Source | New Distribution Intelligence Station echo, lby, pumpkin
This week, the New Distribution Intelligence Station continues its 'Looking Ahead to 2025' series, providing data-based research and reference for FMCG and retail professionals in 2025 through analysis of popular categories.
Over the past two years, sugar-free tea has undoubtedly been the hottest, most discussed, and most competitive beverage category. From the 'duopoly narrative' dominated by Nongfu Spring and Suntory, to the emergence of new brands like 'Guozi Shule' and 'Cha Xiaokai', to the entry of beverage giants like 'Wahaha' and 'Dongpeng', this most active beverage category has become a representative and microcosm of the sustained prosperity of the beverage market.
Along with the rapid growth of the category, some development issues have also emerged: the gradual saturation of first-tier and new first-tier city markets, the intense competition for convenience store coolers and shelves leaving brands 'in a dilemma', and the continuous erosion of market share of small and medium-sized products by large-format products, leading to a decline in average price per 100ml. These have become unavoidable and difficult problems against the backdrop of category development and intensifying competition.
As the weather warms up in 2025 and the beverage peak season approaches, the development of the sugar-free tea category and its brands seem to be at a new critical point.
This week, based on data from the New Distribution Brand CT and product ingredient information from the beverage product database DAP-Data, the New Distribution Intelligence Station continues to bring you research on sugar-free ready-to-drink tea in the 'Looking Ahead to 2025' series.
The offline retail monitoring network of the New Distribution Brand CT covers cities at all levels above the county level nationwide (excluding townships, towns, and villages), and deeply covers core urban agglomerations nationwide, with formats including hypermarkets, large supermarkets, small supermarkets, convenience stores, and grocery stores.
New Distribution uses AI and big data technology to automatically clean real-time full POS data from sample store transactions. Currently, the New Distribution Brand CT monitors over 300,000 brands, with over 14 million product barcodes and over 5 billion annual orders.
Current State of Category Development
1. Sales Revenue/Market Share: Steady Growth, but Pace Changing
First, we extracted data for the two-year period from April 2023 to March 2025, including overall sales revenue, year-on-year growth rate, and market share changes for the ready-to-drink tea category (including sweetened and sugar-free).
Based on continuous store data from the New Distribution Brand CT, the sales trend shows clear seasonal fluctuations following the beverage industry's peak and off-peak seasons. Bottled ready-to-drink tea has shown significant seasonal volatility over the past two years, with June to September being the traditional peak season, peaking in July and August, and hitting lows in December, January, and February. Sales in peak months are more than double but less than triple those in off-peak months.
Within this rhythm, the share of sugar-free ready-to-drink tea in ready-to-drink tea continues to expand, with sales in most months of 2024 significantly higher than the same period in 2023.
Also based on continuous store data from the New Distribution Brand CT, from the perspective of year-on-year sales growth, in 2023, the growth rate was in a high-speed expansion phase, with multiple single-month year-on-year growth rates exceeding 100%, and the highest exceeding 250%. After entering 2024, the growth rate slowed but remained above 10% in most months.
However, in 2025, even excluding January and February affected by the Chinese New Year shift, the year-on-year growth rate for sugar-free ready-to-drink tea in March was still negative, indicating that the category's sales scale in the offline retail market did not expand compared to last year. This is our first concern for this year's sugar-free ready-to-drink tea performance: whether the market size growth dividend can continue.
When the water is big, the fish are big. If the category dividend is large enough, even maintaining a position in the category means actual growth. Conversely, if the category scale dividend stops growing and competition shifts entirely from incremental to existing, the competition for all participants may become more intense.
From a market share perspective, with the beverage category as a whole, the market share of sugar-free ready-to-drink tea continues to steadily increase. From early 2023 to early 2025, the year-on-year share in the beverage market increased by about 1 percentage point. Compared to other subcategories, sugar-free ready-to-drink tea still has certain advantages in consumer preference, health awareness of ingredients, and brand innovation, making it a relatively stable segment in the current beverage market.
