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Sports and Energy Drinks - China - July 2013

“Sports and energy drinks, with their functional benefits and healthy image by association with vitamins, are gaining importance and popularity in the market. However, remain significantly smaller categories by comparison to other soft drink markets, and currently face critical challenges to growing consumption. Therefore, brands need to unlock the growth potential by increasing product relevance to a wider pool of consumers, convincing them that the drinks can play a role in their daily lives.”

– Ruyi Xu, Deputy Research Manager

Some questions answered in this report include:

  • How can sports and energy drinks improve their product relevance to Chinese consumers?
  • What are the opportunities to grow the sports and energy drink market?
  • Is stepping out of the category and repositioning into functional water a viable positioning strategy for growth?
  • How can sports and energy drinks engage more female consumers?


Report Introduction:

Sports and energy drinks posted a healthy value CAGR of 16% over 2008-13, while China’s total soft drink market slowed growth to low double-digit rates since 2011. This shows that sports and energy drinks, with their functional benefits and healthy image by association with vitamins, are gaining importance and popularity in the market.

“However, sports and energy drinks remain significantly smaller categories by comparison to other soft drink markets, and currently face critical challenges to growing consumption. Their male-focused marketing and limited perceived consumption occasions have resulted in a narrow user base (men, aged 20-29) and low consumption frequency.

“Therefore, brands need to unlock the growth potential by increasing product relevance to a wider pool of consumers, convincing them that the drinks can play a role in their daily lives.

 

Liqueurs - UK - January 2012

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Table of contents

  1. Introduction

      • Definition
        • Methodology
          • Consumer research
            • Abbreviations
            • Executive Summary

                • The Market
                  • Sports and energy drinks remain small but are seeing strong growth
                    • Figure 1: Retail value sales of sports drinks, China, 2008-18
                    • Figure 2: Retail value sales of energy drinks, China, 2008-18
                    • Figure 3: Retail sales volume growth by drinks category, China, 2008-13
                  • Growth drivers and barriers
                    • The forecast
                      • Companies and brands
                        • Figure 4: Sports drinks market share, by sales value, China, 2011-12
                        • Figure 5: Value and volume share of energy drinks market, China, 2011-12
                      • The consumer
                        • Majority of consumers drink sports and energy drinks two to four times a month
                          • Reasons for not drinking sports and energy drinks
                            • Purchase locations of sports and energy drinks
                              • Sports and energy drinks consumption is needs-driven
                                • Purchasing factors
                                  • Three in five are open to healthier varieties of sports and energy drinks
                                    • Key issue – Building stronger relevance to consumers should support growth
                                      • Associating sports drinks with light exercise
                                        • Figure 6: Sports drink products for light sports participants, Japan 2009-2012
                                      • Sports drinks with reduced sugar and calories should tackle concerns over health
                                        • Figure 7: Lucozade Sport Lite, UK 2011
                                      • Sports drinks with natural ingredients rich in electrolytes
                                        • Figure 8: Coconut sports drink, New Zealand and US, 2011-13
                                      • Repositioning products outside of the sports drink category is both a risk and an opportunity
                                        • Key issue – Positioning sports and energy drinks around new occasions can help generate more sales
                                          • Figure 9: Key value points in advertising themes of major sports and energy brands, China, 2013
                                          • Figure 10: Sports and energy drink brands with a mental focus positioning, UK and US, 2011-13
                                        • Key issue – Wider distribution points for sports and energy drinks to capture impulse consumption
                                          • Figure 11: Location of sports and energy drinks purchase, by frequency of drinking sports and energy drinks, March 2013
                                        • Key issue – Women pose a potentially sizeable market to grow sports and energy drinks
                                          • Figure 12: Functional claims made in female-targeted energy drinks, Japan and China, 2010-13
                                          • Figure 13: Top ten flavour components in female- and male-targeted drinks*, global, 2008-July 2013
                                          • Figure 14: Flavours featured in female-targeted sports and energy drink, global, 2010-13
                                      • The Market

