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Healthier Lifestyles Drive Interest in China's Emerging "Refreshing Drinks" Category

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In 2014, thanks to the changing preferences of Chinese consumers, refreshing drinks” experienced explosive growth. Refreshing drinks includes still functional bottled water, sports drinks and water-like juice drinks. In 2015, refreshing drinks evolved to also include carbonated functional bottled water and soda water. The factors that make refreshing drinks popular are their different, lighter taste profiles and water-like appearances, making consumers believe that they are healthier soft drinks. The fact that consumers have greater awareness that carbonates and RTD tea are unhealthier options is benefitting not only still natural mineral bottled water and carbonated natural mineral bottled water, but refreshing drinks as well.

The 2014 launch of Sea Salt initiates the popularity of refreshing drinks

The popularity of refreshing drinks exploded with the launch of Sea Salt & Lemonade in April 2014. Sea Salt is a juice drinks product launched by President Enterprises (China) Investment Co Ltd, with value sales reaching CNY62 million in 2014 and CNY78 million in 2015. With the addition of sea salt, summer is the product’s peak season, thanks to its hydrating benefits. In December 2014, President Enterprises extended Sea Salt’s brand portfolio, with the introduction of Sea Salt & Grapefruit, and in March 2015, the company further diversified its product range with the launch of Sea Salt & Calamansi. According to trade sources, Sea Salt is a star brand that not only taps market potential, but manages to retain consumers’ interest through the launch of new flavours; as a result, its success has been copied by multiple market players.

Because of similar lighter tastes and a water-like appearance, still functional bottled water and sports drinks were considered to be refreshing drinks by Chinese consumers in 2014. Brands such as Mizone and Aquarius particularly benefited because of their multinational heritage. In an effort to cater to consumers’ desires for different types of refreshing drinks, Mizone keeps diversifying its flavour options, with the launch of Cucumber & Lime, Rose & Grape, Honey Pomelo and Blueberry in 2015. Aquarius was also launched by carbonates giant Coca-Cola China Ltd in April 2014 to capture share in refreshing drinks. Both brands are strong competitors with Sea Salt. Mizone has proven to be proficient in television advertisements, while Aquarius has adopted celebrity endorsements by hiring China’s first Olympic badminton winner Dan Lin in 2014, as well as the famous model Angelababy and Korean singer Jong Kook Kim in 2015 to effectively establish brand awareness.

Multiple new launches signal great potential

Inspired by the emergence of refreshing drinks, multiple new launches followed Sea Salt in 2014 and in 2015, competing for consumer attention. New launches have tended to appear in four forms: in juice drinks like Sea Salt; still functional bottled water like Mizone; carbonated functional bottled water like Wahaha Get C; and soda water like Jian Fa. Benchmarking President Enterprises (China) Investment Co Ltd’s remarkable innovation of adding sea salt to its products to create refreshing taste profiles, Mizone Suiyue was launched by Guangdong Robust Corp to further compete in this niche in April 2015. Additionally, carbonated functional bottled water has been explored by carbonates players, including Hangzhou Wahaha Group Co Ltd and Ting Hsin International Group, as a strategic way to counter deteriorating carbonates sales. 2014 and 2015 key new launches are listed in the table below for a better comparison between national brand owners, product categories, launch times and key selling points.

New Refreshing Drinks Launches: 2014/2015

Product type Brand Name Launch Time Key Selling Point
Juice drinks Sea Salt Lemonade flavour in April 2014, Grapefruit flavour in December 2014, Calamansi flavour in March 2015 Combining the taste of sea salt with concentrated juice, to create refreshing water-like tastes
Juice drinks Suntory Qin Ning Water Suntory Qin Ning Water in August 2014, Suntory Qin Tao Water in May 2015 The products have a lemon-like and peach-like light taste
Juice drinks Hai Jing Lemon June 2015 Inspired by the success of Sea Salt, this is a similar product from Ting Hsin International Group
Functional bottled water (still) Mizone Suiyue April 2015 This is not an extension of flavour; it is a whole new product, integrating the taste of sea salt with concentrated juice
Functional bottled water (still) Mizone Cucumber & Lime flavour, Rose & Grape flavour, Honey Pomelo flavour and Blueberry flavour in April 2015 The launch of new flavours shows Mizone's efforts to diversify tastes
Functional bottled water (still) Evergrande Biying May 2015 The launch of functional bottled water with an appearance similar to Mizone signals Evergrande Spring Group’s endeavours to enter a category other than still natural mineral bottled water
Functional bottled water (carbonated) Wahaha Get C June 2014 The product combines a carbonated taste with vitamin water
Functional bottled water (carbonated) Pepsi Sparkling Vitamin Water July 2015 The product combines a carbonated taste with vitamin water
Sports drinks Aquarius April 2014 Coca-Cola China Ltd's first sports drinks brand officially introduced into China
Soda water Jian Fa June 2015 Reputable actor Xiubo Wu was hired to promote the product

Source: Euromonitor International from company reports, company research, trade press

Water-like appearances and lighter tastes will continue to be appreciated by health-conscious consumers

As consumers become aware that many soft drinks are not as healthy as they thought, products designed with lighter tastes and innovative flavours will be increasingly favoured over the forecast period. Refreshing drinks witnessed dynamic growth over the last two years, albeit from a niche position, and will be confronted with both opportunities and threats going forward. On the bright side, their water-like appearances and better-than-pure-water tastes are in line with consumers’ expectations of healthier products, and refreshing drinks are always competitively positioned, given the strong profiles established by leading brands Mizone and Sea Salt. On the more negative side, according to trade sources, the common life cycle of soft drinks has been shortened from three to four years to only one to two years. No one knows when the mania of refreshing drinks will be replaced by another addition besides sea salt. Moreover, diversification and segmentation driven by new launches from a growing number of companies in both refreshing drinks and other competing categories will inevitably contribute to intensified competition in the soft drinks industry.

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