2. City Tiers: High-Tier Stabilizing, Low-Tier Taking Over Growth
We cross-referenced the overall data of the ready-to-drink tea category with city tiers from first-tier to third-tier and below, observing the category's performance across different city tiers.
From the market share of different city tiers, the market share of ready-to-drink tea as a whole, and sugar-free ready-to-drink tea, is significantly higher in high-tier markets than in low-tier markets. From October 2024 to March 2025, the average market share in first-tier and new first-tier cities was close to 6%, while second-tier and third-tier and below cities fluctuated around 3%, with the latter being the lowest among all tiers.
In terms of trends, the share in high-tier markets is relatively stable overall, with some increase but not significant. Low-tier markets, despite starting later and having lower overall levels, show a more obvious upward trend. This distribution reflects that in high-tier markets, where consumer awareness is more mature and product updates are faster, sugar-free tea has completed a certain degree of category education and consumption penetration, while in low-tier markets, penetration of sugar-free ready-to-drink tea products is still increasing.
From the perspective of year-on-year sales growth, the differences in growth rhythms across city tiers are more pronounced. The year-on-year sales growth of sugar-free ready-to-drink tea in first-tier and new first-tier cities is generally stable, with only slight fluctuations, while the growth in third-tier and below cities is relatively more active.
In summary, the market share of sugar-free ready-to-drink tea in first-tier and new first-tier cities has stabilized, while the sales growth potential of the category comes more from third-tier and below cities. Although the market share in low-tier cities still lags behind first-tier/new first-tier, the increase in penetration can still bring 'incremental' growth to the category, while high-tier cities may face more 'existing market competition' within a stable share.
3. Format Changes: Large Formats Show Potential
We cross-referenced the overall data of the ready-to-drink tea category with different formats such as hypermarkets, large supermarkets, small supermarkets, convenience stores, and grocery stores, observing the category's performance across formats.
From a market share perspective, sugar-free ready-to-drink tea has a higher share in small formats, especially in convenience stores and grocery stores. This aligns with the general characteristics of the beverage category: large formats tend to favor home stocking, while small formats favor immediate consumption and on-the-go drinking.
Among them, convenience stores consistently rank at the forefront throughout the observation period, maintaining around 6% most of the time, making it the sales channel with the highest share in the overall beverage market, followed by grocery stores. In contrast, the share of sugar-free tea in hypermarkets and large supermarkets is relatively low, with no significant increase even during the June to September peak season.
From the share in different formats, we can infer the category's situation in various consumption scenarios. The typical consumption demand for sugar-free tea remains primarily immediate drinking and thirst quenching. However, on the other hand, there are many products in beverages that satisfy thirst, and more substitute products mean more intense channel competition. For the same thirst-quenching need, the distribution and display in channels are crucial to consumer product choice.
Observing the changes in average sales per store across formats, in 2024, the sales performance of sugar-free ready-to-drink tea improved across all retail channels, especially in large formats like hypermarkets and large supermarkets, where the increase was relatively more pronounced, indicating that traditional channels are releasing more structural growth potential. At the same time, small formats like convenience stores and grocery stores also maintained steady upward momentum, reflecting the continuous enhancement of sugar-free tea's reach across different consumption scenarios, with both channel breadth and terminal depth expanding.
Entering early 2025, despite periodic fluctuations in some months due to holiday timing shifts, what is more noteworthy is that growth across formats has stalled after the holidays, with year-on-year growth significantly slowing. This may indicate that the sugar-free tea category is shifting from incremental expansion to existing market competition, and the market competition rhythm has entered a new phase.
Category Competitive Landscape: One Superpower with Multiple Strong Players or a Single Dominant Player?
1. Top 5 Groups in the Category: Nongfu's Share Exceeds 70%
In this section on the top group landscape, we extracted the market share changes of groups in the sugar-free ready-to-drink tea category from Q2 2024 to Q1 2025.