                                        • Key points
                                          • Sports and energy drinks remain small categories, owing to infrequent consumption levels
                                            • Figure 15: Sales value and volume of sports and energy drinks, China, 2007-13
                                            • Figure 16: Retail sales volume and value of sports and energy drinks, China, 2013
                                            • Figure 17: Consumption frequency, by drink category, China, November 2012
                                          • Despite a slowdown in soft drinks production, sports and energy drinks maintain their growth momentum
                                            • Figure 18: Total output volume of soft drinks market, China, 2007-12
                                            • Figure 19: Retail sales volume growth, by drinks category, China, 2008-13
                                            • Figure 20: Retail sales value growth, by drinks category, China, 2008-13
                                          • Drivers to growth
                                            • Greater interest in sports and exercising to keep fit bodes well for the sports drinks market
                                              • Sports and energy drinks look to cater to a more health-conscious population
                                                • Busier lifestyles should aid growth in energy drinks
                                                  • Barriers to growth
                                                    • Masculine image and a lack of sports culture in China challenge growth potential
                                                        • Figure 21: Sports area and venue resources comparison, China vs. developed countries, 2009-10
                                                      • Sports and energy drinks face strong competition in the wider soft drinks market
                                                        • Figure 22: Average price per litre, by beverage category, China, 2012
                                                      • Ingredient content poses concerns
                                                        • Future of the market
                                                          • Figure 23: Retail sales volume of sports drinks, China, 2008-18
                                                          • Figure 24: Retail sales value of sports drinks, China, 2008-18
                                                          • Figure 25: Retail sales volume of energy drinks, China, 2008-18
                                                          • Figure 26: Retail sales value of energy drinks, China, 2008-18
                                                      • Companies and Brands

                                                        • Key points
                                                          • Sports and energy drinks are highly concentrated markets
                                                            • Figure 27: Market concentration, by drinks category, retail market, China, 2012
                                                          • Danone dominates sports drinks market by share
                                                            • Figure 28: Soft drink product portfolio, by leading sports drink manufacturers, China, 2013
                                                            • Figure 29: Sports drinks market share, by sales value, China, 2010-12
                                                            • Figure 30: Sports drinks market share, by sales volume, China, 2010-12
                                                            • Figure 31: Sports drinks product positioning, China, 2013
                                                          • Red Bull faces increasing challengers within the energy drinks market
                                                            • Figure 32: Value and volume share of energy drinks market, China, 2011 and 2012
                                                            • Figure 33: Energy drinks product positioning, China, 2013
                                                          • Red Bull
                                                            • Groupe Danone S.A.
                                                              • Figure 34: Mizone launches blueberry flavour, China, 2013
                                                            • Nongfu Spring Co., Ltd
                                                              • Figure 35: Nongfu Spring’s Scream sports drink, China, 2013
                                                            • PepsiCo Inc.
                                                                • Figure 36: Gatorade reveals new packaging, China, July 2013
                                                              • Ichimore Beverage Co., Ltd
                                                                • Figure 37: Comparison of Ichimore energy drink products, China, 2013
                                                              • Hangzhou Wahaha Group Co., Ltd
                                                                • Otsuka Pharmaceuticals Co., Ltd.
                                                                  • GlaxoSmithKline Plc
                                                                    • Taisho Pharmaceutical Co., Ltd.
                                                                      • Figure 38: Lipovitan product, China, 2008-11
                                                                  • The Consumer – Frequency of Use

                                                                    • Key points
                                                                      • Majority of consumers drink sports and energy drinks two to four times a month
                                                                        • Figure 39: Frequency of drinking sports and energy drinks, March 2013
                                                                      • Use is biased towards younger men
                                                                          • Figure 40: Most popular frequency of drinking sports and energy drinks, by age and gender, March 2013
                                                                        • Higher prices could limit the potential audience
                                                                            • Figure 41: Most popular frequency of drinking sports and energy drinks, by income and city, March 2013
                                                                        • The Consumer – Reasons for not Drinking Sports and Energy Drinks

                                                                          • Key points
                                                                            • 45% of low and non-users don’t trust product claims
                                                                                • Figure 42: Reasons for not drinking sports and energy drinks, March 2013
                                                                              • Natural ingredients could boost usage among women and older age groups
                                                                                  • Figure 43: Most popular perception towards consumption of sports and energy drinks, by age and gender, March 2013
                                                                                • Low-priced products could expand the market…
                                                                                  • …but could undermine value perceptions across the category
                                                                                    • Figure 44: Next most popular perception towards consumption of sports and energy drinks, by age and gender, March 2013
                                                                                  • Non-users struggle to see the benefits
                                                                                      • Figure 45: Perception towards consumption of sports and energy drinks, by frequency of drinking sports and energy drinks, March 2013
                                                                                  • The Consumer – Purchase Location

