In China, the soft drink market is changing, with more consumers choosing healthy and nutritious drinks. People all over the world are trying to live healthier lives, and the revolution is also touching the soft drinks market in China. The major players are still two American brands: Coca-Cola Company and PepsiCo, but the consumption of functional drinks is growing rapidly, presenting big opportunities for domestic and foreign brands.
In this blog post, we will take a look at the Chinese soft drink market and examine the opportunities in this thriving sector, presenting ideas on how to cater to the needs of Chinese consumers and export your soft drinks to China.
Overview of China’s soft drink market (2022)
Before 2000, Chinese people were all about carbonated soft drinks, with Coca-Cola and Pepsi leading the market. After six years, they began to shift their interest toward tea beverages, growing the demand for the tea beverage industry in China. Nowadays, although carbonated beverages like cola are still the first choice for many Chinese, functional drinks, bottled water, and energy drinks are slowly gaining more and more market share, as Chinese people are starting to be more health-conscious.
As of 2022, the revenue in the soft drink market in China amounts to almost 56 billion dollars and is expected to grow annually by 8.41% until 2026. In 2026, the market is expected to reach 77.04 billion dollars. Almost 53% of soft drinks enthusiasts are people between 18 and 34 years old.
What is also important to mention is that only around 10% of soft drinks are drunk out of home (in restaurants, bars etc.). This means, that anyone that is interested in selling soft drinks in China, needs to think about crucial offline distribution channels, like convenience stores, supermarkets, or vending machines.
Which soft drinks are preferred in China?
As we mentioned before, during the first ten years of 2000s, sodas were beyond the drunkest soft drinks in China. People were buying coca-cola in bulks, as it was the trendiest drink on the market. But nowadays, carbonated beverages take only 14% of the market share, with bottled water, ready to drink bottled tea and fruit drinks taking 71% of the market.
Beverage industry is changing all around the world and China is no different. There are more and more people choosing to buy a fruit juice instead of coca cola, they are also turning to mineral water, or functional and sports drinks for health benefits.
Coca-Cola is still leading the market
Thanks to its unique taste and branding, Coca-Cola China is still the market leader when it comes to carbonated beverages. According to GlobalData, Coca-Cola Company has 25% of soft drinks market share in China, with China being the third-biggest market for the company after US and Mexico (but please note that the company produces many different products apart from the signature coca-cola). Coca-Cola Company, being the first on China’s soft drink market in 1979, shortly followed by PepsiCo, has many factories in China with more expansion in the future.
According to Karen So, managing director of Coca-Cola, “China’s beverage market is diversified with a wide range of products. We will strive to achieve a dominant position or top ranking in soda water, tea, coffee, energy drinks and other categories in the future.”
Tea and Iced-Coffee
The tea market in China is vast and competitive, with the dominance of local brands. Tea is the most traditional beverage in the Chinese culture, and the variety of choices for tea beverages is bigger than anywhere else in the world.
According to Daxue Consulting, in recent years the new-style tea beverages are entering the market, with HEYTEA and Naixue Cha gaining the most recognition. There are many different options to chose from, starting from traditional tea flavors, through milk-tea and tea beverages with fruit juice. Instant tea occupies 21% of the market shares.
Although coffee culture is a domain of the West, coffee market in China is presenting a huge potential, with many people choosing this beverage among tea. Giants like Starbucks and Costa Coffee are very popular in China, in fact, the biggest amount of Starbucks is located in Mainland China.
Following the recent consumption trends, coffee companies are starting offering zero sugar coffees, just like in other countries. Now there are many options for ready-to-go iced coffees in glass bottles sold in convenience stores and grocery shops across China.
Juice market occupies 18% of the soft drink market shares in China, with orange juice being the most favoured taste among Chinese customers. Tongyi, Kangfu Shifu, Nongfu Spring and Huiyuan are four local brands with the biggest market shares in the juice market. Today more consumers buy fresh fruit juices and juice drinks instead of carbon dioxide beverages, as they are pursuing healthier and more functional drink options.
Mineral water and nutridrinks
China has one of the biggest water markets in the world and it will only grow now, thanks to changing behaviours of it’s netizens. The biggest companies on the market are Wahaha, Kang Shifu and Nongfu Spring, all being domestic brands. Although Chinese people are fond of drinking warm water, there is a growing amount of young Chinese consumers that like to buy mineral bottled water and waters with some fruity tastes.
As more people do sports and take care about their health, bottled water and nutridrinks are gaining more popularity in soft drink market. Following industry trends, all the big companies, like Coca-cola China, Nongfu Spring, Wahaha or Pepsi are introducing mineral bottled water and other beverages with zero sugar, zero calories and many nutrients to Chinese mainland consumers.
GMA worked for Balance, an Australian water brand focusing on the health benefits of the local flora. We managed to grow brand’s WeChat followers by 8000 and Weibo by 75000. Balance gained big recognition in China, taking part in online and offline events, showing other brands that there still is a lot of space for foreign companies of soft drinks in Chinese market. If you would like to work with us, leave us a comment.
How to promote soft drinks on the Chinese market?
