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Chinese Soft Drinks Companies: Growth Opportunities, Challenges and Strategies

September 2016

All soft drinks companies operating in China are facing a slow-growing economy which is affecting sales of soft drinks. Personalised marketing and added-value products demonstrate that brand owners need to engage consumers and need to be innovative to stand out from the competition. Manufacturers should capture Chinese middle-class consumers who are now looking for natural and healthy products.

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Chinese companies collectively stronger than international players

Chinese companies have experienced an economic boom over the past two decades and now they are facing slowdown. Collectively, Chinese companies are weak in carbonates and TCCC’s dominance in this category deters Chinese entry. In the overall soft drinks market, major Chinese players and small players jointly take a much larger share than international companies.

Chinese perform well in RTD tea and purified water

Local flavours and RTD tea heritage are the key strengths of Chinese players. They are also expanding in natural mineral water to boost value sales. Competition is no longer focusing on selling large volumes at low prices, adding value is increasingly important. The market is undergoing a "transformation" towards more value-added products which puts pressure on companies that fail to innovate. Local, TCM (traditional Chinese medicine) and health are key factors.

Regulatory challenges

All players face the same regulatory challenges. Change in definitions for bottled water may affect labelling and sales of some brands, particularly brands labelled “mineral water”. The rules on labelling of energy drinks may affect potential entrants such as Monster.

International development

Chinese players essentially rely on an organic growth strategy. Foreign companies are both competitors and collaborators for the Chinese. Chinese companies are now more open-minded and are actively seeking cooperation with foreigners. Meanwhile, they are also tentatively looking overseas for deals.


Key findings
Which companies are chosen to highlight and why?

Corporate Overview and Soft Drinks

Quick corporate overview of Chinese companies analysed
How important are soft drinks in Chinese companies’ portfolios?
Ting Hsin benefits from a wide range of businesses
Ting Hsin RTD tea sales driven by plentiful flavour offering
Uni -President strong growth underpinned by RTD tea
Uni -President: A trend-setter in light-flavoured drinks
Uni -President vs Ting Hsin : Geographical and category footprint
Uni -President and Ting Hsin : Similarities and differences
Wahaha loses share in overall Soft D rinks Market
Wahaha’s Get C tries to tap into Uni -President’s sea salt drinks
Yangshengtang moving up to premium water to boost value
Wahaha and Yangshengtang : Similarities and differences
Summary 1 Corporate O verview and Soft D rinks B usinesses

Strategic Evaluation

Chinese collectively outweigh international players
Soft drinks in China competitive landscape in 2015
Competition pyramid: TCCC stands firm in China’s overall market
Key strategic issues
Versatility vs focus
Evolution of water
Diversity of share of t hroat and short product life
Plant-based beverages a new growth avenue
JDB key strength: Natural, health, heritage and digital marketing
Multiple forms of international cooperation
Highlights of licensing , alliances and acquisition initiatives
Chinese buying stakes in international health and wellness brands
Summary 2 strategic evaluation

Growth Challenges and Strategies

Key challenges and growth strategies by core categories
Chinese companies: Water challenge
Bottled water regulatory change benefits true mineral water brands
Mass and premium split
Functional and natural mineral water brands are star performers
Water filtration devices/systems affect bulk water providers
Carbonates: TCCC’s dominance and Tianfu Cola’s return
No Chinese companies successfully rival TCCC in carbonates
Tianfu banks on herbal infusion - will healthy cola work?
Ting Hsin agreement brings no relief for PepsiCo
Huiyuan blending fruit and vegetable juice to battle sugar concerns
Chinese juice companies outpace international players in 2015
Chinese producers count on playful/healthy tactics in RTD tea
International players outperform Chinese in RTD coffee
Thai Red Bull dominates energy drinks and regulatory challenge
Summary 3 category opportunities and growth strategies

On-Trade and Regional Opportunities

Regional disparity points to different growth opportunities/strategies
East China to offer the most attractive value growth
Strategic overview of on-trade sales: TCCC’s soda leads the way
Specific functionality and tactics: Local flavour, local dining needs
Rising chained fast food offers good platform for carbonates
Surge in herbal RTD tea goes hand-in-hand with spicy cuisines
Summary 4 on-trade and regional opportunities

Future Movements

Future movements: Adding value and boosting volume

Appendix: Competitor Analytics

Competitor Analytics tool
Market Overlap
Overlap Matrices

Appendix: Industry Forecast Model

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Growth decomposition explained
Significance and applications for growth decomposition
Key applications for Industry Forecast Models


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