                                                                                    • Key points
                                                                                      • Purchase location of sports and energy drinks
                                                                                        • Figure 46: Location of sports and energy drinks purchase, March 2013
                                                                                      • Younger consumers are more open to impulse buys
                                                                                        • Figure 47: Location of sports and energy drinks purchase, by gender and age, March 2013
                                                                                      • Gyms offer brands the chance to sell premium variants
                                                                                          • Figure 48: Location of sports and energy drinks purchase, by income and education level, March 2013
                                                                                          • Figure 49: Repertoire of location of sports and energy drinks purchase, March 2013
                                                                                      • The Consumer – Consumption Occasions

                                                                                        • Key points
                                                                                          • Sports and energy drinks consumption is needs-driven
                                                                                              • Figure 50: Occasion of sports and energy drinks consumption, March 2013
                                                                                            • Vending machines should appeal to key user groups
                                                                                                • Figure 51: Location of sports and energy drinks purchase, by occasion of sports and energy drinks consumption, March 2013
                                                                                              • A broader focus on health and wellness could narrow the gender divide
                                                                                                  • Figure 52: Occasion of sports and energy drinks consumption, by gender and age, March 2013
                                                                                                • Emphasise the scientific basis for product claims
                                                                                                    • Figure 53: Occasion of sports and energy drinks consumption, by income and education level, March 2013
                                                                                                • The Consumer – Key Choice Factors

                                                                                                  • Key points
                                                                                                    • Natural ingredients are the most important factor when buying sports and energy drinks
                                                                                                        • Figure 54: Factors considered when buying sports and energy drinks, March 2013
                                                                                                      • Strong potential for flavour and packaging innovation
                                                                                                        • New functional benefits could broaden appeal among women
                                                                                                          • Still plenty of scope to develop low-calorie variants
                                                                                                              • Figure 55: Factors considered when buying sports and energy drinks – rank 1, by gender and age, March 2013
                                                                                                              • Figure 56: Factors considered when buying sports and energy drinks – rank 1, by gender and age, March 2013 (continued)
                                                                                                          • The Consumer – Attitudes towards Sports and Energy Drinks

                                                                                                            • Key points
                                                                                                              • Three in five are open to healthier varieties of sports and energy drink
                                                                                                                  • Figure 57: Attitudes towards sports and energy drinks, March 2013
                                                                                                                • Signs that women are less sure of the product benefits than men
                                                                                                                    • Figure 58: Attitudes towards the functional qualities of sports and energy drinks, by gender, March 2013
                                                                                                                  • “Quick kick” energy boost is valued by older respondents
                                                                                                                    • Figure 59: Attitudes towards sports and energy drinks’ impact on metabolism, energy and hydration, by age, March 2013
                                                                                                                • Key Issue – Building Stronger Relevance to Consumers is The Number One Challenge Faced by Sports Drink Market

                                                                                                                  • Key points
                                                                                                                    • The sports drinks market looks to expand beyond the sporting occasion
                                                                                                                        • Figure 60: Change in frequency of exercising, November 2012
                                                                                                                        • Figure 61: Most important factors contributing to healthy living, November 2012
                                                                                                                        • Figure 62: Most important factors contributing to stress on current health, November 2012
                                                                                                                      • Centring sports drinks on Chinese consumers’ lifestyles and needs
                                                                                                                        • Associating sports drinks with light exercise
                                                                                                                            • Figure 63: Most practised sports or exercising activities, China, 2008
                                                                                                                            • Figure 64: Sports drink products for light sports participants, Japan, 2009-12
                                                                                                                          • Sports drinks with reduced sugar and calories should tackle concerns over health
                                                                                                                            • Figure 65: Reasons for not drinking sports/energy drinks, by age, March 2013
                                                                                                                            • Figure 66: Attitudes towards sports/energy drinks, March 2013
                                                                                                                            • Figure 67: Top popular claims of sports drinks new launch, China vs. global, January 2008-July 2013
                                                                                                                            • Figure 68: Average calorie content in sports drinks, China, 2013
                                                                                                                            • Figure 69: Lucozade Sport Lite, UK 2011
                                                                                                                            • Figure 70: Coca-Cola launches Aquarius Zero, Japan 2012
                                                                                                                          • Emphasising naturalness will help to stave off competition from products such as coconut water
                                                                                                                              • Figure 71: Coconut sports drink, New Zealand and US, 2011-13
                                                                                                                            • Repositioning products outside of the sports drink category is a double-edged sword
                                                                                                                              • Figure 72: Market size and growth of sports drink vs. bottled water, China, 2008-13
                                                                                                                              • Figure 73: Top popular claims in bottled water market, China, 2008-13
                                                                                                                              • Figure 74: Attitudes towards bottled water, November 2012
                                                                                                                              • Figure 75: Top ten food and drink categories with vitamin-fortified claims, China, 2008-12
                                                                                                                              • Figure 76: Agreement with the statement ‘Sports and energy drinks help increase metabolism’, by age, March 2013
                                                                                                                            • What does it mean?
                                                                                                                            • Key Issue – Positioning Sports and Energy Drinks Around New Occasions Can Help to Generate Sales

