Click 'Read the original' for details. In the rapidly approaching second half of beverage consumption, industrial beverages are being overtaken by a growing number of larger Chinese-style beverage chain brands. The threat of substitutes in the beverage industry has never been as huge and real as it is today. Since I proposed at the end of 2014 that Chinese consumer goods were showing a trend of 'mainstream shifting,' and further pointed out that Chinese enterprises' 'quantitative growth had hit a ceiling,' the beverage industry giants that once dominated the FMCG sector have begun to frequently show symptoms of 'giant pain': Wahaha's total sales dropped by 20 billion yuan, Uni-President's Fresh Orange and Master Kong's Iced Tea saw sales declines, and recently Huiyuan Juice was reported to be in debt of 11.5 billion yuan. This shows that the 'giant pain' phenomenon in the beverage industry over the past four years can no longer be explained by product upgrades, e-commerce impact, or outdated marketing models. Against the backdrop of the near-total collapse of industrial beverages (packaged beverage products), real changes are occurring: changes in the market environment, changes in distribution and communication structures, and changes in mainstream consumer groups and consumption motivations. In market terms, China's beverage consumption has entered the second half, and the golden age of industrial beverages is over. Changes in the Weight of Consumption Drivers Leading to a Major Shift in the Beverage Industry Beverages have three main consumption drivers: taste, health, and quality. Before 2014, taste accounted for over 90% of the weight in consumers' choice factors. In that era, pear juice, hawthorn juice, kvass, iced tea, fresh orange, mixed fruit juice, herbal tea, walnut milk, etc., appeared in succession. Simple combinations of formula, packaging, and product concepts could create a 'new category,' and focusing on taste, channel, and price could support the rise of a super product or even a scale brand. Herbal tea, Nutri-Express, Six Walnuts, and Fresh Orange were all standouts of that era. After 2014, beverage consumers only increased the weight of the health driver by 30%, yet beverages with a list of chemical names on the ingredient label saw sales plummet off a cliff. A simple action by consumers—checking the ingredient list before purchasing—turned most products into shelf zombies. In basic daily necessities such as air, water, beverages, cooking oil, and condiments, the weight of the health driver continues to increase and has a decisive impact on consumption decisions. The influence of the quality driver on beverage consumption is also beyond imagination: while ice cream giants were haggling over the channel value chain for products priced at 2, 3, or 5 yuan, Zhongjie 1942's ice cream was already selling for over 15 yuan; while NFC (not-from-concentrate) juice struggled on the brink of 8 yuan per bottle, young people were willing to queue for an hour to buy a cup of Heytea or Naixue Tea, new Chinese-style beverages, for over 18 yuan. The quality driver requires not only a perfect product but also the cooperation of consumption scenarios. NFC beverages are better than Chinese-style mixed tea in terms of health and taste, but they remain confined to niche offline channels and less appealing online channels, failing to unleash their sales potential. The changes in the weights of these three consumption drivers have directly created the major shift in today's beverage market: the past industrial beverages have reached their end, with only declines and no growth; product upgrades and even mainstream shifts in industrial beverages are no longer just structural adjustments but a life-and-death test for brands; and more scenario-based, popular, and integrated online-offline mixed beverages will carve out an increasingly larger share of beverage consumption. In short, if industrialized beverage brands fail to deeply understand the essence of the second half of China's beverage consumption, their sales will plummet off a cliff and they may even exit the market in the near future. The Second Half of Beverage Consumption How to Capture Consumers' Stomachs So, what are the characteristics and trends of the second half of China's beverage consumption? The first characteristic is an old topic: product upgrades, that is, adding health and quality factors on the basis of taste appeal. In other words, future industrial beverage brands can only survive if they offer good-tasting products that meet health standards. If, on this basis, the product also conveys a sense of quality, it can be a long-lived product. And I still firmly believe that the industry-wide reshuffle through mainstream shifting will inevitably bring about a change in leadership. That is, the new leading brand will necessarily be the one that has completed a 'substantive' upgrade of its products. Beverages that still focus on taste and lack reliable and credible health support are destined to be short-lived. The second characteristic is the intensifying diversion of sales to substitutes. In the past four years, the post-90s generation has fully become the main force in beverage consumption. The post-90s consume more 'willfully,' meaning they are less sensitive to price. Faced with 3-yuan iced tea and 18-yuan Heytea, they more readily hand their money to Heytea and are even willing to queue. In fashion consumption venues such as commercial streets, shopping malls, and office buildings, young people are increasingly holding Chinese-style mixed tea rather than bottled beverages or Starbucks. According to data from the end of 2017, the number of beverage stores reached 450,000, of which 180,000 new mixed-tea stores were added in 2017, while coffee shops decreased by 180,000, resulting in a net increase of nearly 50,000 mixed-tea stores. The consumption pattern behind the rise and fall in numbers is clear: the proportion of Chinese-style mixed tea is rising rapidly. It is estimated that in 2017, the market size of Chinese-style mixed tea was about 100 billion yuan, and it will reach 500 billion yuan in the next 10 years. The limelight of industrial beverages is being seized by a growing number of larger Chinese-style beverage chain brands. The threat of substitutes in the beverage industry has never been as huge and real as it is today. The third characteristic is the battle for stomach capacity share, which is the ultimate battle in the second half of beverage consumption. The essence of beverages is their share of the total water intake of the human body. Consumers' sources of water intake have become diversified: food, drinking water, alcohol, vegetables, fruits, coffee, tea, and beverages—all these water-based foods are competing with beverages for consumers' stomach capacity. Beverage marketing must not only consider traditional product upgrades, channel coverage, and scenario coverage, but also seriously study the share of consumers' stomach capacity: that is, finding a strategic positioning that enters daily drinking scenarios. The core of this strategic positioning is not just the product, but insight into consumers' lives; it must not only rely on advertising to drive consumers' desire (want to drink), but also truly embed the product into consumers' daily lives (need to drink). China's current beverage market is half fire, half sea—some are happy, some are worried. New-style tea drinks are advancing triumphantly, while industrialized beverage brands find it hard to make progress. I hope the characteristics of the second half of China's beverage consumption pointed out in this article can help enterprising companies become the new mainstream brands of the future. Source: 'Sales and Marketing' magazine, Management Edition October 23-24, during the Autumn Sugar and Wine Fair, New Distribution will host the '2018 FMCG City Distribution Logistics Conference.' We will invite industry experts, FMCG warehousing and distribution specialists, and distributors who have transformed into unified warehousing and distribution platforms to discuss and answer questions about the future development trends of FMCG city distribution logistics and practical cases of distributor transformation. We hope it will bring you different inspiration and thinking! -END-