Carbonates in China

2021 DEVELOPMENTS

Reduced-sugar and sugar-free carbonates outperform regular carbonates

Carbonates maintained off-trade growth despite the pandemic in 2020, and this is set to continue in 2021. Drivers of growth included rising sales of reduced-sugar and sugar-free products due to increasing health and wellness awareness amongst Chinese consumers.

Coca-Cola China continues its localisation

Coca-Cola China is expected to maintain its dominance in carbonates in China in off-trade value terms in 2021, thanks to well-known brands including Sprite, Coca-Cola, Fanta, Schweppes and Smart, in several different variants. The company has always been very active in terms of new product development, and this continued even during the pandemic.

Home seclusion boosts sales via e-commerce as consumers protect themselves

E-commerce witnessed an acceleration of growth in 2020 as a result of the onset of the global pandemic, and growth is expected to accelerate even further in 2021. Even after strict lockdowns ended, many consumers have continued to spend more time at home and shop online rather than risking social contact in stores.

PROSPECTS AND OPPORTUNITIES

Carbonates expected to thrive in the forecast period

Carbonates is expected to see solid although slowing off-trade volume growth rates in the forecast period, along with higher current value increases due to price rises. Drivers of growth are likely to include more players and brands entering the market, especially in the sugar-free segment, as well as a wider range of flavours, as these can encourage trials and stimulate sales.

International players to expand by launching sugar-free products

Sugar-free products are becoming particularly popular amongst consumers in China, and this is set to continue in the forecast period. This is mainly thanks to the government’s “Three Reduce, Three Health” plan, which advocates a healthy lifestyle, with the pandemic also contributing to rising knowledge of and concern about health.

Coca-Cola aims to maintain its dominance of carbonates through production expansion

Swire Coca-Cola and China Food Coca-Cola, which produce products for Coca-Cola China, have both invested in building more production lines in the country to maintain the supply of soft drinks to consumers. The company has seen stable revenue during the pandemic in China, partly benefiting from increasing penetration in online platforms.