In 2009, juice drinks once held an 18.56% share, ranking among the top three in the national beverage industry by production and sales. By 2020, this figure had dropped below 15%, with ready-to-drink tea surpassing juice to claim the third spot with a 21.12% share. Data source: Qianzhan Industry Research Institute (figures rounded) If consumers no longer favor juice, how do we explain the continuous launch of new fruit drinks by new tea brands, such as peach oolong, strawberry bobo, and mango pomelo sago, which are widely sought after by consumers? Crystal grapes appear in the hands of young people in a different form, such as CoCo's "Rainy Green Grape," Heytea's "Succulent Grape," and Nayuki's "Cheese Grape"... In fact, juice is a category worth discussing. On one hand, it is naturally associated with health, aligning with the health consumption trend, especially after the application of NFC technology. On the other hand, China's juice consumption is relatively low, with per capita annual consumption of less than 1 kilogram, which is one-tenth of the world average. Data source: Guanyan Report Network, Debon Research Institute Moreover, in this market of over 100 billion yuan, there is no industry giant with a particularly large scale. The top three companies in the juice industry are Coca-Cola (China), Wei Chuan Foods, and Huiyuan Juice, with market shares of 14.6%, 11.6%, and 11.0%, respectively. It aligns with the health consumption trend, the market still has potential and room for growth, and market concentration is low, but sales volume has been unable to break through. Various contradictions appear in the juice market. The juice industry needs an upgrade and breakthrough from supply to product. In response to these contradictions and dilemmas, we interviewed Hangzhou Leyuan Group, a senior enterprise in the industry.

Company Profile of Leyuan

Founded in 1998, Leyuan has invested a total of 1 billion yuan, with its headquarters in Qianjiang New City CBD, Hangzhou, Zhejiang. The factory is located in Deqing County, Huzhou, Zhejiang, with two production bases covering a total area of 117,800 square meters, equipped with 7 leading domestic automatic juice filling production lines.

Leyuan has been focused on the juice and juice drink industry for over 20 years, with products including the 100% Fruit & Vegetable Secret juice, 100% Fruit & Vegetable Secret smoothie, Leyuan Yipin, Leyuan Little Lime, and Leyuan Fruit Pulp Orange.

