1. China Beverage Industry:
Course of Development
Survey found that China’s beverage industry has
generally gone through four stages:
The first stage is from 1979-1995, in these 17
years the beverage market was dominated by carbonated beverages
like Coca-Cola and Pepsi. The second stage is from 1996-2000. This
5-year-period was marked by the victory of bottled water like
Wahaha, Robust and Nongfushangquan, breaking the domination of
Coca-Cola and Pepsi. The year 2001 featured the rise of Mater
Kong’s tea beverage, which can be regard as the third development
stage of China’s beverage industry. And the fourth stage is in 2002
when fruit juice, represented by Uni-president’s Orangeate, enjoyed
a great popularity in the market. By now, Beverage products’ life
cycles was significantly reduced and changes in consumer tastes
have accelerated noticeably, which makes the beverage company’s new
product development become increasingly risky.
2.Chinese Soft Drinks’
Categories:
At present, China’s soft drink products on the
market includes drinking water, carbonated drinks, juice drinks,
milk drinks, tea beverages and functional beverages.
(1) Drinking Water
Survey on the brand awareness of the bottled water
products showed that Nufu Spring, with its 80% market share, held a
safe lead. Followed by Master Kong and Wahaha, accounts for over
40% market share respectively. Together with the Uni-president, the
Robust and the Nestle, these 6 brands currently reign China’s
bottled water market, leaving the rest brands with a relatively low
brand awareness.
(2)Carbonated Drinks
Growth in carbonated drinks market is currently
limited, but the market still has a large consumer base, making it
impossible for major beverage manufacturers to ignore this share of
market. In 2009 the production of carbonated drinks in China
reached 12.542 million tons, up by 13.26% and drop to 15.5% in the
total amount of the soft drink. Analysts believed that in 2010 the
sales revenue of China’s carbonated beverage industry will be
approximately 60 billion yuan, up by 13.2%.
(3) Fruit and Vegetable Juice
In recent years, China’s fruit juice industry
showcases a rapid growth momentum. in 2009, a total of 14.476
million tons of fruit juice was produced, an increase of 22.42%.
Statistics from www.askci.com showed that in 2004-2009, the
Compound Annual Growth Rate of the retail sale of fruit juice in
China was more than 15%. In 2009, the amount of fruit juice sold in
China reached 11.857 billion liters, with retail sales revenue of
nearly 80 billion yuan. As beverage market in China continues to
expand its capacity, the per capita consumption of beverages
maintains a rapid growth. Consumers’ need of natural, low sugar,
healthy beverage has given rise to the fruit juice industry. It is
predicted that in 2011 the retail sales of China’s juice drink
market will grow to approximately 100 billion yuan, and by 2015,
160 billion yuan.
(4) Milk Drinks
In recent years, with the development of China’s
national economy, Chinese family’s food structure has been
generally improved, and the consumption of dairy products showed a
clear upward trend. The major ground of dairy consumption is in
urban cities. Consumers’ buying habits of milk product has changed
from buying a single box or a single bag at a time to FCL
purchasing, so as to satisfy the need of the whole
family.
Although milk drinks are not something new in the
market, it is in recent years that it achieved a significant
development. Now the Wahaha and the Robust, two groundbreakers of
Chinese milk drink industry is a far cry from their good old
days. From the advance of their milk drink
products, we can also see the two companies each goes for a
completely different trajectory. While the Wahaha’s major milk
drink products are milk products series for children and the
Nutrition Express series, the Robust limits itself to children’s
milk drink market. Today in the milk drinks market becomes more
competitive, with Wahaha, Coca-Cola, Small Foreigners, Wei-Chuan
(belongs to the Ting Hsin International Group along with Master
Kong), silver heron and other beverage emterprises like Mengniu,
Yili, Brilliant are step into the milk drinks market.