                                                                                                                              • Key points
                                                                                                                                • Building on emotional need states can encourage more repeat sales
                                                                                                                                  • Figure 77: Consumption frequency, by drink category, China, November 2012
                                                                                                                                  • Figure 78: Key value points in advertising themes of major sports and energy brands, China, 2013
                                                                                                                                  • Figure 79: Red Bull GmbH’s multi-country content marketing, 2013
                                                                                                                                  • Figure 80: Marketing communication by global energy drink brands, 2013
                                                                                                                                • Positioning around mental alertness offers scope to extend the proposition of sports and energy drinks
                                                                                                                                  • Figure 81: Mizone’s marketing campaign The Cube, China, 2013
                                                                                                                                  • Figure 82: Sports and energy drink brands with a mental focus positioning, UK and US, 2011-13
                                                                                                                                  • Figure 83: US energy drink brand 5-hour energy advertising, 2013
                                                                                                                                • What does it mean?
                                                                                                                                • Key Issue – Wider Distribution Points for Sports and Energy Drinks to Capture Impulse Consumption

                                                                                                                                  • Key points
                                                                                                                                    • Catering to impulse purchases can help to drive sales, particularly among on-the-go consumers
                                                                                                                                      • Figure 84: Occasion of sports and energy drinks consumption, March 2013
                                                                                                                                      • Figure 85: Location of sports and energy drinks purchase, by frequency of drinking sports and energy drinks, March 2013
                                                                                                                                      • Figure 86: Location of sports and energy drinks purchase, by occasion of sports and energy drinks consumption, March 2013
                                                                                                                                    • Transportation hubs and tourist destinations and leisure venues pose potential for capturing on-the-go consumers
                                                                                                                                      • What does it mean?
                                                                                                                                      • Key Issue – Women Pose a Potentially Sizeable Market to Grow Sports and Energy Drinks

                                                                                                                                        • Key points
                                                                                                                                          • Women pose a potentially sizeable market for sports and energy drinks
                                                                                                                                            • Figure 87: Frequency of drinking sports and energy drinks, by gender, March 2013
                                                                                                                                            • Figure 88: Leisure activities by China’s middle class, by gender, China, April 2012
                                                                                                                                            • Figure 89: Sports and energy drink brands targeting women, China, 2013
                                                                                                                                          • Women are concerned about calorie content and artificial ingredients
                                                                                                                                            • Figure 90: Reasons for not drinking sports and energy drinks, by gender, March 2013
                                                                                                                                            • Figure 91: Top ten claims of female-targeted sports and energy drinks, global, 2008-July 2013
                                                                                                                                            • Figure 92: Ingredients most likely to choose – women, China, December 2012
                                                                                                                                          • Women need more convincing about the product’s advantages
                                                                                                                                            • Figure 93: Attitudes towards sports and energy drinks, by gender, March 2013
                                                                                                                                            • Figure 94: Occasions for drinking sports and energy drinks, by gender and age, China, March 2013
                                                                                                                                          • Taking marketing cues from beauty and skincare
                                                                                                                                            • Figure 95: Functional claims made in female-targeted energy drinks, Japan and China, 2010-13
                                                                                                                                          • Tailoring flavours and packaging to women would help to demystify the category
                                                                                                                                            • Flavours such as ginger, raspberry and peach are used to target women
                                                                                                                                              • Figure 96: Top ten flavour components in female- and male-targeted drinks*, global, 2008-July 2013
                                                                                                                                              • Figure 97: Flavours featured in female-targeted sports and energy drink, global, 2010-13
                                                                                                                                            • Packaging innovation can help to target women
                                                                                                                                              • Figure 98: Top ten pack sizes in female-targeted drinks*, global, 2008-12
                                                                                                                                            • Connect women through associations with value and lifestyle
                                                                                                                                              • Figure 99: Glacéau vitaminwater new advertising campaign, China, 2013
                                                                                                                                              • Figure 100: Glacéau vitaminwater’s packaging, China, 2013
                                                                                                                                              • Figure 101: Baileys cream liqueur advertising campaign, China, 2013
                                                                                                                                              • Figure 102: Agreed descriptions of healthy lifestyle – women, by age, China, November 2012
                                                                                                                                            • What does it mean?
                                                                                                                                            • Appendix – Frequency of Drinking Sports and Energy Drinks

