Abstract
This report covers the market for soft drinks in China. The report covers the
following sectors:
- Carbonated soft drinks (CSDs )
- Concentrates/dilutables
- Fruit juices
- Sports drinks
- Mineral water
- Soya drinks
- Dairy drinks
- RTD tea
- RTD coffee
Total soft drinks market expenditure grew by 133.1% between 2001 and 2007 in
current value terms, reaching a total value of RMB226.97bn (US$30.96bn). In
volume terms, total market consumption grew by 114.7% over the same period, to
reach a total market volume of 43.11 million tonnes.
The significance of the soft drinks market has decreased within the total
Chinese food market over recent years rose from 6.21% in 2001, to 5.57% by
2007. This shows a turn around in fortunes for the soft drinks industry.
Previously, growth within total food retailing was indicative of how the
Chinese were both more willing, and more able to afford to drink more soft
drinks , and more frequently. The launch of many new brands, heralded by slick
advertising campaigns, had helped to raise consumer awareness and interest.
However, in more recent years, volume sales growth has flattened, particularly
in CSDs and fruit juices. The reasons are various, but price rises, combined
with a natural maturation of the market, have combined to flatten growth. New
growth does exist in the market, but this is in sectors such as sports drinks,
RTD teas, soya and dairy drinks. Another reason why these sectors are growing
fast, and CSDs are literally flat, is the shift towards healthier eating
patterns among many consumers.
The development of tea-based soft drinks, mostly fruit flavoured, appealed to
local traditional Chinese tastes, and have thus become successful. However,
strong marketing, especially at younger generations, and by linking brands
with healthy lifestyle images and sporting interests , have also been crucial
in boosting the strong rise in the sales of these products.
Now, even the CSD giants are looking to shift their emphasis away from colas
and other carbonates, developing more fruit juices, tea drinks, waters and new
herbal drinks, designed primarily for the China market. Faced with declining
rates of growth for CSDs in other parts of the world, new products launched
already being developed in China could soon be exported elsewhere, China
becoming a test bed for a whole new generation of soft drink products.
The tough market realities of China have forced the industry to change its
game plan, and come up with something new that the consumers are going to be
more willing to buy, particularly if consumers sense that a product is better
for them than traditional CSDs. Consumer demands are forcing the industry to
change its focus, and with this come additional costs of new product research
and development, and marketing adaptation, in what is already a market with
very slim margins.
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