The most popular beverages in China in 2022 were packaged drinking water, carbonated beverages, dairy products, and sparkling water, with consumption rates of 63%, 55%, 54% and 42%, respectively. Moreover, health-awareness is reshaping consumer preferences, leading to the rise of healthy nutrition products. In particular Chinese market reported an incredibly growth in “free sugar” drinks during the last years. According to 2021 China Sugar-free Beverage Market Trends Insight Report, the market size of sugar-free drinks reached 11.78 billion RMB (1.71 billion USD) in 2020, a seven-fold increase from 2014, and is expected to grow to 22.74 billion RMB (3.31 billion USD) by 2025.
For a long period of time, China has been acting as a great tea consumption country. With the progress of technology and the further increase of tea demand in China, the production and sales volume of tea in China continued to grow. According to Intelligence Research Group, the output of tea in China reached 3.18 million tons in 2021, with a year-on-year increase of 248,200 tons, and the sales volume of tea was 2.3 million tons, with a year-on-year increase of 100,300 tons. Moreover, healthier, lower-calory, tea-based drinks are on the rise as Chinese consumers are looking for healthier products. Sugar-free tea drinks are not a new phenomenon in the Chinese market. As early as the 1990s, Suntory introduced oolong tea as the pioneer in China. They believed that as the birthplace and a major hub for tea culture, Chinese consumers would readily embrace the concept of sugar-free tea.
However, this turned out to be a miscalculation on Suntory’s part. During that period, China’s tea beverage market was still dominated by sugary options. Brands like Rising Sun’s iced black tea and Master Kong’s iced black tea provided consumers with a refreshingly sweet taste. Even Nongfu Spring couldn’t sway consumers’ preferences. The launch of Oriental Leaf failed to capture the attention of young consumers. This marked a challenging phase for sugar-free tea drinks in the Chinese beverage market.
In 2016, Yuanqi Forest introduced its flagship sugar-free sparkling water to consumers. Despite initial hurdles, Yuanqi Forest eventually rose to become a leader in the sparkling water category, boasting a zero sugar and zero fat concept. Over time, consumer preferences have shifted, and the idea of sugar-free has extended beyond drinks to snacks. Anything associated with the term “sugar-free” seems to draw attention and traction for brands. Moreover, the 2019 epidemic underscored the paramount importance of health to consumers. From that point forward, sugar-free tea experienced rapid growth in the Chinese market. Today, consumers not only embrace the taste of sugar-free tea but also set higher standards for brands. They seek stronger tea, without other flavors overpowering it, and hope to alleviate any bitterness. Some even find sugar-free tea easy to consume, without imposing a mental burden. Consequently, sugar-free tea has become a popular water substitute for most consumers. In 2021, China produced 3.0632 million tons of tea. According to data from the China Tea Circulation Association, about 500,000 tons of unsellable tea accumulate in our country every year.
Therefore, the surge in popularity of sugar-free tea drinks stems from brands’ increased access to tea raw materials. In contrast to sugary tea drinks, which use fewer and lower-quality tea leaves, sugar-free options employ a greater quantity of higher-quality tea leaves, essential for ensuring a superior taste. Without sugar, the emphasis is on using more tea leaves of superior quality. Abundant raw materials and changing consumer demand have propelled the development of sugar-free tea beverages in China.
With a vast supply of raw materials and evolving consumer preferences, sugar-free tea has emerged as a significant player in the Chinese beverage market. Its continued popularity will rely on brand innovation, distribution power, and marketing capabilities. While established brands like Suntory, Oriental Leaf, Rangcha, and Chali have made their mark, there remains ample opportunity for new entrants to find their unique positioning and target consumer groups. The future of sugar-free tea is bright, offering lucrative opportunities for beverage dealers and an array of choices for discerning consumers.
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