This report looks at the following areas:
- Future market outlook and growth prospects in the next five years
- Tea drink trends to watch and innovation opportunities
- Changes in consumption trends and reasons for consumption of RTD teas
- Tea base preferences and comparisons between different product types
- Price sensitivity analysis of RTD pure tea drinks and comparison between the average price of new products
- Consumer preferences for sugar reduction in different RTD tea segments and comparisons
Despite the intentional spending trend, consumers are still willing to trade up in tea drinks. Revolutions in sugar-free and natural sweetness claims will help drive the continued growth of ready-to-drink (RTD) tea products, while innovations and communication around tea bases and aromas can enhance the drinking experience and meet consumers' advanced needs.
Pepper Peng, Senior Analyst, China Insights
Market Definitions
This Report examines the China market for tea infusions and tea drinks with a focus on RTD tea drinks. The following tea drink categories are included in the scope of the Report:
- All packaged black tea, green tea and other RTD tea drinks, such as Asian herbal tea (referring to traditional herbal tea drinks made with Chinese herbal medicine substances, as represented by Wong Lo Kat’s (王老吉) products, milk tea, oolong tea and jasmine tea.
- Packaged tea infusions (in tea bags): standard and other black, green, oolong, white, fruit and flower teas, Asian herbal tea, Pu’er tea and mate.
The study excludes loose tea and instant tea powder, but these categories are included in the consumer survey where relevant to provide a context for comparison.
Market size is based on sales through all retail channels (off-trade) and non-retail sales (on-trade or HoReCa).
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Executive summary
- Key issues covered in this Report
- Definition
- What you need to know
- The market
- The penetration of tea culture and trading up demands are driving the growth of RTD tea and tea bags
- The sugar reduction revolution is driving growth in RTD tea, while herbal tea faces competition from plant-based drinks
- Market factors
- Companies and brands
- Nongfu Spring and Suntory have further increased their market share thanks to sugar-free tea
- Key trends in marketing campaigns
- Key new product trends
- Graph 1: RTD tea drink launches, by tea base, 2021-24
- Graph 2: RTD tea drink launches, by claims related to sugar reduction, 2021-24
- Examples of products that reflect these trends
- The consumer
- Consumers drink various combinations of tea drinks rather than simply choosing either on-premise or RTD formats
- Graph 3: tea drink consumption frequency, 2024
- Classic tea bases and ingredients are more popular, but there are still opportunities for innovation and differentiation
- Graph 4: tea base preferences for tea drinks, 2024
- Graph 5: interest in tea drink ingredients, 2024
- RMB6 is the optimal price for 500ml of RTD pure tea, while the average price of new products is still far from the point of marginal expensiveness
- Quenching thirst and a delicious taste are still the main reasons for consumption, while demand for meal pairings is on the rise
- Graph 6: reasons for consumption of various RTD tea drinks, 2024
- With the sugar-free trend, consumers are more concerned about natural sweetness
- Graph 7: preferences for sugar-free/added sugar RTD tea, 2024
- Graph 8: preference for sugar reduction in RTD tea, by type of RTD tea, 2024
- Freshness preservation technology is the most effective premiumisation feature, while there is an increased focus on organic claims
- Graph 9: premium RTD tea drink features, 2024
- Issues and insights
- What we think
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The market
- Market size and forecast
- RTD tea value sales boomed in 2023
- The popularity of tea bags is expected to see sustained growth
- Market segmentation
- Asian herbal tea sees renewed growth, but faces competition from adjacent categories
- Health demands and product innovations drive strong growth in non-herbal tea categories
- Market factors
- Extreme weather affects tea production
- Tea culture is increasingly being promoted
- There is a clear trend for intentional consumption of non-alcoholic drinks…
- Graph 10: changes in spending – non-alcoholic drinks, 2021-2024
- Graph 11: plans to trade up/down in non-alcoholic drinks, 2021-24
- …however, there is still potential for trading up in tea drinks
- Graph 12: plans to trade up/down in non-alcoholic drinks, 2024
- Shanghai pilots a beverage grading system, guiding consumers to make healthy choices
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Companies and brands
- Market share
- Sugar-free teas help Nongfu Spring and Suntory further grow market share
- Master Kong and Uni-President continue to upgrade their products and establish a healthy, youthful image
- Increasing competition as more companies enter the sugar-free tea market
- Marketing activities
- Tea drink brands are opening New Chinese Style teahouses to spotlight tea bases
- Tea-producing areas and tea making techniques have become the focus of communications
- New sugar reduction option: 10% sweetness
- Technology upgrades can revolutionise the tea drinking experience
- New product trends
- New product launches continue to focus on RTD tea and tea bags
- Graph 13: tea drink launches, by sub-category, 2021-24
- Graph 14: tea infusion launches, by formats, 2021-24
- Mainstream tea bases continue to become further segmented, while innovation accelerates in niche tea bases
- Graph 15: RTD tea launches, by tea base, 2021-24
- Examples of segmented black tea, oolong tea and green tea products
- Examples of products with white tea, yellow tea and Pu’er tea bases
- Tea blends are gradually shifting from freshly made tea to RTD categories
- Minus claims are increasing
- Sugar-free remains the most active claim