It should be noted that due to the high concentration of market share, Nongfu Spring, ranked first, had an average market share exceeding 70% over the four quarters from Q2 2024 to Q1 2025. Therefore, we reduced the number of groups to the top five for reference. The groups are sorted by their average market share over the four quarters from Q2 2024 to Q1 2025 in the New Distribution Brand CT offline retail data, from high to low.
In the period from Q2 2024 to Q1 2025, the top five groups in the sugar-free ready-to-drink tea category were Nongfu Spring, Suntory, Master Kong, Guozi Shule, and Uni-President.
In terms of magnitude, the market share of the second to fifth groups ranges from a fraction to one-twentieth of Nongfu Spring's share. Based on data from the New Distribution Brand CT, starting from the sixth place, the average market share in the period is less than one-fiftieth of Nongfu Spring's average.
In terms of trends, Nongfu Spring, ranked first, saw its market share increase every quarter during the period.
From another perspective, whether the future development of the sugar-free ready-to-drink tea category will be a 'game' for one group or an 'industry game' remains a question mark.
2. 'Leaders, Active Participants, and Challengers': Each with Their Own Joys and Sorrows
- Leaders: Nongfu Spring, Suntory
- Active Participants: Master Kong, Uni-President, Coca-Cola, Wahaha, Vitasoy, Dydo, Dongpeng, Nestlé, Yuanqi
- Challengers: Guozi Shule, Cha Xiaokai, Rang Cha
We extracted the changes in market share of the three groups in the overall sugar-free tea market over the two-year period from April 2023 to March 2025.
From the overall market share, the 'leaders' group has always held an absolute dominant position. Over the past year, their market share remained above 80% most of the time, briefly dipping to 79% in mid-2024 but quickly recovering to around 85% in subsequent quarters, demonstrating strong and stable market control.
At the same time, the 'challengers' group continues to rise. Although their overall share is still relatively small, it has slowly grown from near zero in early 2023 to 5%-6%, showing steady progress, with some new brands gradually gaining traction.
In between, the 'active participants' appear somewhat passive. Their market share saw a temporary increase during the 2024 peak season, reaching around 13%, but later declined.
3. Multiple Paths Emerge: Traditional Leverage and Innovative Penetration in Parallel
From the channel structure across formats, leaders maintain a significant market dominance in all mainstream channels. However, during the June to September 2024 beverage peak season, this structure experienced slight disturbances, especially in more traditional retail formats such as hypermarkets, large supermarkets, small supermarkets, and grocery stores (excluding convenience stores), where the leaders' market share saw a temporary decline.
Behind this change is the breakthrough of active participants in traditional channels. Groups in this category typically have years of channel accumulation in the beverage industry. Although some groups have only recently increased their focus on the sugar-free tea track, they can leverage existing distribution capabilities and terminal resources to boost share through promotions, displays, and other means during the peak season, achieving short-term gains.
In contrast, challengers, due to their smaller size and weaker channel foundation, find it difficult to achieve significant breakthroughs even during the peak season, with limited overall structural changes.
However, for challengers, another slow but steady growth path is gradually emerging. From the chart, it can be observed that although the market share of challengers in various formats is still small, the overall trend is steadily upward with minimal fluctuation, unaffected by peak and off-peak seasons.
This may reflect that consumers' motivation to try new products always exists regardless of the channel. Compared to traditional beverage companies that rely more on channel scale and brand influence, challengers are accumulating a stable presence across multiple channels through product and content differentiation.
From current trends, the channel performance of different types of enterprises has initially diverged: active participants are better at leveraging traditional retail scenarios during peak seasons, while challengers rely on diversified product innovation for continuous penetration. Leaders, though overall stable, face multiple challenges and need to continuously strengthen product and channel synergy to cope with the new round of competitive pressure brought by structural changes.
From the perspective of distribution rate, leaders maintain a high and stable level, with limited room for further growth. Active participants increased their distribution rate in the summer of 2024 but showed some decline after entering the off-season. Challengers' distribution rate is steadily climbing, though the absolute level is still low, indicating greater growth space.
