
Fresh milk
Milk tea brand 3 Non-dairy creamer
Subsidiary of famous tea brand
New brand
Established brand
Milk tea brand 3 Subsidiary of famous
CNY 11 per cup tea brand
New brand
Price 3 CNY 13 per cup
CNY 11 per cup
Price 3
CNY 16 per cup
CNY 13 per cup
CNY 16 per cup
Tea is generally classified into three groups based on fermentation level, namely
black Tea
tea,isgreen tea, and
generally oolong
classified teathree
into [48].groups
Studies on milk
based with green or
on fermentation black
level, tea date
namely blackback
to
tea, green tea, and oolong tea [48]. Studies on milk with green or black tea date back to oc-
1998 [49], but most of these were studies concerning the biochemical changes that
curred in green
1998 [49], but mostor of
black
theseteas
were with milkconcerning
studies [49,50]. How consumerschanges
the biochemical evaluatedthatthe different
occurred
in green
types of or
teablack
basesteas
inwith
milkmilk
tea [49,50].
has only How consumers
rarely evaluated the
been discussed different types
in previous of teaThis
studies.
bases provides
study in milk teaan has only rarely
example been tea
of milk discussed
productsin previous studies.
in the actual milkThis
teastudy provides
market, and we
an example of milk tea products in the actual milk tea market, and we
found that menus do not provide information about the types of tea base on all milk tea found that menus
do not provide
products (Figureinformation
1). In lineabout
with the
the types of tea base
real-world on all
market, wemilk
set tea products
“none” as a (Figure
category1). for
In line with the real-world market, we set “none” as a category for the “type
the “type of tea base” attribute in order to imitate real milk tea beverages without tea base of tea base”
attribute in order to imitate real milk tea beverages without tea base information. Moreover,
information. Moreover, jasmine tea is a unique reprocessed tea in Fuzhou, China, where
jasmine tea is a unique reprocessed tea in Fuzhou, China, where jasmine has been grown in
jasmine has been grown in large quantities since ancient times [51]. We added jasmine as
large quantities since ancient times [51]. We added jasmine as a tea base choice, since it can
abe
teaeasily
basefound
choice, since it can be easily found on the Fuzhou milk tea market.
on the Fuzhou milk tea market.

Figure 1. Examples of milk tea beverage menu in the realistic market.

Figure 1. Examples of milk tea beverage menu in the realistic market.
Foods 2023, 12, 1491 5 of 16

According to the literature, product quality depends on the quality investment of the
manufacturer and the supplier [52]. A famous brand is a symbol of high quality, which
may have a positive effect on consumers’ purchase decision [53]. Consumers’ preferences
and willingness to pay (WTP) for products are not only affected by the quality but also
by the product’s brand. Moreover, the brand image of a product is not only affected by
the producer’s image but also by the image of related suppliers, a phenomenon identified
as the “brand halo” effect by Xu et al. (2019) [52]. Liu et al. (2019) confirmed that tea
from famous tea companies is regarded as a guarantee of quality [54]. As the raw material
provider, it is necessary to explore whether the “brand halo” effect of tea companies exerts
any influence on milk tea beverages. Thus, we set two categories of tea leaves: tea leaves
provided by famous tea enterprises or “none”, i.e., no information.
Today, young consumers are adventurous and tend to try new tastes [55]. Most milk
tea recipes contain a tea base and milk, although other ingredients, such as fruit, are also
found in the current Chinese milk tea market [22,56]. Moreover, regular milk tea is made
up of a tea base and fresh milk or non-dairy creamer [32]. Non-dairy creamer may suit
some consumers with digestive issues, such as lactose intolerance [57], but health problems
caused by non-dairy creamer have impacted consumers’ purchasing decisions to such an
extent that milk tea manufactures have opted to use fresh milk in certain products [58].
As for the various brands of milk tea products, the future milk tea market is predicted
to bloom and continue to be competitive, and as such, there are various directions in
which brands can develop, such as implementing personalized branding [45]. Taking
the marketing strategies of realistic milk tea market into consideration, current brand
subsidiaries of famous tea brands and new brands are chosen as the different levels of
attribute. These branding tactics are shown in Table 1 and are studied in this paper.
As the majority of milk tea consumers are Gen Z, this means that they are much more
price conscious [33,59]. Price is one of the decisive factors that affect consumers’ purchasing
intentions [60]. To encourage or to curb the consumption of certain types of products,
effective subsides or taxes range from 10% to 20% [61]. Since the retail prices of milk tea are
cheap in the real-world market, we set a 20% rate to ensure that price changes could be
identified by respondents. In line with the real-world market, price was rounded up to the
nearest integer.