- Graph 16: RTD tea drink launches, by claims related to sugar reduction, 2021-24
- Unflavoured pure tea is growing once more
- Niche floral and fruit flavours are growing
- Examples of innovative products with grapefruit, gardenia and yangberry flavours
- Leverage affordable claims and large-sized packs to cater to the trend for intentional spending
- Graph 17: RTD tea drink launches, by top 10 fastest-growing packaging specifications, 2021-24
- Graph 18: RTD tea drink launches, by top 10 fastest-growing claims, 2021-24
- Large sized RTD tea drinks are doing well in online sales
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The consumer
- Trends in tea drink consumption
- The overall penetration of all types of tea drinks is stable
- Graph 19: tea drink consumption penetration*, 2023-24
- ‘Straight tea enthusiasts’ consume tea more frequently
- Graph 20: tea drink consumption frequency, 2024
- Medium and high frequency consumers drink a mixture of tea types rather than choosing between RTD and freshly made formats
- Graph 21: share of medium and high frequency consumers with various tea drinking methods, 2024
- RTD pure tea drinks have the potential to attract consumers of all ages
- Graph 22: trends in on-premise tea consumption – bought more, 2024
- Graph 23: medium and high frequency consumers* of various tea drinks, by generation, 2024
- Preferred tea base and ingredients
- There is still room for growth in tea bases and tea base education
- Graph 24: tea base preferences for tea drinks, 2024
- Leverage differentiated black and oolong teas to impress medium and high frequency RTD tea consumers
- Graph 25: interest in tea bases of fruit teas, by consumption frequency of RTD tea (excluding milk tea)*, 2024
- Graph 26: interest in tea bases of pure tea drinks, by consumption frequency of RTD tea (excluding milk tea)*, 2024
- Medium and high frequency consumers of milk tea are looking to explore niche tea bases
- Graph 27: interest in tea base of milk tea, by consumption frequency of RTD/freshly made milk tea, 2024
- Leverage ingredients used in on-premise channels to provide a wider range of textures in the RTD category
- Graph 28: interest in ingredients, by medium and high frequency consumers of tea drinks, 2024
- Graph 29: preference for ingredients in tea drinks, 2024
- Younger consumers prefer trending ingredients
- Graph 30: interest in ingredients, by age, 2024
- Price preference for bottled RTD pure tea
- RMB6 is the optimal price for 500ml of RTD pure tea, which is relatively similar to the average price of new RTD launches
- Graph 31: average price of 500ml bottle of RTD pure tea launches (RMB*), 2021-24
- Consumers in their 30s are the key consumer group for high-end RTD pure tea
- Graph 32: price sensitivity analysis for RTD pure tea drinks – average, by age, 2024
- Reasons for RTD tea consumption
- Quenching thirst and taste are key, while pairing with food is becoming more important
- Graph 33: reasons for consumption of RTD tea drinks (net), 2024
- Each of the RTD tea sub-categories has its own strength…
- Graph 34: reasons for consumption of various RTD tea drinks, 2024
- …and RTD pure tea can be specifically targeted at meal occasions and enhance aromas/flavours
- Graph 35: reason for consumption of RTD pure tea drinks, by consumption frequency of RTD tea*, 2024
- Tea drinking habits and sugar reduction methods
- Pure tea drinks need to provide more serving temperature options…
- …especially hot RTD pure tea options
- Graph 36: preference of flavour, by preference for tea drink temperature, 2024
- Most consumers reject added sugar, but there is still a market for sugar substitutes
- Consumers who like RTD tea drinks with sugar substitutes want to reduce their sugar intake and are concerned about the source of sweetness
- Graph 37: preferred sugar reduction method for RTD tea, 2024
- Consumers are more willing to choose real fruit juice flavours and milk bases
- Graph 38: ingredient preference for RTD fruit tea, 2022 and 2024
- Graph 39: ingredient preferences for RTD milk tea, 2022 and 2024
- Consumers of plant-based RTD milk tea are more strict when selecting reduced sugar options
- Graph 40: sugar reduction preference – RTD milk tea, by preferred RTD milk tea type*, 2024
- Premium tea features
- There is an increased focus on organic claims
- Graph 41: premium packaged tea drinks, 2024
- TURF analysis of premium RTD tea drink consumption factors
- Younger consumers care more about well-known producing regions, while older consumers pay more attention to tea picked in the current year
- Graph 42: premium RTD tea features, by age, 2024
- Attract high-income consumers with traceable sourcing and teas picked at specific times
- Graph 43: premium features of RTD tea*, by monthly household income, 2024
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Issues and insights
- Promote decaffeination to give plant-based drinks a competitive edge
- Besides decaf tea drinks, RTD plant-based tea is a more natural caffeine-free option
- Provide natural and healthy options by leveraging traditional Chinese herbal ingredients and sparkling formats
- Aromas provide new avenues for tea base differentiation
- Highlight fragrances to further enhance the drinking experience
- Describing aromas/fragrances can provide a more intuitive reference for consumers
- Leverage specific or blended tea bases to further enhance the aroma of RTD teas
- Leverage seasonality to meet the demand for trading up in fruit teas
- Seasonal fruit can better meet demand for fresh and natural products
- Further explore citrus fruits and combine seasonality with localisation
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Appendix – market size and forecast, research methodology and abbreviations
- Market size and forecast – RTD tea drinks
- Market size and forecast – tea bags
- Market segmentation – Asian RTD herbal tea
- Market segmentation – RTD non-Asian herbal tea
- Methodology
- Abbreviations
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