Product Upgrades: Two Main Lines of Function and Flavor in Parallel
From 'true zero sugar' to 'fewer additives', sugar-free tea is undergoing continuous product upgrades. Consumers' preference for 'shorter ingredient lists for peace of mind' is becoming increasingly evident. Brands are no longer satisfied with just the 'sugar-free' label but are engaging in new rounds of innovation competition across dimensions such as 'with or without artificial sweeteners', 'tea variety selection', and 'diverse flavors'.
In this week's sugar-free tea research, the New Distribution Intelligence Station continues to collaborate with the DAP-Data beverage product database, incorporating ingredient information for joint product research.
Based on the New Distribution Brand CT data from April 2024 to March 2025, we formed two sets: the top 40 SKUs (non-combination packages) in the sugar-free ready-to-drink tea category and the top 40 new SKUs launched during the period. Using the ingredient lists, technical indicators, and related information from the DAP-Data database (www.dap-data.com), we conducted a full-chain cross/penetration analysis from 'ingredients-ingredient list-product-market sales' to observe the trends in consumer choices reflected in product ingredients/flavors behind the top products in the category.
1. With/Without Artificial Sweeteners: 'True Sugar-Free' is Mainstream, but New Products with Sweeteners May Be a Flavor Breakthrough
First, looking at the market share trends of the top 40 products in the period, products without artificial sweeteners have always held an absolute dominant position in the sugar-free tea market, and their market share is continuously increasing. In contrast, the share of products with artificial sweeteners has been below 4% most of the time, with a slight monthly decline.
However, in the new product top 40, we also observe a relatively independent growth path: the market share of new products with artificial sweeteners is slowly rising, with a growth rate greater than that of sweetener-containing products in the top 40.
This 'dislocation' may reflect brands' practical choices in flavor innovation: although consumers have basic expectations for 'pure tea taste', products with artificial sweeteners may more easily achieve a balance between flavor expression and consumer acceptance. Especially in sub-segments like complex flavors, artificial sweeteners remain an important tool for enhancing taste experience. Compared to the bitterness and astringency that may come with no sweeteners, moderate use of artificial sweeteners provides a balanced solution between taste acceptance and health, helping new products enter the market faster and improve trial conversion rates.
The different price performance of sweetener/non-sweetener products in the product/new product top 40 may also reflect differences in positioning. Overall, products without artificial sweeteners have slightly higher average price per unit and price per 100ml than those with sweeteners, indicating their high positioning in 'mainstream big single products'. However, when looking only at new products, the situation is different: new products with artificial sweeteners have a higher average price per 100ml, showing a certain flavor premium capability, indicating they enter the market more as 'trial products' with higher pricing tolerance in the early stage.
Overall, no artificial sweeteners represent the majority and basic market, while artificial sweeteners are an important tool for brands to innovate in flavor and break through with new products. In the future, product upgrades based on 'sugar-free' may no longer be an either/or choice but rather a more layered product portfolio strategy around different scenarios and consumer preferences.
2. Tea Varieties: Jasmine Tea Remains Mainstream, with Room for Niche Innovation
In the sugar-free ready-to-drink tea market, tea variety selection remains highly concentrated in traditional categories, especially jasmine tea, which has long held a mainstream position. From the market share of tea varieties in the top 40 SKUs of the sugar-free tea category, jasmine tea products maintained a share close to 30% throughout the observation period, with continuous growth. In comparison, oolong tea's market share has narrowed to some extent. Pu'er, green tea, and black tea have not changed much overall.
By city tier, different preferences for tea varieties can be seen. In first-tier cities, oolong tea ranks first above all other tea varieties, while in other city tiers, jasmine ranks first, but the difference between the two is not significant. At the same time, first-tier and new first-tier cities have relatively higher acceptance of more fermented tea bases like Pu'er and black tea.