2.2. Experimental Design

The structure of the choice sets is vital to the accuracy of the CE method; therefore,
the designed choice sets should explain the variance of attributes to a significant extent
while minimizing random errors [62,63]. This study adopted an opt-out option designed to
imitate consumers’ purchase decisions in a realistic market, which can be seen in studies
using a non-hypothetical CE study. The opt-out option can make the research more
accurate [64,65]. In total, three options were provided for each selection (Figure 2). We
designed a virtual menu of milk tea beverages, tea base types were printed on the cups of
milk tea, and consumers were required to make a choice based on the provided ingredients
and other related information.
A full factorial design for choice sets amounts to a total of 216 (4 × 2 × 3 × 3 × 3)
factors, and choice sets grow exponentially for every two alternatives that are involved in
one selection. However, it is impossible to conduct a full factorial design research due to
limited funds and resources. On the other hand, a fractional factorial design is an improved
method that maintains the efficiency of research but reduces the number of choice sets [66].
Therefore, a D-optimal factorial design was adopted in this study and thirty-six choice sets
were generated, of which the D-efficiency and D-error were 97.16% and 0.06, respectively.
These thirty-six choice sets were randomly divided into nine blocks, and each block had
four choice scenarios. One version of the questionnaire consisted of a block of choice sets,
socio-demographic information, and subjective knowledge of milk tea. Each respondent
answered one of the nine versions of the questionnaire.
 Foods
oods 2023, 12, 2023, 12, 1491
1491 6 of 16 6 of 16

Neither Option A
nor Option B

Option A Option B Option C

Figure 2. An example
Figure ofexample
2. An a choice of
setain the questionnaire.
choice set in the questionnaire.

A full2.3. Data Collection

factorial design for choice sets amounts to a total of 216 (4 × 2 × 3 × 3 × 3) factors,
and choice setsMany growstudies
exponentially
stated thatfor every
the maintwoconsumers
alternativesofthatmilkareteainvolved in one Gen Z,
are the so-called
selection. defined
However, as itindividuals
is impossible bornto conduct
betweena1996 full factorial
and 2012design
[46,67],research
who are due to lim-
mostly students at
ited fundspresent.
and resources.
In this On the other
study, college hand, a fractional
students factorial
were chosen asdesign is an improved
the representative samples for
method thattwomaintains the efficiency
reasons. First, comparedofwith research but reduces
the limited allowancethe number
of students of choice
in highsets
school, most
[66]. Therefore,
Chinesea college
D-optimal factorial
students receive design was adopted
a monthly allowance in from
this their
studyparents,
and thirty-six
and they are able
choice setstowere
makegenerated,
their own of purchasing
which thedecisions.
D-efficiency Taking
and this into were
D-error account allows
97.16% andus0.06,
to investigate
consumer
respectively. These preferences moresets
thirty-six choice accurately. Second, the
were randomly CE method
divided into nineinvolves
blocks,multiple
and choices
each blockandhadcollege students
four choice have aOne
scenarios. better understanding
version of these complicated
of the questionnaire consisted ofquestionnaires.
a block
We conducted a face-to-face
of choice sets, socio-demographic information, questionnaire
and subjective survey in nine public
knowledge of milkuniversities
tea. Each located
respondent in answered
Fuzhou from one November to December
of the nine versions of the2022. Fifty respondents were randomly chosen
questionnaire.
in each university. Nine questionnaire version of this study were provided online, and
respondents were asked to fill in the questionnaire, which was accessed by scanning a
2.3. Data Collection
ManyQR code. stated that the main consumers of milk tea are the so-called Gen Z,
studies
Finally, we
defined as individuals invited
born a total
between of 450
1996 andstudents to participate
2012 [46,67], who areinmostly
our research.
students Weatset a “trap
question” in the questionnaires, according to the suggestion
present. In this study, college students were chosen as the representative samples for two by Wang et al. (2017). This
method was used to identify careless respondents [68]. The “trap question” was set as the
reasons. First, compared with the limited allowance of students in high school, most Chi-
following question: “Please select the ‘yellow’ option in the following four options.” The
nese college students receive a monthly allowance from their parents, and they are able to
questionnaire was not considered if any other color option was selected. Ultimately, we
make their own purchasing decisions. Taking this into account allows us to investigate
obtained a total number of 432 valid questionnaires (96.00%). All data were calculated
consumer preferences more accurately. Second, the CE method involves multiple choices
using Stata 15.0.
and college students have a better understanding of these complicated questionnaires.
We conducted
2.4. Modelsa face-to-face questionnaire survey in nine public universities located
in Fuzhou from November to December 2022. Fifty respondents were randomly chosen
The Lancaster consumer theory states that consumer utility is derived from the at-
in each university. Nine questionnaire version of this study were provided online, and
tributes of the product rather than the product itself [69]. Thus, consumer utility consists of
respondents were asked to fill in the questionnaire, which was accessed by scanning a QR
two parts, namely the observable representative and unobservable random error terms [70].
code.
This can be expressed in a mathematical equation as follows:
Finally, we invited a total of 450 students to participate in our research. We set a “trap
question” in the questionnaires, Unit = Vaccording to the suggestion by Wang et al. (2017). This
nit ( β n ) + ε nit = δ ( ASC ) + an ( Xi ) + γn (− Pi ) + ε nit (1)
method was used to identify careless respondents [68]. The “trap question” was set as the
followingwhere
question:
Unit“Please
is the select
utilitytheof ‘yellow’
individual option
n fromin the
thefollowing four options.”
given alternative Thechoice set
i of the
t; Vnit
questionnaire (βn )not
was is considered
the observable if any utility
otherwithcolorparameter
option was ; and εnitUltimately,
βnselected. represents we the random
obtained aerror.
totalThe observable
number of 432utility
valid derives from the(96.00%).
questionnaires attributesAllof the
datagiven calculatedi, which is
werealternative
using Stataexpressed
15.0. as the vector Xi . Pi is the expenditure on the alternative i. ASC reflects the “none”
Foods 2023, 12, 1491 7 of 16