                                                                                                                                                • Figure 103: Frequency of drinking sports and energy drinks, March 2013
                                                                                                                                                • Figure 104: Most popular frequency of drinking sports and energy drinks, by demographics, March 2013
                                                                                                                                                • Figure 105: Next most popular frequency of drinking sports and energy drinks, by demographics, March 2013
                                                                                                                                            • Appendix – Reasons for not Drinking Sports and Energy Drinks

                                                                                                                                                • Figure 106: Perception towards consumption of sports and energy drinks, March 2013
                                                                                                                                                • Figure 107: Most popular perception towards consumption of sports and energy drinks, by demographics, March 2013
                                                                                                                                                • Figure 108: Next most popular perception towards consumption of sports and energy drinks, by demographics, March 2013
                                                                                                                                                • Figure 109: Perception towards consumption of sports and energy drinks, by frequency of drinking sports and energy drinks, March 2013
                                                                                                                                            • Appendix – Location of Sports and Energy Drinks Purchase

                                                                                                                                                • Figure 110: Location of sports and energy drinks purchase, March 2013
                                                                                                                                                • Figure 111: Most popular location of sports and energy drinks purchase, by demographics, March 2013
                                                                                                                                                • Figure 112: Next most popular location of sports and energy drinks purchase, by demographics, March 2013
                                                                                                                                                • Figure 113: Location of sports and energy drinks purchase, by occasion of sports and energy drinks consumption, March 2013
                                                                                                                                              • Repertoire analysis
                                                                                                                                                • Figure 114: Repertoire of location of sports and energy drinks purchase, March 2013
                                                                                                                                                • Figure 115: Repertoire of location of sports and energy drinks purchase, by demographics, March 2013
                                                                                                                                                • Figure 116: Occasion of sports and energy drinks consumption, by repertoire of location of sports and energy drinks purchase, March 2013
                                                                                                                                            • Appendix – Occasion of Sports and Energy Drinks Consumption

                                                                                                                                                • Figure 117: Occasion of sports and energy drinks consumption, March 2013
                                                                                                                                                • Figure 118: Most popular occasion of sports and energy drinks consumption, by demographics, March 2013
                                                                                                                                                • Figure 119: Next most popular occasion of sports and energy drinks consumption, by demographics, March 2013
                                                                                                                                              • Repertoire analysis
                                                                                                                                                • Figure 120: Repertoire of occasion of sports and energy drinks consumption, March 2013
                                                                                                                                                • Figure 121: Occasion of sports and energy drinks consumption, by demographics, March 2013
                                                                                                                                            • Appendix – Factors Considered When Buying Sports and Energy Drinks

                                                                                                                                                • Figure 122: Factors considered when buying sports and energy drinks, March 2013
                                                                                                                                                • Figure 123: Most popular factors considered when buying sports and energy drinks – rank 1, by demographics, March 2013
                                                                                                                                                • Figure 124: Next most popular factors considered when buying sports and energy drinks – rank 1, by demographics, March 2013
                                                                                                                                                • Figure 125: Most popular factors considered when buying sports and energy drinks – rank 2, by demographics, March 2013
                                                                                                                                                • Figure 126: Next most popular factors considered when buying sports and energy drinks – rank 2, by demographics, March 2013
                                                                                                                                                • Figure 127: Most popular factors considered when buying sports and energy drinks – rank 3, by demographics, March 2013
                                                                                                                                                • Figure 128: Next most popular factors considered when buying sports and energy drinks – rank 3, by demographics, March 2013
                                                                                                                                            • Appendix – Attitudes Towards Sports and Energy Drinks

                                                                                                                                                • Figure 129: Attitudes towards sports and energy drink, March 2013
                                                                                                                                                • Figure 130: Most popular attitudes towards sports and energy drink, by demographics, March 2013
                                                                                                                                                • Figure 131: Next most popular attitudes towards sports and energy drink, by demographics, March 2013
                                                                                                                                                • Figure 132: Other attitudes towards sports and energy drink, by demographics, March 2013

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                                                                                                                                            Sports and Energy Drinks - China - July 2013

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