Leyuan integrates global fruit and vegetable resources and has established long-term strategic cooperation with world-renowned juice suppliers, providing a solid guarantee for the selection and supply of juice varieties and flavors. It has established long-term cooperative relationships with more than 200 large retail customers nationwide, including Walmart, RT-Mart, China Resources Vanguard, Wumart, Yonghui, and Hema. Fruit and vegetable juice production line 01 NFC Juice: Transformation and Dilemmas The dilemma of juice is first related to the unreasonable product structure in the industry. Juice can be divided into three levels according to concentration: 1. Low-concentration juice drinks refer to juice with a concentration not exceeding 25%; 2. Juice with a content of 26%-99% is medium-concentration juice; 3. 100% juice content is high-concentration juice, also known as pure juice. Pure juice can be further divided into low-temperature pure juice and room-temperature pure juice, or FC (from concentrate) and NFC (not from concentrate). According to data from Toubao Research Institute, in 2019, low-concentration juice drinks accounted for 74.3% of the sales volume in the juice beverage market, while pure juice drinks only accounted for 5.9%. Orange juice drinks made with white sugar, food additives, and edible flavors occupy the vast majority of shelves. Domestic consumers often classify bottled juice as flavored beverages. With the increase in health awareness in recent years, under the demand for sugar control and reduced sugar, consumption of low-concentration juice has naturally decreased. The shift in demand is driving the transformation of the supply side of the juice market. As 70% of the market begins to decline, more and more players are entering the NFC juice track, believing this will be the windfall and opportunity for the juice market. Around 2015, 30-40 NFC juice brands emerged in the market. According to Euromonitor International data, from 2013 to 2018, the sales scale of the NFC juice market grew from 300 million yuan to 2.57 billion yuan. Although NFC juice seems promising from the data, compared to the entire 100-billion-yuan juice market, NFC juice still occupies only a very small portion. There are many reasons why NFC juice has not met market expectations. First is price. The strong requirement for freshness in NFC juice makes transportation and storage conditions particularly stringent. Cold chain logistics, low-temperature storage, and various costs combined result in NFC juice prices reaching 30-50 yuan per liter, which makes NFC juice destined not to become a mass consumer product. Secondly, the strong requirements for transportation and storage are not conducive to NFC juice seizing market share. It requires distributors to have cold chain vehicles, stores to have refrigerated cabinets, and due to the short shelf life of NFC juice, appropriate marketing plans and promotional arrangements are also needed. Finally, there is category awareness. NFC juice has a low volume in category promotion, and inadequate promotion results in users not being able to understand the advantages of NFC juice well, especially when NFC juice is in the same selling environment as other juices. Consumers may be influenced by price and give up NFC juice. In addition to the above, NFC juice also faces diverse potential competitors and strong direct competitors. The maturity of global supply chains, e-commerce, delivery, and other infrastructure allows Chinese consumers to enjoy fruit freedom without pressure. Street drinks, carbonated beverages, sparkling drinks, etc., which focus on fresh and made-to-order, can bring more pleasure to consumers. Moreover, low-concentration juices, although declining, still occupy 70% of the market. They have lower prices and longer shelf life, can be distributed to more shelves, and are more favored by distributors compared to the "delicate" NFC juice. In terms of upstream supply, due to product characteristics, NFC juice cannot rely on post-processing to increase sweetness, which imposes requirements on fruit varieties. The sweetness of the fruit itself becomes an important factor. A few large enterprises can build their own orchards, but for small and medium-sized enterprises, there are only a few orchards that can supply high-quality fruit. NFC juice certainly has promising prospects, but it will not become the backbone of the juice market for a while. It needs more people to know and recognize the difference between NFC juice and other juices. 02 Current Popular Practices in the Juice Track The burden falls on medium-concentration juice. As a "transitional" product, on one hand, it can convert consumers of low-concentration juice through product upgrades to meet their higher health pursuit needs; on the other hand, medium-concentration juice has more flexible innovation space and can be upgraded horizontally beyond juice. Some brands, with keen insight, have taken the lead in adding and subtracting from medium-concentration juice. Whether in form or selling points, the "makeover" of juice can be divided into the following directions. 1. Niche and Novel Flavors The ordinary mountain citrus in the southern mountains has become the popular Yuyougan across the country. Local wild fruits have become fashionable items that city dwellers queue for one to two hours to get. When conventional fruits like mango, strawberry, bayberry, and coconut are hard to create new hits, savvy product managers turn their attention to niche fruits. Oil citrus, Inner Mongolia sea buckthorn, prickly pear, and bergamot have not let them down, giving them returns beyond expectations. 2. Higher Functional Added Value In addition to supplementing vitamin C, more products are starting to tell stories about probiotics, anthocyanins, and lutein. These products focus on delivering functional benefits and emphasize health and wellness. Juice + vegetable juices retain dietary fiber from vegetables, supplemented with various fruit juices for flavor, attempting to balance health and taste. There is also the compounding of multiple fruit juices, through pairing and innovative flavors, to make products contain more functional additives. 3. Emphasized Regional Attributes Vietnamese small limes, Brazilian Valencia oranges, Chilean blueberries... In addition to these foreign fruits that travel across the ocean to Chinese consumers, the popularity of local fruits is also strong: Xianju Dongkui bayberry, Zhangpu lychee, Tianshan red heart apple... Whether it's novel flavors, niche fruits, or compound functions, these practices attempt to solve the dilemma consumers face when choosing between fresh fruit and juice. Compared to more common apples, pears, and bananas in daily life, juice can extend the food mileage, allowing consumers to taste more novel fruit flavors. Compared to fresh fruits from high-quality origins, juices made from these fresh fruits are more affordable. In general, whether it's adding more freshness to relatively popular products or strengthening the demand for niche needs, the former tests insight into user psychology and product R&D capabilities, while the latter tests supply chain integration and SKU management capabilities. 03 Key to Breaking Through Due to differences in dietary habits, for foreign consumers, juice can appear on the breakfast table just like milk. Milk supplements protein and calcium, while juice supplements dietary fiber, vitamins, and trace elements. The reason milk has become part of Chinese dietary habits relies on relevant national policies, such as milk being a required item in student nutritious lunches, accumulated media publicity, and the concerted efforts of the entire dairy industry. After decades, milk has truly entered the mass market. Compared to the various operational methodologies currently in the juice market, the ultimate point for the juice industry to return to is finding a core communication point that can penetrate multiple consumer groups. Changing consumer habits is a very difficult task. "It is very difficult to make pure juice a necessity like it is abroad, and then use pure juice to supplement vitamins and dietary fiber. But we are trying to do it, and it requires different groups of people and different proportions of vegetables and fruits to solve this problem," said Mr. Zheng Tongjian, Marketing General Manager of Leyuan Group. Compared to guidance, a more effortless approach is activation. Behind consumers are heterogeneous individuals with different needs. Since consumers already have health awareness, doing things that go with the flow is more likely to succeed. For example, children need additional nutritional elements beyond their daily diet, and mothers either lack time or cannot prepare comprehensively. For this group, Leyuan launched a fruit and vegetable smoothie product, each bottle containing 5 fruits and 2 vegetables. For young people's desire for less burden, Leyuan Group uses high-quality Vietnamese seasonal small limes, controls acidity at 4%-6%, and uses low-temperature sterilization and quick-freezing freshness-locking technology to ensure a refreshing and fresh taste. Following the same operational approach are Leyuan's double pomelo juice and Yipin juice. Mr. Zheng Tongjian, Marketing General Manager of Leyuan Group, said, "Our corporate mission is to make juice a daily necessity. Our products can be divided into three lines: products that use better fruit to balance taste and health, NFC juices that focus on health claims, and fruit and vegetable smoothies for the children's market to help supplement dietary structure." Product examples Seizing core consumption scenarios and digging deep, creating a unique atmosphere between consumers and juice, and making the health value of juice itself a favorable weight, can find many worthy cases in the development of the dairy industry. More refreshing, more nutritious, less burden... These labels, if they can be yogurt, high-protein milk, or skim milk in the dairy industry, why can't they be hawthorn juice, coconut water, or small lime juice in the juice industry? "In dairy innovation now, you don't need to tell consumers why they should drink milk every day, but juice needs to do that. In addition to making better products, developing better processes, and lowering prices, it is more about stimulating the entire consumption habit, letting people know why they should drink juice every day, why they should drink fruit and vegetable juice every day, and what problems it can help solve," said Mr. Zheng Tongjian, Marketing General Manager of Leyuan Group. If we look at the cycle, juice might also stand in the position of milk. The "Dietary Guidelines for Chinese Residents" published by the Chinese Nutrition Society emphasizes the rationalization of a balanced dietary structure and the importance of supplementing more dietary fiber every year. To turn these aspects from unilateral appeals into a national topic, the entire juice industry needs to form a consensus, with brands working together on product, communication, and channel fronts to find broader channels and more precise scenarios for juice, making juice an indispensable presence in consumers' minds and achieving a leap in scale. This road is long and difficult, but it will be the breakthrough point for the juice industry to break free from its shackles.