Mixue Franchisee: “The Lemonade We Sell Now Is Practically on the House!”

Summer’s sour sensation: The humble lemon is experiencing a dramatic price surge, leaving consumers and beverage businesses in a pickle.

Sources across the industry are reporting a triple-digit increase in lemon prices compared to last year. One grower in Sichuan province, a major lemon-producing region, noted that even smaller fruit is fetching over 9 yuan per pound, equivalent to roughly $1.24 USD. This spike is sending ripples throughout the supply chain, with some tea shop franchisees admitting the lemon-infused drinks they sell are essentially “on the house” due to soaring costs.

A Zesty Price Tag: One Lemon, 7.2 Yuan

Data from the National Agricultural Products Wholesale Market Price Information System paints a clear picture of the inflationary squeeze. Wholesale lemon prices began their ascent in April, reaching 12.86 yuan per kilogram in June – a 29.38% increase from April’s 9.94 yuan/kg. Compared to the 7.81 yuan/kg from the previous year, the surge represents a whopping 64.66% increase. On June 26th, spot prices in some wholesale markets briefly hit a high of 19 yuan/kg, with bulk transactions still commanding 17 yuan/kg.

Source: National Agricultural Products Wholesale Market Price Information System

The impact is palpable at the retail level. Reports from a fruit market in Sichuan reveal individual lemons selling for 12 yuan each. One purchase by a reporter cost a hefty 7.2 yuan for a single piece of fruit.

The fruit shop owner explained this price trajectory compared to previous batches, and the difficulty of sourcing both medium and small-sized lemons. The escalating cost has the owner considering whether to increase stock.

A 7.2 yuan lemon. Source: Cai Lian News reporter photo.

What’s fueling this citrus surge? Industry insiders cite a perfect storm of factors. Increased demand, especially during prime buying season, is a key driver. Significant export volumes from key regions, like An’yue, are also contributing. Production yields in the past two years may have also fallen.

A collapse of the lemon crop in Turkey has also placed upward pressure on prices, and hoarding, which may also be playing a part in the market’s behavior.

The demand side is equally significant. As temperatures rise in May and June, demand for lemon-based drinks, particularly in tea shops, escalates, further driving up prices.

Beverage Chains: Caught Between a Lemon and a Hard Place

The rising cost of lemons has put pressure on beverage chains. A franchisee of a major low-cost tea chain reported that lemon prices have skyrocketed, with a box now costing over 200 yuan, compared to around 130 yuan just a few months ago.

A report from another franchisee depicts the dire situation, noting lemons are currently priced nearing 10 yuan per pound. The cost increase now makes selling lemon-infused drinks a loss-making enterprise.

Franchisees are also facing constraints. Increasing prices is not an option as the company does not allow it. Nor is removing lemonade from the menu.

The chain has a sizeable lemon purchasing program. In 2021, the company bought around 50,000 tons of lemons from key supply areas. According to the latest prospectus, the company’s lemon purchases reached 115,000 tons in 2023. The main supply locations were in the regions of, which account for around 30% and 20% of the national lemon crop.

An insider in the company mentioned that, similar to all other food products, it adjusts its supply according to market prices and strives to control the price of lemons.

One chain insider stated that the company is not adjusting price.

Another franchisee of a competing chain expressed his worries over the increasing costs, but has not increased prices on lemon tea drinks, which remain priced at 6 yuan per cup. Prices are unlikely to increase, as the franchisee reports he does not have the right to do so.

As of the latest reports, lemon-based drinks in several brands including the above have yet to increase their prices.

Source: Cai Lian News reporter photo

With lemon prices remaining high throughout the summer, industry observers are closely watching the upcoming harvest season, which is expected in September and October. Experts anticipate prices will remain elevated in the near term. A significant drop in price is unlikely for this year.