(5). Tea Beverages
By 2010, company producing tea beverages in China
has nearly reached ten thousand, with some fifty products
categories and more than 100 brands. At present,
Domestic market of tea drinks is concentrated on
certain brands, for example, the Master Kong’s products account for
nearly 50% of the market share. Together with Uni-president, the
two brands’ market share in the first and second-tier cities are
almost 80%. Viewing from a long-term perspective, the structure of
tea drinks market is bound to be broken. The market share of Master
Kong and Uni-presidentwill gradually decline to a more reasonable
situation.
3. Overview of the Chinese Soft
Drink Market
1) Production and Sales of Soft Drink
Industry,
In 2008, from January to November, total
industrial output value of China’s soft drink manufacturing
industry reached 208,835,015,000 yuan, an increase of 25.67% over
the same period last year; from January to November, the main
business income amounted to 211,505,744,000 yuan, an increase of
22.49% over the same period last year, achieved a total profit of
16,128,486,000 yuan, an increase of 15.46% over the same period
last year.
In 2009, From January to November, the main
business income of China’s soft drink manufacturing industry was $
246,646,634,000, making a total profit of $
22,371,138,000.
In 2010 from January to November the total sales
revenue of China’s beverage manufacturing industry reached 824.6594
billion yuan, an increase of 24.46%. faced with a shrinking demand
in the international market and a highly
competitive domestic market, in 2011 China’s soft drink industry
strengthened its marketing efforts and product innovation so as to
maintain a steady growth in production and sales At the end of
November 2010, China’s soft drink manufacturing industry’s total
assets reached 236.945 billion yuan, up by 22.99%. from January to
December 2010, the national accumulative output of soft drinks was
99.84 million tons, an increase of 18.27%. profits from beverage
manufacturing industry amounted to 75.3391 billion yuan, an
increase of 21.67%.
2) The Distribution of Soft Drinks
Market
In China, production of soft drinks is much higher
in the east than in the west. Comparing the sales amount in
absolute terms, cities in east China constitute the largest market
for soft drink consumption, but the growth rate of the soft drink
consumption in the western China is slightly higher than that of
the east. Among the top four soft drink sales provinces, three
(except Zhejiang Province) experienced a growth of approximately
15%, far less than the sales growth rate of western region., which
shows the huge potential of the western market.
Due to historical reasons, the eastern region
enjoys a more open environment and a more developed economic
situation. After a long period of development, the beverage market
in the eastern region becomes increasingly matured, and beverage
companies in this region have a better functional and institutional
system in doing distribution and R & D technology,
etc., while with the domestic and foreign large enterprises
becoming increasingly optimistic about the Northwest beverage
market has a great potential for development. And the market in
southwest regions, headed by that of Chengdu, is also very
demanding.
4. The Development Prospects of
China Soft Drinks
The development of Chinese soft drinks market
started from the beginning of the 1980s. And in only twenty years
of time it has finished the whole developmental process of soft
drink market in the United States and European countries. Today it
has grown into a huge and mature market. In recent years, with
rapid economic growth, rural and urban consumers’ income levels and
spending power continue to improve, which boost people’s demand on
beverage consumption. The domestic beverage industry has a huge
market-based and rely on and enjoys a great room for
growth.
Outlook of the soft drink industry in 2011 and
2015 will maintain a 12% -15% annual growth rate. the overall size
of the industry will continue to expand. As the beverage market
constantly adjusting to changing demand, the soft drink industry
will continue to adjust its production structure, the bottled water
will still accounted for the largest share of the market, tea
drinks, protein drinks will increase the proportion and the healthy
drinks will become the major body of the industry
structure.
During the “Eleventh Five-Year Plan” period, China
has focused on adjusting the beverage product structure, and
reduces the proportion of carbonated beverages. As a result, the
total production of the beverage continues to increase. The
industry focuses on developing fruit and vegetable juice drinks,
plant protein drinks and tea drinks and other products, moderately
develops bottled (tank) mineral water, cola, etc and gradually
reduces the production of carbonated beverages. Driven by the
favorable policy, the soft drink industry in the future will
experience a structural framework reconstruction, with functional
drinks, fruit juice, teas and other healthy beverages will form the
main frame structure. The Pursuit of health drinks will be an
inevitable direction for the China’s beverage market.
