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According to media reports, at Wahaha Group's 2015 sales work conference, Zong Qinghou admitted to distributors that 2014 was the worst sales year in recent years, with overall sales down 7%. Meanwhile, Tingyi's announcement showed that its beverage business segment saw a year-on-year decline in revenue in Q3, with a decline of 19.95%. Statistics show that Tingyi's instant noodle revenue in Q3 had seen positive year-on-year growth for four consecutive years since 2010, but this year's Q3 saw a reversal, with the first year-on-year decline in five years. According to insiders at Uni-President, in 2015, Uni-President will focus on quality-driven sales growth and abandon expansion of some unprofitable businesses.

Since 2001, over 13 years, China's beverage market has maintained double-digit growth. However, in 2013, the high growth of the beverage industry slowed significantly. Data shows that China's beverage industry grew 13.61% year-on-year in 2013. Although the performance was passable, the growth rate declined compared to previous years. In 2014, the beverage industry faced a more severe situation, with the industry calling 2014 a 'small year' for beverages, and market performance was as expected. The 'small year' in 2014 was mainly due to the severe economic and consumption environment, coupled with frequent rainy weather in summer, leading to poor overall market conditions. In this changing environment, what will be the development trend of China's beverage market in 2015? What products should distributors and manufacturers choose to distribute and produce? We can analyze systematically from the following aspects.

Specifications: Small-format products will increase, especially 200-300ml aluminum cans

After years of rapid development, the beverage industry has accumulated many classic products and brands. In terms of packaging specifications, 500ml PET bottles, 1L+ share packs, and 310ml cans dominate. There are also some Tetra Pak products of different specifications and materials, filling market gaps.

Many companies determine packaging specifications based on others' choices. Packaging strategy is a key part of product strategy. Previously, Wanglaoji mainly used 310ml cans, while Heqizheng differentiated with 600ml PET, quickly capturing market share. Continuing with large cans now is also an attempt to differentiate in packaging.

However, looking at the overall beverage development trend, China's beverage future will move toward smaller specifications, mainly because consumers are transitioning from subsistence consumption to quality consumption. Especially for urban consumers, small and beautiful products will increasingly win their attention. With 500ml as the upper limit, most new products on the market are below 500ml. This meets the needs of a growing number of quality consumers and better expresses brand quality and value.

Mainstream products include Nestlé coffee and Uni-President Da Nai Cha, which have become a beautiful landscape in the market. They are priced high but have high consumer loyalty. In the future, small-format aluminum cans will be a direction for product development, such as Yingpai American Ginseng Beverage.

Taste: Light-flavored beverages have great prospects, especially light functional drinks

The beverage market has many flavors, mainly determined by product category and content. Fruit juices are sweet and thick, green tea is fresh and refreshing, cola is refreshing, herbal tea has a plant taste, plant protein drinks are rich, and coffee is smooth and aromatic... Each category's growth is based on its taste. Why highlight taste? Because beverage sales largely depend on product taste.

Among currently hot-selling products, vitamin beverages represented by Danone Mizone are actually light-flavored products. Strictly speaking, they are mineral water with added vitamins, more flavorful than water but not as greasy as juice, plus functional claims, driving Mizone to a 10 billion yuan market in just a few years. Without this taste differentiation and the functional claim of the blue hat, it would be hard to start such a large market. Driven by Mizone, light-flavored and light-functional beverages are becoming an important force, challenging herbal tea and plant protein drinks.

Besides Mizone, Coca-Cola launched its Aquarius product, and Uni-President launched Hai Zhi Yan. Many companies succeeded in 2014 by launching lemon-flavored, mint-flavored, and other light-flavored products. It is expected that in 2015, light-flavored and light-functional beverages will continue to grow rapidly. This meets people's demand for thirst-quenching drinks in summer and young people's pursuit of rich flavors.

Category: Niche beverage categories have great potential, especially fungi and loquat markets

Currently, China's beverage market is mainly divided into carbonated, juice, plant protein, tea, dairy, and herbal beverages. The category landscape has formed: carbonated drinks are dominated by Coca-Cola and Pepsi, leaving little opportunity for others; juice market is dominated by Huiyuan, with others being small players; herbal tea market is dominated by Wanglaoji and JDB, leaving little opportunity; tea beverage market is a two-horse race between Tingyi and Uni-President; dairy beverage market is dominated by Wahaha; plant protein drinks are a three-way standoff among Six Walnuts, Lulu, and Yedao, each occupying their own category market, leaving others to guerrilla warfare. There is little pure land left for growth, and intense category competition makes market segmentation increasingly difficult.

Facing such a clear competitive landscape, it is very difficult for companies to break through. To maintain high growth, China's beverage industry must break through to continue the rapid development of walnut milk. What categories still have the opportunity to become a 10 billion yuan market? From the overall market development, niche beverage categories have huge potential for gold mining. Under the big trends and big categories, niche categories are the high ground for market gold mining. In 2015, niche specialty beverages will have significant development space because big brands are growing weakly and big categories are sluggish, so the value of small and beautiful niche products will be more prominent. For example, since 2013, Zhentian Loquat Beverage has broken out of the beverage market, becoming a representative lung-moistening drink in the PM2.5 era, gaining market attention and pursuit, with unlimited future prospects. From a raw material perspective, in the future niche beverage market, edible fungus beverages will see brands break out. The popularity of Zhongjing Mushroom Sauce and Jiangzhong Monkey Head Biscuits has paved the way for edible fungus beverages. The polysaccharides in edible fungi are also expensive pharmaceutical raw materials, so future development space is huge. In 2015, the launch of Jiangzhong Monkey Head Beverage is a beginning.

Price: Retail price of 4-5 yuan will be consolidated, especially the 4 yuan price point

China's beverage market has developed from the 2 yuan era to the 3 yuan era. Currently, the 2 yuan price point is occupied by carbonated and tea drinks, while the 3 yuan price point is occupied by juices and various plant drinks. Affected by market competition, inflation, and rising labor costs, the price point is moving toward 4 yuan. More and more products will compete at the 4 yuan price point, and future bottled beverages will compete around this price.

It is foreseeable that after entering 2015, new beverage development and creation will be priced between 4-5 yuan; otherwise, products will have no operational or development space and cannot form competitive advantages. When new products lack scale, they can only survive through value competition; otherwise, price wars will make them victims of big brands' price grinders. In fact, marketing mainly involves the trade-off between value and price strategies. Whether to choose value or price is determined by the company's strategy and resources, not arbitrarily.

For example, