"Unsweetened tea is selling increasingly well." Shu Min, a distributor for Nongfu Spring, clearly remembers that in 2016, Oriental Leaf had poor sales, but after a free full-bottle tasting at a local supermarket, it attracted a group of repeat customers who came back on their own. This year, in his responsible area, sales of Oriental Leaf have exceeded 12 million bottles, and it's not uncommon for small shops to sell over 200 cases. He says Oriental Leaf is magical—many people find it unpleasant at first sip, but after finishing a whole bottle, they can't quit. Over the years, his big promotion tactic has been giving away full bottles.
This is not the first time the unsweetened tea category has attracted market attention. "The best-selling product in the past two years is Oriental Leaf, with profits at least one-third higher than other brands," said distributor Yu Jin. Since 2018, Oriental Leaf's sales data has taken off, and this year many stores have achieved doubled sales: "A single store of about 70-80 square meters, with good sales, can stock 150 cases a month, over 2,200 bottles." Another distributor, Wang Fan, said he knows a distributor who earned 3 million yuan from Oriental Leaf alone this year.
Around the same time, Nongfu Spring distributor Lao Wang noticed a similar phenomenon: unsweetened tea is becoming a favorite at retail terminals. "Many old brands are learning from Nongfu to launch light tea drinks, and small distributors are also making money." This year, among the several stores he regularly supplies, one store earned nearly 30,000 yuan in just over half a year from Oriental Leaf alone.
Among the dozens of channel practitioners contacted by New Distribution, "hot" and "popular" were the most common feedback about the unsweetened tea category. Most practitioners observed subtle signs of the category's growth. For the entire beverage market, major changes affecting the industry have already occurred.
01
Unsweetened tea has found the "spring"
Most distributors mentioned a term to New Distribution: "bottle holding rate." This refers to the proportion of consumers holding a particular beverage in an area, out of all consumers carrying beverages. It's useful for observing the influence of different brands in the same region. Wang Fan is not surprised by Oriental Leaf's popularity. This summer, his favorite activity was to stand in a busy commercial district for an hour, watching what drinks people carried: "Occasionally someone carries another (tea drink), but seven or eight out of ten hold Oriental Leaf."
Similar phenomena occur in convenience stores and chain supermarkets. According to industry insiders, in the first half of this year, unsweetened pure tea products accounted for 70% of tea beverage sales at FamilyMart convenience stores, and 18% of all room-temperature beverage sales. The best performer was Oriental Leaf, followed by Suntory and Ito En. At a Yonghui supermarket store in Jiangxi, Oriental Leaf has become the highest-selling tea beverage, with monthly stock purchases reaching 100,000 yuan.
More than a decade ago, unsweetened tea was a niche product. Compared to sweetened tea, the most unacceptable aspect was its taste. When Oriental Leaf was first launched in 2011, some market analysts predicted it would struggle due to its stubborn choice. In the tea beverage market, consumers sought taste differences, and the positioning of unsweetened tea lacked a future.
Le Xiang, a convenience store owner specializing in tobacco, alcohol, and beverages, told New Distribution that her store stocked Oriental Leaf when it first launched in 2011, but she had concerns. On one hand, she trusted Nongfu Spring's product strength and influence as a leading brand; on the other, she worried about the market prospects of unsweetened products. At that time, Oriental Leaf was the only unsweetened tea in her store, and no one knew how long this "only seedling" could last.
The good news is that the trend for unsweetened tea has formed in the past two years. China Industry Information data shows that from 2014 to 2019, the compound annual growth rate of unsweetened tea reached 32.6%. Nongfu Spring's first-half financial report this year shows tea beverages grew 51.6% year-on-year. At Le Xiang's store, Oriental Leaf jasmine tea sells more than 10 bottles a day during peak season.
Lao Wang explained to New Distribution why distributors are keen on Oriental Leaf. For second-tier distributors, the prices of traditional sweetened teas are too transparent, and distributor profits mainly come from warehouse stocking and logistics fees. Oriental Leaf's retail price and channel profit margins are higher. With the same amount of money for a batch of goods, the storage and transportation cost proportion is smaller, and the savings become pure profit.
Equally important is the new market trend. In the beverage industry, the success of a major category relies on super single products, such as cola popularizing carbonated drinks and latte popularizing coffee. After Oriental Leaf drove the unsweetened tea market to scale, the dividend from the trend quickly emerged. Nielsen data shows that in the first half of this year, the soft drink market overall declined, but Oriental Leaf grew nearly 70% in the past twelve months, contributing nearly 70% of the incremental growth in the unsweetened tea market, and driving the entire unsweetened tea market to grow against the trend.
This makes Oriental Leaf's success not just a story of an "old product becoming popular," but an inspirational story of a persistent "niche" product driving the entire tea beverage industry to take off against the trend.
02
Who is buying Oriental Leaf by the case?
Who are the competitors of unsweetened tea? Many might think of sweetened tea, but more and more phenomena show that unsweetened tea is growing in the direction of bottled water. "For me, stocking up on Oriental Leaf is like treasure hunting," said Wen Wen, a loyal fan of unsweetened tea. Her favorite hobby is to bring home discounted cases of Oriental Leaf from supermarkets. Her daily routine is to drink water in the morning and evening, and tea during the day.
