With China’s economic development, the consumption of bottled water has been growing steadily due to higher incomes and an improved living environment for the Chinese population. Thus, China’s bottled water market has been growing at an average rate of 9.5% annually and is expected to continue to grow for the foreseeable future. With a $32.6 billion market, it’s also one of the most competitive markets in China. But, how can you enter this lucrative and cutthroat industry? There are indeed many challenges for foreign companies entering this market including cultural differences, distribution channels, local regulations as well as health and sanitary scandals. In order to successfully enter this market with your brand of bottled water you should first research the key aspects that need consideration such as how much competition it faces locally or regionally, the limitations in terms of exports, the process to apply, etc. This article will provide some insights on how to enter the bottled water industry in China through e-commerce platforms and social media. We’ll give you as well some marketing and advertising strategies.
The Bottled Water Industry in China
Bottled water is popular in China as it has a variety of benefits, including being free from bacteria and other harmful substances that may be found in tap water. In recent years, bottled water sales have increased due to the growing awareness of quality drinking water. If you go to China one day, the majority of the Chinese population will say that they never drink tap water as it is too polluted and harmful for their health. With a growth of 5% over the past decade and over 9% annually by 2021, this phenomenon is not going to end soon.
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Surpassing America in 2013, China is now the world’s biggest bottled water market in terms of sales volume, reaching 208 billion RMB ($32.6 billion) in 2019, with a yearly increase of 9.5%. According to The Economist, China has experienced an increase from 19 billion to 37 billion liters of bottled water between 2010 and 2015.
Moreover, according to Statista, China was forecast to grab 20% of the world’s market in terms of bottled water consumption.
Therefore, it is also estimated that by 2025, 18% of spending and 9% of volume consumption in the bottled water segment will come from out-of-home consumption (in bars and restaurants for example).
Why is bottled water this popular in China?
With revenues that have skyrocketed in just twenty years, Chinese consumers’ shift in consumption has greatly contributed to this phenomenon. The penetration of bottled water in China now stands at a rate of 15%, the market is still a great opportunity for players who wish to expand their activities overseas.
The three main reasons of bottled water’s sucess in China
- Water pollution & food and beverage scandals
Water pollution played an important role in the growth of the market. Indeed, although the Chinese government reassures individuals about the quality of water in the largest cities, residents are still reluctant to drink tap water. Therefore, they prefer to buy bottled water which is considered of higher quality and more secure in terms of health.
- The emergence of the Chinese middle class
The emergence of the Chinese middle class has contributed to the growth of the market with an increase in wages, but also by its changes in expectations and consumption behaviors. They are now ready to spend a few more yuans in order to buy qualitative water.
- The benefits of water
China’s general health awareness has enabled the market to grow rapidly and to become a prominent player in the beverage market, health interest is growing rapidly in China and the benefits of mineral water are increasingly appreciated by individuals.
There are Three Leading Segments in the Chinese Market
Mineral water: It represents 91% of the bottled water market share. Mineral water is the most consumed type of water, from children to elderly people, Chinese consumers are reassured about it.
Sparkling water: even though it has only 7% of the market share, it’s the best growing sector in recent years. For example, one of the most popular sparkling water in China is Genki Forest.
Flavored water : 2% of the bottled water market share, however this segment is expected to grow in the future. For the moment, Chinese consumers will prefer to buy juice or soda, instead of flavored water.
Where are Chinese consumers purchasing their bottled water?
Even though Chinese consumers are spending much more time on e-commerce platforms, the majority of them are still purchasing their bottled water offline, in commercial centers or supermarkets for example.
However, it is also important to take into account that online sales are increasing over the years, and it is expected that 9.6% of bottled water will be purchased online by 2023.
China’s Competitive Water Market Landscape
The market-leading brands account for more than half of the total market in China and the industry is largely dominated by domestic players. The leading company in the market is Yangshengtang Co. Ltd. with Nongfu Spring (农夫山泉), followed by China Resources Enterprise Ltd, and its bottled water brand called Cestbon.
China is also attracting more and more international brands such as Coca-Cola, Danone, and Nestlé, which, in order to integrate the market, have joined forces with domestic players to develop their activities. In general, foreign brands are considered premium water, which attracts even more Chinese consumers.
As a matter of fact, urbanization has pushed people to reconsider their consumption and to aspire to have a better quality of products. Foreign brands are generally perceived as a guarantee of quality in many fields in China, as a result of increasing health awareness. Moreover, China had quite some scandals in terms of food and beverages (milk formula scandal in 2008, Nongspring polluted water a few years ago, etc.) which explains why they tend to rely on foreign brands.
What are the most popular bottled water brands in China?
In terms of bottled water, the Chinese market is indeed dominated by a few brands that have been able to gain Chinese consumer’s trust.
As of 2018, Nongfu Spring had a market share of over 26%, while its closest competitor C’estbon had 21.3% of the market share, followed by Ganten and its 10.1%.
However, even though the market was for a long time dominated by domestic brands, multinational beverage corporations, such as the brand Ice Dew (owned by Coca-Cola) were also able to grab a part of the Chinese market.
What are the challenges for brands in the Chinese water market?