From the preferences for different tea varieties across city tiers, it can be seen that when formulating tea variety innovation strategies, brands can prioritize multi-tea variety combinations and flavor trials in first-tier markets to meet diverse consumer needs. In lower-tier markets, they should strengthen product power around high-awareness categories like green tea and jasmine tea to stabilize mainstream sales. Tea variety innovation is not a short-term explosive path, but against the backdrop of gradually stabilizing structure, it may become one of the key fulcrums for brand differentiation.
New products reveal another side of current tea variety innovation. Oolong and jasmine remain the main tea varieties in the new product top 40, but at the same time, the emergence of other niche tea varieties such as white tea, Longjing, and black tea has led to a significant overall increase in the share of niche tea varieties. Although such niche innovations account for a small proportion, they bring more differentiation attempts at the product level and reflect the innovation trend in tea base layers.
3. Flavor Combinations: Innovative Leap from 'Pure Tea Taste' to 'Flavor Memory'
Before conducting research on flavor trends in sugar-free tea, we first classified the types of tea bases to clarify the combination logic and innovation direction behind the products. Based on ingredient structure, we divided them into the following three categories:
- Single tea variety: refers to products that use only one traditional tea leaf as the base, such as black tea, green tea, Pu'er, etc., and also includes directly using scented teas like jasmine tea rather than 'tea leaves + other plant combinations', without adding other teas or additional flavors. These products emphasize the original flavor of the tea itself, suitable for consumers seeking 'pure tea taste'.
- Composite tea varieties: refers to products that use two or more tea varieties/plants in combination but have formed fixed classic styles. For example, 'jasmine + green tea' and 'green mandarin peel + Pu'er', although they are composite flavors, due to fixed combinations and high recognition, they often appear as basic flavors for brands.
- Composite flavors: on the basis of tea base, plant components such as gardenia, cherry blossom, and osmanthus are added to enhance flavor layers and highlight aroma memory. This innovation direction emphasizes sensory experience and is often used to attract trial users or create differentiated products.
From the overall product structure, the current sugar-free tea market is still dominated by single tea varieties, with a market share stable at over 60% and slightly increasing over the past year. In contrast, the market share of composite tea varieties is relatively stable, with no significant growth, but as 'classic combinations', their acceptance and repurchase base remain solid. The overall share of composite flavor products is small but maintained at a relatively stable level, indicating a sustained preference for innovative flavors among specific user groups.
In the new product top 40, composite flavors are more active. Since Q3 2024, the market share of new products with composite flavors has continued to rise, even gradually surpassing single tea varieties. This indicates that in new product development, brands are increasingly inclined to enter the market through innovative flavors, attracting trial users with differentiation. It is not difficult to see that composite flavors are becoming an important strategy for new product breakthroughs, while traditional flavors are more used to consolidate existing product structures, and the division of labor between the two in the new product matrix is gradually becoming clear.
Product Specifications/Pricing: Specifications Up, Prices Converging
Beyond flavors and formulas, product specifications and pricing also profoundly affect the market direction of sugar-free tea.
From the proportion of combination/non-combination packages, the current sugar-free ready-to-drink tea market is still absolutely dominated by non-combination packages, accounting for over 90% throughout. Although combination packages have grown, their overall share remains very limited.
In the following specification and price analysis, we will focus on the data performance of non-combination products, including average price per unit, average price per 100ml, mainstream capacity segment distribution, and price band structure, to restore the most representative market status and strategy differences of 'single bottle purchase'.
Trend 1: Increase Capacity, Stabilize Price
In the sugar-free ready-to-drink tea market, increasing single-unit capacity has become a mainstream trend, and this change is significantly faster than price increases.
From April 2023 to March 2025, the average capacity per unit steadily increased from about 550ml to about 620ml, while the average unit price only rose from about 5.15 yuan to about 5.40 yuan. This strategy of 'increasing capacity, stabilizing price' is clearly aimed at enhancing the perception of cost-effectiveness to better cope with intensifying competition.