option, where the value is 0, and the value being 1 indicates the selection of the designed
choice sets.
Among the logit models, the formation is determined through the hypothesis of the
random error distribution and heterogeneity [71]. The multinomial logit model is the
basic form of logit modeling, which assumes that the consumers have a homogeneous
preference for the product [40]. However, Gao et al. (2019) pointed out that consumers share
inconsistent preferences for the product in realistic markets, and the random parameter logit
(RPL) model can relax the hypothesis of consumers, which is consistent with reality [34].
Hence, the RPL model was adopted in this study to evaluate consumer preferences for
milk tea.
The main effects of the attributes in this study can be expressed by Equation (2).
Consumer utility is derived from the five chosen attributes in Table 1, “Tea”, “Types”,
“Ingredients” and “Brand” are the abbreviations of “Tea leaf origin”, “Type of tea base”,
“Added ingredients” and “Milk tea brand”, respectively (Table 1). Individual n chooses
the alternative i in the choice set n, which is expressed as nit. Additionally, the parameter
vectors β1 to β5n represent the degrees of the individual n’s preferences for the relative
attributes that are necessary to determine. The “Price” attribute is the metric variable, while
the other four attributes are nominal variables. “Types” and “Tea” attributes were coded
with the baseline category “none”, and the “fruit” and “established brand” categories were
used as the baselines of the “Brand” and “Ingredients” dummy variables.

Unit = ASC + β 1 Pricenit + β 2n Typesnit + β 3n Teanit + β 4n Ingredientsnit

(2)
+ β 5n Brandnit + ε nit

Individual n’s WTP for attribute x is estimated as Equation (3):

β nx
WTPn = − (3)
β np

where βnx represents the coefficient of the non-price attribute x and βnp is the coefficient of
the price attribute np.

3. Results
Of the respondents, around 61.34% were female, which is in line with many studies,
where female respondents slightly exceed male respondents [16,30,32]. Over 87% of par-
ticipants were junior college students or undergraduates, while postgraduates comprised
12.27%. As for the weekly frequency of drinking milk tea, only 39 (9.03%) respondents
drank milk tea more than four times a week, while most participants consumed milk tea no
more than once per week. This result is analogous to the study by Ong et al. (2021), which
found that most consumers drink milk tea less than three times a week, and those who
drink milk tea once a week account for the largest proportion [32]. In this study, the target
demographic was students, around 50% of whom were provided with a monthly allowance
between CNY 500 and 1499 and 31.94%received an allowance between CNY 1500 and 2499,
while only 14 people had a monthly allowance of more than CNY 3500 (Table 2).

