Shifting Demand in China’s Beverage Market

China's Beverage Market

China’s Beverage Market

China’s beverage market is one of the most dynamic and fastest-growing in the world. In recent years, there is a trend toward a healthy living style among Chinese consumers. People are drawn to beverages that promote a better lifestyle.

Nutrition plays a crucial role in their choice of product. Consumers make it a habit to inspect labels of products for nutritional value, possible allergens, and other indicators of safety and quality. Consequently, health-functional drinks have become a sub-sector that has been experiencing high growth due to rising demand.

Notable Trends in China’s Beverage Market

Coffee

Traditionally, China is a tea-loving country. But coffee’s popularity has been rising, especially among young consumers. Today, around 52% of China’s population drink coffee.  Sales are expected to reach RMB 300 Billion (US$42.2 Billion) by 2020. There is a growing interest in specialty coffee as consumers seek higher quality beverages. Milk-based coffee is the most popular, like lattes and cappuccinos. Coffee mixed with healthier ingredients, like plant protein milk, is also piquing consumer’s interest.

Alcohol

China consumes around 64 billion liters of alcohol per year. Due to the health and wellness trend, sales of premium non-alcoholic and low-calorie beer and spirits are rising. Consumers are also purchasing lighter, sweeter and fruitier wine styles with lower alcohol content. While red wine remains a favorite, white wine, sparkling wine and champagne also have developing fanbases. Meanwhile, Chinese drinkers are shifting from the usual pale lagers to more premium and craft beers.

shifting demand in china's beverage market

Carbonated Drinks

China’s soft drink market is highly fragmented, with major foreign players like Coca-Cola and Pepsi dominating the competition. Annual per capita consumption of carbonated beverages stands at 14.8 liters. As health awareness guides beverage choices, consumers are gradually turning away from traditional soft drinks. Low or no sugar and low-calorie drinks have become the dominant trend. Demand is rising for healthier varieties and blends, such as cold-pressed juice, vinegar-based concentrates and hybrid soft drinks.

Energy Drinks

Sales of energy drinks in China are set to reach RMB 88 Billion (US$12.4 billion) by the end of 2019. The Chinese’s fast-paced and hectic lifestyle is fueling the explosive growth of the sector in recent years. Consumers want products that help them refuel energy after working long hours. Concerns for their health are pushing them to buy energy drinks with natural ingredients. Plant-based beverages with little or no sugar are preferred. Some brands are incorporating medicinal ingredients like ginseng to recreate traditional recipes.

How to Tap into the Beverage Market in China

Demand for imported beverages—ranging from coffee to alcohol—is showing strong growth in China. Consumers want healthy beverages and are willing to pay more for them. This health trend is opening opportunities for beverage companies and retailers. For businesses to succeed, their products must appeal to China’s health-conscious consumers.

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