2024 was a key node for the acceleration of this trend. From the beginning of the year, single-unit capacity continued to rise, especially during Q2 to Q3, with a steep growth curve. Although prices also increased, the overall change was moderate, even briefly declining during the mid-year peak season, showing brands' cautious strategy in controlling consumer price sensitivity, with a clear intention to exchange price for volume.
However, entering the second half of 2024, possibly related to the end of the peak season, this pattern began to subtly shift: the growth in single-unit capacity gradually narrowed and stabilized, while the slope of unit price increases accelerated significantly. This trend continued into early 2025, reflecting that after completing a round of 'capacity expansion and price stabilization', brands began to tentatively adjust prices, and the average price per 100ml also recovered after continuous decline.
This not only helps repair the profit compression caused by previous cost-performance competition but also marks the gradual entry of the sugar-free tea market into a more mature and segmented pricing stage.
Trend 2: Large Capacity Gradually Becomes Mainstream, Price Structure Flattens
From the market share composition of various specification segments, the 650-1000ml segment rapidly expanded in 2024, becoming the main driver of the 'capacity increase' trend, with market share jumping from less than 20% at the beginning of the year to over 30%. However, after entering the 2024 peak season, the share of this segment stabilized, possibly indicating that the incremental dividend of large capacity has entered a plateau.
Price trends further confirm this change. From a price perspective, an interesting and important phenomenon is that in the first half of 2023, the average price per 100ml of the 650-1000ml segment was actually lower than that of products above 1000ml, making it the 'cheapest capacity segment' at the time. However, with market adjustments, this trend reversed: the price per 100ml of products above 1000ml began to decline continuously from early 2024 and gradually leveled with the 650-1000ml segment, with the cost-effectiveness of the two large capacity segments converging.
At the same time, the average price per 100ml of small-capacity products (350-650ml and below) is also declining, and the average price per 100ml of different capacity products is converging: small ones are not as expensive as before, and large ones are truly cheap.
Trend 3: 'Squeeze the Middle, Boost the Low' Forms a New Range
From the market share composition of various price segments per 100ml, the mid-to-low price segment of 0.5-0.7 yuan/100ml significantly expanded after mid-2024, becoming the most notable growth price band.
Although 0.7-1 yuan/100ml remains the absolute mainstream, maintaining around 70% share, its share has slightly fluctuated. The previously stable high-price band of 1-1.2 yuan/100ml has seen a significant contraction, with a notable downward trend in market share.
With increasingly fierce competition, in the price-sensitive sugar-free tea category, the high-price product range is narrowing, and low-price products may become the breakthrough for future growth.
Corresponding to the price structure per 100ml, the share of products priced at 5-7 yuan per bottle continues to rise, driven by the combination of specification upgrades and price declines. Products priced at 3-5 yuan per bottle remain the mainstream price segment, accounting for over 60%. In comparison, products priced above 7 yuan per bottle and below 3 yuan per bottle are both further compressing their market share. However, this year, with the gradual distribution of Oriental Leaf's 1.5L per bottle products, it may have a certain impact and change on the single-bottle price segment composition.
Afterword
Having experienced the highlight moments of 2023-2024, sugar-free ready-to-drink tea, as a representative category of the 'healthy beverage' trend, has completed the key leap from user education to consumption habit establishment. Entering 2025, although the overall market heat continues, the focus of brands is shifting from 'competing for awareness, grabbing incremental growth' to 'controlling structure, improving efficiency'.
Today's sugar-free ready-to-drink tea, describing its landscape as 'one superpower with multiple strong players' may no longer be appropriate. Excessive concentration may bring many problems. Strong players can further squeeze and erode the market share of weaker players through various means, such as price wars, promotions, and further segmentation of specifications/prices/scenarios. However, whether this is the future remains unknown.
On the other hand, when consumers want to buy sugar-free tea, if the options are only 'A' or 'not A', I wonder if they might also feel a bit 'bored and helpless'?