5 Ranking of Soft Drink Brands
in China
Ranking of Soft Drink Brands:
Ranking of China’s Top Ten Baverage Brand in
2011
6. Introductions to Major
Chinese Beverage Brands
1) Master Kong Group Industry (Holding)
Limited
Master Kong Group Industry (Holding) Limited is
principally engaged in the production and sales of China’s instant
noodles, beverages and pastries. The group began producing instant
noodles in 1992, and since 1996 it expanded the business to
pastries and beverages. At present three product items of the group
have secured a significant place in the Chinese food market. The
Group’s market share of instant noodles, tea and bottled water are
55.8%, 51.9% and 20.8% respectively, securing a leading position in
the market. The market share of diluted fruit juices and sandwich
biscuit come as the second in the market with 17.5%, 22.7%
respectively.
2). Uni-President Enterprises Corp.
On July 1, 1961, Uni-President Enterprises Corp.
was formally established in the ancient city of Tainan. At present
this company has invested in hundreds of related companies at home
and abroad, its project covers a number of consumer goods and
services related with people’s livelihood, making it a diversified
integrated Living Industry Group.
First to introduce Tetra Pak equipment in 1975,
Uni-president produced aseptic packaging aluminum foil asparagus
juice, and reversed the trend led by canned drinks in Taiwan Market
ever since. In 1977, it began to make TP aseptic packaged milk. In
1990 Xinshi Dairy Factory became the first GMP-certified factory.
In 1994, the company, by using the probiotic species, developed “AB
yogurt” that help improve people’s health. It also was the producer
of first bottle of refrigerated packaged “pure tea” which changed
people’s drinking tea-drinking habit. In 1998, the company is the
first one to introduce the sterile plastic bottles (PET) production
line, and actively introducing new process technologies to create
product value and quality differences, as a result, the product
“King of tea” turned out to be a brilliant success. In 2005, it
introduced the membrane filtration technology and launched the “Dr.
Milker” fresh milk product.
3)Hangzhou Wahaha Health Foods Co. Ltd.
In 1987, Wahaha’s predecessor – Hangzhou
Shangcheng District Division-run Distribution enterprises was
established and it launched in 1998″China’s own cola – Wahaha
Future Cola”; the company produces milk drinks, drinking water,
carbonated drinks, fruit juice , tea, health food, canned food,
snacks and other 8 categories more than 100 varieties of products.
Among the top 500 private enterprises in China, Wahaha ranks the
eighth in revenue, the first in profits and the second in paying
taxes.
4) The JDB Group
JDB Group is a Hong Kong-based large-scale
manufacturer of specialized beverage. The JDB’s main product is
red-canned”Wong Lo Kat”’ which is an old traditional brand, with
more than 170 years of history, the red-canned “Wong Lo Kat” is the
largest producer in the herbal tea industry. Made from pure Chinese
herbal medicine, this beverage can reduce “the inner heat”. Its
sales network spread throughout mainland China’s in 30 provinces,
municipalities and autonomous regions and now the products have
been exported to Southeast Asia, Europe and America.
5)China Huiyuan Juice Group Ltd.
A Spin-off from Beijing Huiyuan Group, the China
Huiyuan Juice Group Limited start tading its shares on the Hong
Kong Stock Exchange in February, 2007. At present Huiyuan Group has
more than 180 world-class fruit processing snf beverage bottling
production line. Its cold crushing fruit puree processing,
concentrated fruit juice processing, ultra filtration, beverage
filling under UHT ultra high temperature sterilization, aseptic
cold filling other technology are in a world-leading position. In
the nearly 18 years ever since the Group was established, it has
established 40 modern factories he country’s 22 provinces and
autonomous regions, set up links with more than 500 acres
standardized high-quality fruit production base, built a basic
sales and service network throughout the country and a national
system of fruit juice industrial management.
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