There are several steps that brands should take if they want to succeed on the Chinese market and increase their retail sales. Read up to get to know them!
Build a Chinese website that will be optimized for Baidu
Chinese consumers and distributors must be able to find you on Baidu, the most popular search engine in China. As we use Google to check brands that we are interested in, Chinese customers and distributors will try to look you up in Baidu, to learn more about your brand.
To build a great website follow some easy tips:
- The website must be in Chinese Mandarin, as Baidu doesn’t rank high foreign websites
- Leave the contact information on the homepage (and here the most important contact will be your WeChat Official Account and phone number)
- You can have an option of a live chat, that will increase your conversion rate, it’s a very popular tool in China
- Your website must be hosted in Mainland China or Hong Kong/Singapour (To put it simply your website will load faster and get a ranking boost on Baidu).
- The content must be adapted to Chinese tastes, be original, and frequent (It will give your Website authority on Baidu)
Promote your soft drinks brand on Chinese social media
Chinese social media are used by the majority of Internet population in China, with WeChat being an absolute leader, gathering more than 1.26 billion users as of 2022. WeChat offers many features, allowing you to create an Official Account, which is essential in building brand awareness, as it works as a newsletter. Apart from that, you can create your own WeChat store, post video content, run ads and many more.
Although WeChat is a must in your marketing strategy, it’s more of a closed-ecosystem, where you build awareness and loyalty with your existing followers base. If you want to reach out to new customers, Weibo, Little Red Book and Douyin or Kuaishou will be your social media options, that will give a boost to your brand.
To promote yourself effectively on Chinese social media it is necessary to:
- create an official account, which is essential to build trust in users;
- post new comments and frequent updates;
- manage the community and interact with users and Kols;
- cross-marketing with other platforms
Invest in Storytelling and Packaging to sell your soda brand in China
If you are a small enterprise that wants to enter the Chinese soda market, it is really important to focus on the quality and on the storytelling of your brand. In marketing, storytelling means the conveyance of a “packaged” message within a story to a specific target. For example, if you want to sell your Italian orange soda highlight the quality and the freshness of the oranges you use.
It is also very important to adapt the packaging to Chinese tastes. Chinese people really like strong colors and drawings. Chinese consumers have expressed their desire to have different tastes in soft drinks. Consumers tend to have higher expectations. They really want products that correspond to their lifestyle. As their purchase increased, they are ready to pay more for a better product. Highlight this aspects in your content on social media to gain the interest of your target audience.
Build your e-reputation
E-reputation is the most important step to take in order to win Chinese consumers. They don’t usually buy from brands they don’t know, so unless someone recommends them to you or they get attracted by your story, you can’t count on their purchases. One of the greatest ways to gain good e-reputation in China is through Xiaohongshu.
Xiaohongshu is a social e-commerce platform that has become popular in China’s wealthy cities. The app’s core content is UGC (user-generated content). UGC on RED is one of the reasons behind the success of the app, as it becomes the place to go for genuine products/brand reviews and ultimately a perfect place for Chinese influencers. Posts (under the form of shopping notes) and comments would like to educate the user on a specific product more than merely advertising it. Chinese consumers have a lot of trust in social media recommendations.
Apart from RED, you can also invest in some PR actions, so that you show up in Baidu. You also need to remember about being present on all of your accounts, so that you interact with your community.
Sell Soda Brands on Chinese e-commerce platforms
There are many e-commerce platforms to chose from, with Tmall, Taobao and JD being the market leaders. But what is important to know is that those platforms big initial investments, so it’s only for brands with an established presence and good branding in China.
For relatively new brands, it’s best to start with a WeChat Store or Pinduoduo, better suited for a smaller budget. E-commerce platforms will give you the biggest exposure, but the competition is also huge, so you need to be sure, that your brand is ready before you enter one of these platforms.
Find the right distributors
After some branding effort, finding a distributor will be a much easier task as your brand/products will already have recognition in China. After you have built your own e-reputation on Chinese social media, you can start looking for some Chinese distributors. There are several ways to do that:
- Work with an agency or organization and its distribution network.
- Participate in trade fairs, put your Wechat QR code everywhere and show you already understand how the market works and that you are ready for it
- Have your listing on a Wechat H5 brochure that can easily be shared with potential distributors on any occasion. (This listing would be the “China” version of your PDF listing)
- Lead Generation: Get requests Online via your Website for instance.
Entering the Chinese market can be really difficult for a small enterprise but following the right steps, it is possible to reach Chinese consumers and gain their trust.
GMA is your best partner to market your soft drinks brand in China
Gentlemen Marketing Agency is a Digital Marketing Agency that is an expert in helping foreign companies to establish or strengthen their position in China. With more than 10 years of experience and more than 70 Chinese and foreign professionals in the field, we can offer you many different solutions for the best market entry in China.
Here are some of our services:
We have many successful stories and more than 1000 satisfied customers. When it comes to soda brands, we’ve been working with Balance water, Red Bull and Twist & Drink brands, which we showed you in the article. All of them gained recognition and successfully entered the Chinese market.
Do you want to be next? Don’t hesitate to contact us or leave us a comment to discuss your project!