Marketing and communication are playing a prominent role in the success of a brand. In the bottled water market, marketing campaigns have allowed the industry vehicle a picture of trendy and healthy products, advocating a ‘Healthy Lifestyle’.
Individual concerns about the risks of water contamination are a real opportunity for international brands. Indeed, many brands are pointing out the fact that they are eco-responsible, aware of their environmental impact, etc. Thanks to this kind of campaign, Chinese consumers perceive water as a healthier alternative to juice and other beverages.
Many of you might be wondering how to attract Chinese consumers? In fact, the design of your bottle is also a key factor of success. The more attractive your bottle will be, the more people will look at it and potentially buy it.
Promoting its brand in China requires understanding the market’s structure and the environment in which it operates. Many foreign companies have failed in China because they wanted to impose their Western strategy on the market or habits and environment that are hardly transposable in China.
Water brand should bet on digital channels to develop their reputation in China
The impact that social networks have on individuals is tremendous, and brands should seize this opportunity in order to conquer the Chinese market. With more than 989 million Internet users, China is one of the most digitalized countries in the world.
Internet users have the opportunity, through these applications, to be part of different communities, groups, follow the news, follow their favorite brands, buy online and share content. WeChat and Weibo are the two main media you will have to focus on in order to promote your bottled water brand in China.
Social media in China
Social networks have the advantage to interact directly with your followers and potential clients. It allows a sort of proximity with your Chinese consumers. Sharing content is also a way to gain visibility and satisfy the curiosity of users.
Explaining to consumers the benefits of your brand and your products through social media is a good way to gain popularity as well as to develop your brand awareness.
As the most popular social media in China, WeChat has more than 1.2 billion users. Thus, if you want to sell your bottled water in China, WeChat is a powerful tool to develop your online presence as well as develop your business in China. You’ll be able to reach a wide audience, by posting content, replying to consumers, post pictures, etc. Moreover, you’ll be able to create H5 brochure, which is highly appreciated by Chinese consumers.
You can also partner with KOLs to promote your brand as they have a lot of followers that are ready to purchase the same things as them.
Increase and optimize your visibility with your Chinese website
Being visible online is a necessity if you want to develop your visibility among Chinese consumers. To adapt to the requirements of the Chinese market, you’ll have to create a Chinese website, with the “.cn”. As mentioned earlier, Chinese consumers are doing a lot of research about brands that they are not familiar with. Thus, your website is the showcase for your company and your products: the visuals and information that will be published will have to be of high quality in order to attract the interest of your potential consumers.
To increase your visibility, hosting your website in China seems one of the optimal solutions to appear in the best search results of the search engine leader in China: Baidu.
Search engine optimization is the basis to understand and adapt to consumers’ behavior, as 70% of them will use Baidu to search online.
E-commerce in China: A big step to increase your sales
China is the world’s largest e-commerce market. Chinese customers like to purchase their products online, as there are more than 989 million internet users. In 2022, B2C e-commerce sales are expected to surpass 956 billion U.S. dollars in revenues. Actually, in China, we have a lot of e-commerce platform but the most popular is Tmall, JD.Com, Taobao and so on. If you want to increase your sales or become more visible online, you have to set up a Tmall store or JD.com Store. If you want more information, you can contact us directly.
The Balance Case Study: Australian Water
Balance is an Australian water brand focusing on the health benefits of the local flora. The water brand infused in subtle ways indigenous plants so that the taste of the water. The brand is growing quickly around the world and they chose GMA to promote their water in China. Their product is a great product, especially for China that has been hurt by many scandals and where tap water can not be consumed. It is also a great market because more and more people are paying more attention to their health and are ready to spend money on qualitative products.
However, having a great product and selling in China are two different things and that is why Balance Australian Water needed-us to promote its products to Chinese distributors and Chinese consumers. The main challenge for Balance Australian Water is that Chinese distributors are not looking for products but for a brand since it is easier to sell. Therefore, marketing the brand to the public has double benefits: Get a wider coverage of your water brand in the general public and the interest of Chinese distributors. In order to promote the brand, we have to work on e-reputation and visibility.
Our first step was to create Balance Australian Water a presence on Social Media: Wechat and Weibo and make sure they rank on Baidu with tools such as PR, Q&A, a Baike Account etc
- + 8000 Followers on Wechat
- Wechat H5 shared in +200 groups
- 5 keywords ranked on Baidu 1st page
- Weibo +200% Views
- Weibo +20k followers
- 5PR /month
- Exhibition with PR on 30 media Outlets
- Co-Branding with multiples Brands/Coffee shop (ex: Oatly)
Gentlemen Marketing Agency to Help you Sell your Bottled Water in China
Our agency is born out of our passion for the web, digital marketing, and business in China. Located in Shanghai, Gentlemen Marketing Agency is positioned and focused on the Chinese Market (Food & Beverage )
With our experience in many different industries, we understand the issues and opportunities foreign brands have to face when entering the Chinese market. We can help you achieve your goal and get started in the Chinese market, as well as help you use the right techniques to take care of your Chinese customers.
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You can also read our Strategic Guide to Export Food Brands in China