3.1. Main Effects of the Attributes

The results of main effects of the attributes are shown in Table 3. Firstly, the coefficient
of price is statistically significant at the 1% level, which implies that participants show
negative attitudes towards price increases. We found that when compared with no infor-
mation, tea leaves supplied by famous tea enterprises enhanced the utility of consumers.
As to the types of tea bases, consumer preferences did not differ, which indicates that
consumers pay little attention to the types of tea bases in milk tea products. On the other
hand, the coefficient of non-dairy creamer is negative, which means that compared with
fruit, consumers show significantly negative attitudes toward non-dairy creamer; however,
there is no difference between fruit and fresh milk. Furthermore, the coefficient of a new
Foods 2023, 12, 1491 8 of 16

brand is significantly negative at the 5% level, which indicates that a milk tea product of
a new brand would reduce the utility of consumers—this also suggests that it is hard for
new brands to attract consumers in the milk tea market. All in all, the results correspond
to the proposition stated in the introduction that it would be beneficial for famous tea
enterprises to provide tea leaves for the milk tea industry, and this could be an effective
extrinsic characteristic regarding consumer milk tea preferences.
Table 2. Socio-demographic and economic characteristics of participants.

Variable Definitions Frequency (N = 432) Percentage

Gender Male 167 38.66%
Female 265 61.34%
Junior college student 176 40.74%
Education Undergraduate 203 46.99%
Postgraduate 53 12.27%
0–1 247 57.18%
Frequency of weekly 2–3 146 33.80%
drinking milk tea 4–5 27 6.25%
≥6 12 2.78%
Monthly allowance ≤500 59 13.66%
(CNY) 500–1499 201 46.53%
1500–2499 138 31.94%
2500–3499 20 4.63%
3500–4499 1 0.23%
4500–5499 3 0.69%
≥5000 10 2.31%

Table 3. Estimation of the main effects of attributes using the RPL model.

Variables Coefficients Std. Error p

ASC −5.133 0.622 0.000
Price −0.200 0.034 0.000
Provided by famous tea
0.225 0.102 0.028
enterprises
Random
Black tea 0.089 0.174 0.609
parameter
Green tea −0.053 0.186 0.777
means
Jasmine tea 0.083 0.150 0.580
Fresh milk 0.094 0.143 0.509
Non-dairy creamer −2.081 0.329 0.000
Subsidiary of famous tea brand 0.216 0.142 0.128
New brand −0.286 0.135 0.033
ASC 4.652 0.483 0.000
Provided by famous tea
0.366 0.311 0.239
enterprises
Random Black tea 1.276 0.346 0.000
parameter Green tea −0.055 0.427 0.897
distribution Jasmine tea 0.024 0.420 0.955
Fresh milk 1.698 0.288 0.000
Non-dairy creamer 2.355 0.394 0.000
Subsidiary of famous tea brand 0.695 0.344 0.043
New brand −0.532 0.394 0.177
Log-likelihood −1411.738
LR chi2 (7) 657.910

3.2. Main Effects of Socio-Demographic Interactions

That consumers have heterogeneous preferences for different products has been
confirmed by many studies [34,40]; thus, this section specifically determined the interaction
effects of attributes and the socio-demographic characteristics of participants. Results are
Foods 2023, 12, 1491 9 of 16

shown in Table 4. Education, the weekly frequency of drinking milk tea, and monthly
allowances all have a significant influence on consumer preferences. As seen in Table 4,
individuals with a higher education level display negative attitudes towards tea leaves
provided by famous tea companies. On the other hand, well-educated participants were
inclined to choose milk tea from subsidiaries of famous tea brands. Furthermore, these
attributes enhanced consumers’ utility if they drank milk tea multiple times a week, thus
indicating that the milk tea industry should continue to improve the attributes of milk
tea so as to maintain their existing consumers. With regards to the influence of monthly
allowance on the purchase of milk tea, students with higher monthly allowance preferred
milk tea made from tea leaves provided by famous enterprises, but a negative value was
found for black and green tea bases. The results also show a significant negative value for
non-dairy creamer, indicating that milk tea manufacturers should avoid using non-dairy
creamer when focusing on mid-range products [45].
Table 4. Estimation of the interaction effects of attributes with socio-demographic variables using
RPL models.