This aligns with Yu Jin's observation: "In my area, Oriental Leaf used to be sold mainly by single bottles, but now during peak season, many consumers buy by the case. Car owners, especially white-collar and middle-class people, like to stock up in summer, buying several cases at a time." In his view, Oriental Leaf is being sold in comparison to drinking water. On supermarket shelves, Oriental Leaf is usually placed on the third layer of a five-layer shelf, or the fourth layer of a six-layer shelf, and fills an entire layer, with nearly 80% of the beverage pile being Oriental Leaf.
Le Xiang also noticed this. Her store's Oriental Leaf consumers show two trends: most buy single bottles, but some are willing to take whole cases, which is rare for other tea drinks. This is not an isolated case. Consumers tend to categorize beverages into "trial" and "staple" types. Trial products are bought individually to satisfy curiosity about new items; staples are for stable repeat buyers who purchase in bulk and store for daily consumption. But few consumers are willing to replace all their water intake with sweetened drinks—after a day of drinking, their teeth feel sour.
Before unsweetened tea became popular, the product with the strongest "staple" ability was mineral water, because it doesn't need boiling, is easy to carry, and is most suitable for daily drinking. Now, unsweetened tea is showing a new "staple" trend. Wen Wen told New Distribution: "My wish now is for the manufacturer to offer a large package, so it's easier to buy." Behind this is a stronger consumption trend—soft drinks are rapidly embracing health, driving more changes in terminal channels and consumer behavior.
The emergence of "stockpiling" consumers is encouraging supermarket owners to increase their orders. "I think it might be influenced by parents. Today's parents are very wary of high-salt and high-sugar diets, so they also let their children drink unsweetened tea," said Shu Min. "In our area, when you open the trunk of a car, a case of water and a case of leaves is standard. Besides office workers, students are also getting into drinking leaves."
Consumer Mao Mao told New Distribution: "In the past, it was mainly fitness and weight-loss people who drank unsweetened drinks. Now, friends who don't exercise are also paying attention to dietary health. Everyone's health awareness has risen, and they actively check ingredient labels when buying drinks."
03
How can a forward-looking product cross cycles?
Unsweetened tea has presented a huge cake to the market. "The trend of healthy beverages will not change," Lao Wang believes. Unsweetened tea, represented by Oriental Leaf, still has much room to grow: "In Japan, young people mainly drink unsweetened tea; sweetened tea is the minority." According to data from the China Industrial Research Institute, in 2021, China's bottled water market was about 235 billion yuan, with an average annual growth rate of about 8%. By 2020, China's unsweetened tea market was only 4.9 billion yuan, and the overall unsweetened rate of tea beverages was only 5.2%. In contrast, Japan's unsweetened rate for tea beverages had already reached about 70%.
In other words, unsweetened tea still has huge development space in China. Among them, Oriental Leaf plays a leading role. Nielsen data shows that in the first half of this year, the soft drink market overall declined, but Oriental Leaf grew nearly 70% in the past twelve months, contributing nearly 70% of the incremental growth in the unsweetened tea market, and driving unsweetened tea to grow against the trend.
Undoubtedly, Oriental Leaf has become synonymous with domestic unsweetened tea. Many channel practitioners acknowledged to New Distribution Oriental Leaf's contribution to market education: "Ten years ago, many big brands made unsweetened tea products, but they quickly withdrew." Oriental Leaf is the opener of market demand. In Shu Min's area, Oriental Leaf consumers generally show high loyalty and high repurchase rates, which is inseparable from Oriental Leaf's years of market cultivation. This is beneficial for unsweetened tea practitioners to enjoy longer-term growth dividends.
In the unsweetened tea market, the emergence of hot phenomena in products, channels, and consumption confirms this. On the product side, Uni-President and Master Kong have launched or relaunched unsweetened tea products to share the cake of expanding category boundaries. On the channel side, more distributors and terminal merchants are making money through Oriental Leaf in a sluggish market environment. On the consumption side, consumers have more and healthier tea beverage choices.
As the category crosses its dormant period, unsweetened tea has become a star in the market. Experience from developed countries' beverage markets shows that the birth of a super single product is a prelude to category ascent—mature consumer groups, market uncertainty digested by pioneers, stable channel profits... all indicate that the conditions for a star track are ripe. From a certain perspective, in China, a domestic beverage that can beat Coca-Cola is likely to emerge from tea beverages.
On Oriental Leaf's 11-year growth curve, observers can see a company's growth logic. Rather than making low-end imitations of popular products, Nongfu Spring prefers to lay out ahead of time, avoid red oceans, and conduct market education in advance. The success of the bottled water market confirms the power of this strategy, and in the unsweetened tea market, Nongfu Spring has proven itself over a longer 10-year cycle.
For tea beverages to compete with cola, more brands need to focus their efforts, return to the source of product strength, and enrich product supply. From this perspective, China's beverage market still needs more dreamers. (All names in the article are pseudonyms)
Source: New Distribution (ID: baoliaohui) Author: Bai Ji
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