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Soft Drink Trends - China - October 2018

“Consumers choose difference types of soft drinks according to the drinking occasion, which is good news for manufacturers as they can differentiate their products based on the consumption occasion targeted. For innovation, products with minus claims such as low sugar or low calories are not enough to meet consumers’ demand for health. Nutritional value, either contained naturally or added during production, is one key to drive consumers’ interests in new products. Extra function such as energy-boosting is another key to keep business ahead in the market competition.”
– Loris Li, Associate Director, Food & Drink

This report looks at the following areas:

  • Consumer demand for nutrition keeps driving innovation
  • Occasion-wise products can be better differentiated
  • Potential opportunities in cooperating with food delivery services

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
        • Excluded
        • Executive Summary

            • The market
              • Stable retail market value growth with challenges and opportunities
                • Figure 1: Best- and worst-case forecast for soft drinks, by value, 2013-23
              • Juice is the main value contributor
                • Figure 2: Soft drink sub-categories, by value, 2018
              • New production technologies and blurring trend can push growth
                • Companies and brands
                  • Traditional CSD players tapping into more sub-categories
                    • Local leading brands expand in healthy drinks
                      • Fan economy targeting young generation
                        • From the inside out encourage frequent usage
                          • The consumer
                            • Different sub-categories see opportunities and challenges
                              • Figure 3: Consumption frequency of soft drinks, China, July 2018
                            • Consumers choose drinks based on occasions
                              • Figure 4: Consumption occasions of soft drinks, China, July 2018
                            • Boosting energy and health are important consumption reasons
                              • Figure 5: Consumption purposes of soft drinks, China, July 2018
                            • Promotion strategies for different types of consumers
                              • Figure 6: Selected purchase triggers of soft drinks, by age, China, July 2018
                              • Figure 7: Selected purchase triggers of soft drinks, by employment, China, July 2018
                              • Figure 8: Selected purchase trigger of soft drinks, by monthly personal income, China, July 2018
                            • More than half of the population purchase in offline channels
                              • Figure 9: Attitudes towards soft drink consumption, China, July 2018
                            • Sparkling texture is gaining popularity
                              • Figure 10: Attitudes towards soft drink consumption, China, July 2018
                            • Increasingly consumers want to know what exactly they are drinking
                              • Figure 11: Attitudes towards soft drink consumption, China, July 2018
                            • More interests in natural and functional ingredients
                              • Figure 12: Interests in innovation, China, July 2018
                            • What we think
                            • Issues and Insights

                              • Consumer demand for nutrition keeps driving innovation
                                • The facts
                                  • The implications
                                    • Occasion-wise products can be better differentiated
                                      • The facts
                                        • The implications
                                          • Potential opportunities in cooperating with food delivery services
                                            • The facts
                                              • The implications
                                              • The Market – What You Need to Know

                                                • Growth from consumers’ status of being outside
                                                  • Sports and energy drinks retain high growth rate
                                                    • Slowing acceleration in the market
                                                    • Market Drivers

                                                      • Consumers’ status of being outside contributes to the market growth
                                                        • Blurring between different sub-categories offers growing opportunities
                                                          • New production technology may help drive tea and juice consumption
                                                            • Figure 13: Instantaneous nitrogen filling process in an aluminium pot, China, 2018
                                                        • Market Segmentation

                                                          • Juice as the most value generating sub-category
                                                            • Figure 14: Soft drink segmentation, by sales value, 2018
                                                          • High growth in sports and energy drink sub-categories
                                                            • Figure 15: Market value of sports and energy drinks, China, 2013-18
                                                          • Plant protein drinks have slowed down their growth
                                                          • Market Size and Forecast

                                                            • Slower growth rate with opportunities to improve
                                                              • Figure 16: Best- and worst-case forecast for soft drinks, by value, 2013-23
                                                            • Forecast market value will reach RMB872 billion by 2023
                                                            • Key Players – What You Need to Know

                                                              • Coca-Cola and PepsiCo investing in healthy products
                                                                • Domestic brands have adapted marketing mix
                                                                  • New players with product lines of their expertise
                                                                    • Figure 17: Soft drinks by Yuanqisenlin
                                                                • Competitive Strategies

                                                                  • Making healthy drinks with low/no/reduced sugar…
                                                                    • Figure 18: Sugar level of carbonated soft drinks new launches in China, October 2015-September 2018
                                                                    • Figure 19: New launches in energy drinks category with claim of L/N/R sugar, China, October 2015-September 2018
                                                                    • Figure 20: Soft drinks having claim on sugar level, China
                                                                  • …or adding additional nutrients
                                                                    • Figure 21: New launches in energy drinks with claim on vitamin/mineral-fortified, China, October 2015-September 2018
                                                                    • Figure 22: New launches in sports drinks with claim on vitamin/mineral-fortified, China, October 2015-September 2018
                                                                    • Figure 23: Soft drinks with probiotics, China
                                                                    • Figure 24: Chun Yue, bottled water with additional fibre, by Coca-Cola, China
                                                                  • IP collaboration
                                                                    • Figure 25: Ri Jia Man energy drink collaboration with online game, China, 2018
                                                                  • Borrow ideas from foodservice
                                                                    • Figure 26: New products of Uni-President, China, 2018
                                                                  • Sponsorship with variety shows
                                                                    • Figure 27: Receiving more voting rights by purchasing Nongfu Spring soft drinks, China, 2018
                                                                    • Figure 28: Celebrity customised soft drinks, by Nongfu Spring, China, 2018
                                                                • Who’s Innovating?

