The beverage market in China is one of the fastest growing food markets and is projected to become the largest worldwide by 2015. Chinese beverage production grew 10.34% in 2014 and consumption preferences are shifting towards healthier options like milk, juice and herbal teas. Major trends include increasing quality and safety standards from consumers due to food scandals and a focus on local and imported brands.

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THE BEVERAGE
MARKET IN CHINA
SEPTEMBER, 2015
Daxue香港 上海 北京
Consulting

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THE BEVERAGE
MARKET IN CHINA
The beverage market in China is one of the
fastest growing markets in the Chinese food
industry. According to Jihong He, the Chairman
of China’s food circulation association, the
beveragemarketinChinawillbecomethebiggest
worldwide by 2015. Production of Chinese
beverages underlines this trend as it illustrates
a 10.34% growth rate for January to May 2014,
compared with the previous year. In this period
Chinese beverage manufactures produced an
output of 64.766 tons of beverage.
From 2001-2014, the average growth rate of the
production of beverages in China is about 13%.
The potential of this industry is also shown in the
fact that in 2012, a Chinese person consumed
96 liters of beverages on average, whereas an
American consumed approximately 263 liters.

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The revenue rate in the beverage industry in
China is currently more than 30%. However, it is
highly a competitive market with new trends, and
a resulting challenge is a relatively low level of
loyalty towards beverage brands. This is why firms
are investing heavily in new strategies to cultivate
brand loyalty: Coca-Cola for example will invest
$4 billion in 2015-2017.
Coca-Cola holds a market-share of about 16
%, which is slowly decreasing. The American
beverage powerhouse has to deal with ever-
changing consumer preferences in the Chinese
beverage market. Chinese people nowadays
prefer healthier drinks and local herbal teas.
In some parts of China Coca-Cola is out-sold by
local player JDB and its herbal tea “JDB Red Can”.
1. http://www.reuters.com/article/2013/11/08/us-cocacola-china-idUSBRE9A704H20131108
2. http://www.scmp.com/business/china-business/article/1314083/herbal-drink-giants-recipe-home-grown-success
Chinese people
nowadays prefer
healthier drinks and local
herbal teas
The revenue rate
in the beverage
industry
in China is
more than 30%

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NEW TRENDS
As living standards have improved in China,
beverage consumption has changed.
Consumers are searching for a greater diversity
of products, and further, have become more and
more discerning. Because of several scandals in
China’s food and beverage industry, consumers’
top priority in this sector is confidence about the
product’s safety and integrity. Moreover, there is a
trend towards healthy living.
As a result, Chinese customers set value on
high quality products that are pollution-free
and safe, and are trending towards imported
food and beverages.
3. http://english.cntv.cn/2015/08/06/VIDE1438822925240370.shtml
As a consequence milk and protein beverages
have enjoyed an increase in popularity.
Convenience and freshness are also important to
Chinese consumers, however safety and quality
outweigh all the other factors. Because of these
trends in consumption preferences, the popularity
of traditional carbonated drinks is declining.

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THE BEVERAGE MARKET
IN CHINA
Tea Beverages
CoffeeWater Carbonated Beverages
Juice Milk & Protein Beverages

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WHAT DO
CHINESE PEOPLE
DRINK?
• Water
Water is a growing segment of the beverage
industry in China. The growth rate of Mineral
Water in 2013 was about 16%; Nielsen estimated it
to be more than 20% for 2014. Further, the growth
rate for high-end mineral water like Baisuishan,
Kunlunshan, and Evian is projected to reach 40%
growth.
4. http://www.nielsen.com/uk/en.html
5. http://www.evian.com/zh_cn/
• Coffee
Chinese people are drinking far less coffee than
those in other countries. In 2014, the consumption
of coffee by Chinese people was 5 cups annually,
compared to 240 cups as a worldwide average.
However, the market has potential as it grew
around 7% in 2014.
The demand for coffee drinks and fresh coffee
is rising. For example, the growth ratio of fresh
coffee in 2014 increased to 22.1%. Another trend in
the coffee sector is the desire for high-end coffee.
6. http://www.chinahighlights.com/travelguide/article/coffee.htm

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• Juice
In 2013, the juice beverage industry had a market
value of around $13.88 billion. With the increased
spending power of the middle class, juice market
revenues are expected to climb to an annual
amount of $25 billion.
Chinese traditional health juice is a new trend.
The first to reach real popularity in this sector was
the Rock Sugar Sydney Beverage. Uni-President,
Master Kong, Wahaha, Jinmailang all launched
this type of beverage in 2011. In the ongoing
years nearly all market players have developed
and diversified their production line for Chinese
traditional healthy juice.
• Carbonated Beverages
Due to the ongoing health trend in the food
and beverage market in China the demand for
carbonated beverages is declining heavily. The
market share of carbonated beverages dropped
from 36% in 2000 to under 25% in 2013. Moreover,
it is difficult to enter this market as the two biggest
players, Coca-Cola and Pepsi, share nearly all the
market power.
6. http://www.chinahighlights.com/travelguide/article/coffee.htm

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• Milk and Protein beverages
Themilkandproteinmarketisabouttogrowfast
in China: in 2013, the growth rate was 23.46% and
the total market revenue was 89.522 billion RMB.
Currently, the main market player in this sector
is Wahaha, and in the protein beverage market
the biggest players are Six Nuts, Lulu, Island of
Coconuts and Yinlu. In 2014 and 2015 more and
more competitors have entered the market due
to its potential.
• Tea Beverages
The classical and traditional drink in China is tea.
This is why the tea beverage industry boomed
in the early 2000s. In 2009, consumption
reached 9 million tons, representing 10% of the
total beverage market. This market became
the third largest beverage market in China
after carbonated beverage and mineral water.
However, the market is beginning to shrink: in
2014, the tea beverage market declined 3.6%.
As a consequence, Nestle Ice Tea for example
left the market. The main reason for this decline is
health concern. The high sugar content in many
tea beverages have pushed consumers away.
7. http://www.china.org.cn/learning_chinese/Chinese_tea/2011-07/15/content_22999489.htm
8. http://en.wahaha.com.cn/product/index.htm

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