Tea-conomics: thoughts on the Washington boba market

As a self-proclaimed boba connoisseur and lover of all things bubble tea, the rise in boba cafés around western Washington warms my tapioca-filled heart. What is boba? Boba, bubble tea, boba tea, and milk tea is a Taiwanese beverage often topped with tapioca, fruit jellies, custard, or foam. I am sipping on one as I write this blog post.

While some of my personal favorite boba shops resides in Federal Way, University of Washington’s “ave” boasts a different bubble tea store on basically every block. My sister, a UW student, says “you don’t have to look for boba to find boba.”

Just how, exactly, do these cafés manage to stay in business? Due to their close proximity, customers can easily check competing prices. Additionally, a limited number variations of bubble tea exist—how does one shop distinguish itself from others?

Perhaps this problem could be approached from a Hotelling perspective. Location and price matter. Again, these boba shops are so close together. I could stand in one and stare out the window at two competitors. To UW students, what’s another one block walk for better boba or better price?

In attempts to differentiate themselves, each bubble tea shop offers a kind of “specialty” or bonus in addition to their basic boba flavors. For example, some shops have started to offer alternative milks, while others serve boba to wash down fried chicken or fresh bao. Some trendy bubble tea stores even sell their own merchandise. Most shops have relied on aesthetically pleasing ambiance in order to advertise via social media posts.

While the boba market isn’t necessarily perfect competition, the ave presents an interesting study of supply, demand, and firms’ behaviors. Are customers looking for a shop that accepts reusable cups? Do they want a drink they can post on Instagram? Do they want vegan options? The shop down the street offers soy milk, so should we offer almond milk and oat milk? That other store has t-shirts, should we sell stickers?

UW’s abundance of boba juxtaposes with UPS’s relative lack of local bubble tea locations. Shops within a short drive enjoy an oligopoly of UPS students’ boba consumption. What’s a better study snack than a lightly caffeinated, chewable beverage? Perhaps in the future, Loggers will revel in the vast selection of bubble tea currently enjoyed by our neighbors up north.

About Rachel Kadoshima

Rachel is a senior economics and French language student

One Reply to “Tea-conomics: thoughts on the Washington boba market”

  1. Seems like the UW milk tea market is saturated fat despite all the dairy alternatives…when will the boba bubble burst?

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