                                                                  • Energy drinks that can prevent hangover
                                                                    • Figure 29: B4 energy drink with claims of hangover prevention supplement, US, 2016
                                                                  • Shift towards natural ingredients
                                                                    • Figure 30: Examples of soft drinks with natural ingredients in China, 2018
                                                                  • From the inside out: Beauty as a new path to explore
                                                                    • Figure 31: Top sub-categories with beauty-related claims, China, October 2015-September 2018
                                                                    • Figure 32: Examples of soft drinks with collagen in other markets
                                                                    • Figure 33: Examples of soft drinks with Hyaluronic acid in other markets
                                                                    • Figure 34: Examples of soft drinks with rejuvenation and antioxidant claims
                                                                  • Probiotic drinks on demand
                                                                    • Figure 35: Examples of soft drinks with probiotic
                                                                • The Consumer – What You Need to Know

                                                                  • Consumers seek functional benefits from soft drinks
                                                                    • Offline channels are important for promoting new products
                                                                      • Consumers’ preference of different drinks is occasion-based
                                                                      • Consumption Frequency

                                                                        • Families with one child drink more bottled water
                                                                          • Figure 36: Soft drinks consumption frequency, China, July 2018
                                                                        • Post-1980s and post-1990s are medium users of tea and infusions
                                                                          • Figure 37: Consumption frequency of tea and infusions, by generation, China, July 2018
                                                                        • Attracting females can help increase juice consumption frequency
                                                                          • Figure 38: Juice consumption frequency, by gender and age, China, July 2018
                                                                        • Carbonated soft drinks still have chance to revive
                                                                          • 25-29-year-olds consume sports and energy drinks the most frequently
                                                                          • Consumption Occasions

                                                                            • Tea and energy drinks compete on the occasion of studying or working
                                                                              • Figure 39: Consumption occasion of tea and energy drinks, China, July 2018
                                                                            • Occasion of pairing with food could be an opportunity for juice
                                                                              • Figure 40: Consumption occasion of juice, China, July 2018
                                                                            • Carbonated soft drinks are best for entertainment
                                                                              • Opportunities of cooperating with food delivery services
                                                                                • Figure 41: Consumption frequency of soft drinks with the purpose of pairing with food, China, July 2018
                                                                            • Consumption Purpose

                                                                              • Demand of boosting energy worthy of attention
                                                                                • Consumers are indeed dining with soft drinks
                                                                                  • Figure 42: Consumption purpose of soft drinks, China, July 2018
                                                                                • Juice can impress consumers through its health benefits
                                                                                  • Figure 43: Consumption frequency of soft drinks at once a day or more, by selected consumption purposes, China, July 2018
                                                                              • Purchase Triggers for New Products

                                                                                • The top three purchase driving forces for soft drinks
                                                                                  • Figure 44: Purchase triggers for new products, China, July 2018
                                                                                • Promotion strategies for new launches
                                                                                  • Figure 45: Selected purchase triggers, by gender and age, China, July 2018
                                                                                  • Figure 46: Selected purchase triggers, by selected employment, China, July 2018
                                                                                • Through photo social networking platforms to reach high-income consumers
                                                                                  • Figure 47: Consumers whose purchase trigger is recommendations on social media, by monthly personal income, China, July 2018
                                                                              • Attitudes towards Consumption

                                                                                • In-store promotion with free samples attract 20-24s the most
                                                                                  • Figure 48: Attitudes towards consumption, China, July 2018
                                                                                  • Figure 49: Attitudes towards consumption, by age, China, July 2018
                                                                                • Adding sparkling texture would help to gain more market share
                                                                                  • Figure 50: Attitudes towards consumption, China, July 2018
                                                                                  • Figure 51: Attitudes towards consumption, by age and gender, China, July 2018
                                                                                • Most consumers are soft drink label readers
                                                                                  • Figure 52: Attitudes towards consumption, China, July 2018
                                                                              • Interest in Innovation

                                                                                • Probiotics are still in trend especially for the tea market
                                                                                  • Figure 53: Interests in innovation, China, July 2018
                                                                                • Naturalness is the key selling point
                                                                                  • High potential in soft drinks with traditional Chinese medicine
                                                                                  • Meet the Mintropolitans

                                                                                    • Innovation attracts Mintropolitans on soft drink consumption
                                                                                      • Figure 54: Interests in innovation, by consumer classification, China, July 2018
                                                                                      • Figure 55: Attitudes towards consumption, by consumer classification, China, July 2018
                                                                                    • Clear labelling and dedicated packaging are valued by Mintropolitans
                                                                                      • Figure 56: Attitudes towards consumption, by consumer classification, China, July 2018
                                                                                  • Appendix – Market Size and Forecast

                                                                                      • Figure 57: Value sales of China’s soft drinks retail market, 2013-23
                                                                                  • Appendix – Market Segmentation

                                                                                      • Figure 58: Value sales of China’s soft drinks retail market, by sub-categories, 2018
                                                                                  • Appendix – Methodology

                                                                                    • Methodology
                                                                                      • Fan chart forecast
                                                                                        • Abbreviations

                                                                                        Soft Drink Trends - China - October 2018

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