Variables Coefficients Std. Error p

ASC 0.698 1.412 0.621
Price −0.188 0.036 0.000
Provided by famous tea enterprises 0.292 0.500 0.559
Black tea 0.235 0.989 0.813
Green tea −0.021 0.914 0.981
Jasmine tea −0.374 0.715 0.601
Fresh milk −0.295 0.723 0.683
Non-dairy creamer 0.076 0.825 0.927
Subsidiary of famous tea brand 0.347 0.730 0.634
New brand −0.206 0.651 0.752
gender × ASC −0.812 0.674 0.228
gender × provided by famous tea
0.184 0.253 0.467
enterprises
gender × black tea 0.152 0.430 0.723
gender × green tea 0.018 0.442 0.967
gender × jasmine tea 0.459 0.358 0.199
gender × fresh milk 0.503 0.351 0.152
gender × non-dairy creamer −0.465 0.431 0.280
gender × subsidiary of famous tea
−0.538 0.353 0.128
brand
gender × new brand 0.033 0.311 0.916
education × provided by famous tea
Random −0.496 0.229 0.030
enterprises
parameter
education × black tea 0.068 0.345 0.844
means
education × green tea 0.508 0.402 0.206
education × jasmine tea 0.091 0.352 0.797
education × fresh milk −0.464 0.286 0.104
education × non-dairy creamer −0.404 0.343 0.238
education × subsidiary of famous tea
0.583 0.343 0.090
brand
education × new brand 0.225 0.236 0.341
education × ASC −0.723 0.598 0.227
frequency × ASC −1.083 0.426 0.011
frequency × provided by famous tea
0.011 0.139 0.938
enterprises
frequency × black tea 0.211 0.241 0.379
frequency × green tea 0.134 0.267 0.616
frequency × jasmine tea 0.056 0.211 0.792
frequency × fresh milk 0.196 0.208 0.347
frequency × non-dairy creamer 0.228 0.242 0.346
Foods 2023, 12, 1491 10 of 16

Table 4. Cont.

Variables Coefficients Std. Error p

frequency × subsidiary of famous tea
0.011 0.198 0.955
brand
frequency × new brand −0.187 0.180 0.299
allowance × ASC −0.491 0.303 0.105
allowance × provided by famous tea
0.228 0.124 0.065
enterprises
allowance × black tea −0.368 0.184 0.045
allowance × green tea −0.449 0.219 0.040
allowance × jasmine tea −0.175 0.179 0.326
allowance × fresh milk 0.026 0.168 0.875
allowance × non-dairy creamer −0.377 0.197 0.055
allowance × subsidiary of famous tea
−0.115 0.163 0.482
brand
allowance × new brand −0.074 0.142 0.601
ASC 4.431 0.463 0.000
Provided by famous tea enterprises 0.239 0.385 0.535
Black tea 1.256 0.334 0.000
Random Green tea 0.031 0.538 0.954
parameter Jasmine tea −0.027 0.481 0.955
distributions Fresh milk 1.661 0.288 0.000
Non-dairy creamer 2.229 0.371 0.000
Subsidiary of famous tea brand 0.672 0.368 0.068
New brand −0.477 0.487 0.327
Log-likelihood −1411.738
LR chi2 (7) 657.910
Note: “frequency” indicates frequency of weekly drinking milk tea; “allowance” indicates monthly allowance.

3.3. Consumer WTP in Terms of Attributes

Consumer WTP values for given attributes were also calculated and are shown in
Table 5. It can be seen that milk tea with non-dairy creamer has a strong negative value
for consumer milk tea preferences, which has the highest premium of CNY 10.40. Simi-
larly, young consumers also show negative attitudes towards milk tea from new brands,
involving a CNY 1.43 premium for the attribute. On the other hand, consumers prefer
tea leaves provided by famous tea enterprises, with the WTP values for the product at
about CNY 1.12. The results indicate that milk tea products without non-dairy creamer and
from established brands or their subsidiaries may have a positive influence on consumer
preferences, and that tea leaves provided by famous tea companies lead to higher WTP
values for the milk tea products.
Table 5. WTP for different levels of attributes.

