Three Trends in Chinese Beverages

Delivery

This report comes in PPT.

Key Findings

A slowed down growth rate is expected for the soft drinks market in 2020

Overall, soft drinks is estimated to record a low single-digit off-trade value growth rate in 2020. Nationwide lockdowns, home seclusion, and the cancellation of social and festival gatherings significantly impact sales in the on-trade channel. Pandemic effects also drag down the whole year’s growth rate in crowded off-trade channels, such as supermarkets and hypermarkets, where soft drinks derives the bulk of sales, while accelerating growth in e-commerce.

Domestic carbonates brands on the rise with nostalgia trend

After being acquired or participating in joint ventures with international brands during the 1990s, local players gradually came back to the market with an “awakening your childhood memory” nostalgic brand image in the 2010s. The differentiation in key ingredients and flavours, as well as their strategies in channels and promotions contribute to the growth of these players.

Soft drinks players seek sensory experience innovations across beverages

Millennials are open to experimenting with new flavours and mouthfeel in soft drinks. Fruit flavours, alcoholic flavours, boiled water flavour, and carbonated mouthfeel are gaining popularity among the younger generation. Local players also enjoy first-mover advantage by leading in local innovations.

Erythritol popularised among sugar substitutes in soft drinks

Following the nationwide “Three Reduce, Three Health” initiative in advocating a healthy lifestyle, the sugar substitute used in soft drinks attracts consumers’ attention. Different from artificial sweeteners such as aspartame and Ace-K, the technical limitations and high cost have hindered greater application of erythritol in the past decades. The higher perceived safety over aspartame and Ace-K, zero calories, high tolerance in the human body and diabetes-friendliness contribute to growing popularity.