Attributes RPL model

CI
Mean (CNY)
[5%, 95%]
Provided by famous tea enterprises 1.12 [0.09, 2.16]
Black tea 0.44 [−1.26, 2.15]
Green tea −0.26 [−2.09, 1.57]
Jasmine tea 0.41 [−1.05, 1.88]
Fresh milk 0.47 [−0.94, 1.88]
Non-dairy creamer −10.40 [−14.08, −6.72]
Subsidiary of famous tea brand 1.08 [−0.32, 2.49]
New brand −1.43 [−2.81, −0.05]
Foods 2023, 12, 1491 11 of 16

4. Discussion
Seeking new markets is of great significance for Chinese tea companies in pursuit
of profit growth [14,15]. The younger generations are the main consumers in the current
domestic beverage market and they are increasingly purchasing milk tea [18]. As such,
some tea enterprises have joined the milk tea industry in an attempt to attract these young
consumers [5,18]. Therefore, it is essential to understand the consumer preferences of this
young demographic regarding milk tea. The previous literature focused predominantly
on the internal attributes of milk tea, such as sugar level, the amount of ice, pearl size,
and so on [32]. However, this study placed emphasis on the tea-base part of milk tea and
undertook an in-depth examination of the influence of tea base types, and in particular, the
origins of tea leaves on consumer’s milk tea preferences. Ingredients and brands of milk
tea were also analyzed in this study to measure the utility of consumers.
In this study, respondents showed positive attitudes towards tea bases from famous
tea enterprises, which indicated that consumer utility enhanced through the use of tea
leaves from famous tea companies, and consumers also showed a willingness to pay a
higher price for such milk tea products. This result is in line with the study by Xu et al.
(2019), who stated that the supplier also has an effect on the brand image of the final
product, called the “brand halo” effect [52]. This is because tea leaves are an important
ingredient in milk tea, and when they originate from established tea companies, it can
promote milk tea products’ brand images and encourage purchasing behaviors. On the
other hand, many studies are concerned about functions or nutritional value of different
types of tea [35,48]. Several studies have examined the chemical functions and the taste of
milk tea products made with different types of tea [72,73]. Another study explored the color
and taste of milk tea made with large-leaf yellow tea [74]. In the traditional tea market, the
consumption of tea varies by tea type. [4]. However, in this study, participants rarely paid
attention to what type of tea is used to make the tea base when considering the purchase of
milk tea. This result was different from the consumption behaviors in the traditional tea
market [75], which implies that marketing strategies should focus on attributes other than
types of tea in order to attract younger consumers in the milk tea market.
Regarding the brand of the milk tea products, the results of this study show that
participants were reluctant to buy milk tea products from new brands. This result is similar
to the study by Choi et al. (2019), who found that consumers were willing to pay a higher
price for a well-known global brand [16]. Similarly, a study conducted in the Malaysian
milk tea market found that brands had a significant effect on consumers’ purchasing
intentions for milk tea [76]. According to Jin et al. (2013), a brand serves as a way to build
consumers’ recognition of certain products [77]. The potential reason for the result is that
consumers tend to undermine the quality of a new brand [78]. Thus, it is not easy to enter
the competitive milk tea market by building a new brand.
Many ingredients added into milk tea can be found in the current Chinese milk tea
market [22]. We chose the most popular ingredients in this study, namely fresh milk,
fruit, and non-dairy creamer, and our results show that consumers’ evaluation of non-
dairy creamer is negative. A possible reason for this may be the food scandals related to
non-dairy creamer in China which have caused health concerns among consumers [58].
Aside from this, there is no statistical significance between fresh milk and fruit in this
study; however, this result is the opposite of the results of Ong et al. (2021), who found
that people preferred fresh milk to fruit in milk tea [32]. These inconsistent findings
are considered to be a consequence of different eating habits in different countries. In
conclusion, manufacturers should use fresh milk or fruit instead of non-dairy creamer to
encourage consumers’ purchasing intentions.
Taking the socio-demographics of participants into consideration, we found that
consumers with higher levels of income are more inclined to choose milk tea with a tea base
made from tea leaves provided by famous enterprises, but they are reluctant to purchase
milk tea that provides information about the type of tea used. According to Wang et al.
(2019), one of the factors that influences Chinese consumers’ purchasing intentions when
Foods 2023, 12, 1491 12 of 16

buying tea drinks is that they tend to pursue novel experiences [28]. This indicates that
young consumers seem to show negative attitudes towards traditional attributes of a new
product. Moreover, consumers with higher education levels tend to purchase milk tea
from subsidiaries of famous tea brands, and this indicates that famous tea enterprises
should use sub-branding strategies to expand into the new milk tea market. As for other
socio-demographic variables, no significant interactions with milk tea were found in other
studies, and hence they are not included in this study.

4.1. Practical Applications

Many studies have suggested that tea enterprises should start pilot development
projects in order to revive the tea industry [4–6]. However, few talk about what projects
are suitable for tea companies. The boom in the milk tea market has attracted several tea
enterprises. According to results of this study, tea bases from famous tea companies can
enhance consumers’ utility and promote consumer preference for milk tea products. Thus,
famous tea enterprises could seek cooperation with milk tea manufacturers, which is a win–
win strategy for both parties. However, there are many players in the milk tea market who
provide consumers with far more choices than they need, which means that new brands
do not have many good opportunities to enter the milk tea market. To be specific, tea
companies should make use of their established reputations to attract consumers in the milk
tea market, and co-branding or sub-branding strategies are the cost-effective methods that
can be employed to achieve this goal. On the other hand, our study found that consumers
rarely pay attention to the types of tea in the milk tea products. Similarly, Yang et al. (2011)
mentioned that the Chinese tea industry is facing a dilemma, in that they have famous
tea but do not have famous brands [79]. This implies that the marketing strategies of tea
companies should be focused on brand establishment rather than developing famous types
of tea. Moreover, since customers give more importance to the ingredients of milk tea
due to concerns about non-dairy creamer, marketers can highlight the natural ingredients
(i.e., fresh milk and fruits) to attract more consumers.

4.2. Study Limitations

The limitations and future research directions of this study are as follows. Firstly,
this study places more emphasis on the attributes that are relative to the aspects of tea.
However, as a type of novel drink, milk tea is now undergoing rapid changes in terms of
taste, packing, texture, and so on, which also play important roles in explaining consumer’s
milk tea preferences. These were not explored in this research. Although types of tea
base seem to have no influence on consumers’ purchasing intentions, which we attempted
to explain through their pursuit of novel experiences, in future research, it will still be
necessary to analyze why young consumers pay no attention to tea types when they
purchase milk tea, especially in a country that has a long history of drinking tea and a
highly developed tea culture.
Secondly, a study on the current brands in Chinese milk tea market found that brands
should target consumers according to their income level [45]. Although we discussed the
impacts of socio-demographic characteristics on consumer preferences for milk tea in this
study, it would be worthwhile to delve into marketing strategies that are more relevant to
the target consumers and brand positioning.

5. Conclusions
This study demonstrates that tea bases made with tea leaves provided by famous tea
enterprises enhance consumer utility when compared with those made with tea leaves
from unknown suppliers. Moreover, the “non-dairy creamer” coefficient is negative, which
means that compared with fruit, consumers show significant negative attitudes to non-
dairy creamer and are reluctant to choose milk tea with non-dairy creamer. Furthermore,
the “new brand” coefficient is significantly negative at the 5% level, which indicates that a
milk tea product of a new brand reduces the utility of consumers. It is important for tea
Foods 2023, 12, 1491 13 of 16

enterprises to establish a reputation before entering the milk tea market. In general, it is
beneficial for famous tea enterprises to provide tea leaves for the milk tea industry, as this
could be an effective extrinsic factor in consumer’s milk tea preferences.
Moreover, socio-demographic characteristics also influence milk tea purchase. Edu-
cation, weekly frequency of drinking milk tea, and monthly income all have a significant
influence on consumer preferences. Our results found that people with higher education
levels are inclined to choose milk tea from subsidiaries of famous tea brands. Regular
consumers display a higher opinion of milk tea products when attributes are provided.
Additionally, students with higher monthly allowances prefer milk tea made with tea
leaves provided by famous companies, but a negative value was found for black and green
tea bases. This study also shows significant negative values for non-dairy creamer.

Author Contributions: Conceptualization, X.L. and Q.C., methodology, X.L., investigation, X.L. and
Q.C., data curation, X.L., writing—original draft preparation, X.L., writing—review and editing, J.Y.
All authors have read and agreed to the published version of the manuscript.
Funding: This research was funded by the Major Project Funding for Social Science Research in
the Fujian Province Social Science Planning Center, grant number FJ2022JDZ034, and the Scientific
Research Foundation for Scholars, grant number GY-S22086.
Data Availability Statement: Data are contained within the article.
Acknowledgments: In this section, you can acknowledge any support given which is not covered by
the author contributions or funding sections. This may include administrative and technical support,
or donations in kind (e.g., materials used for experiments).
Conflicts of Interest: The authors declare no conflict of interest.

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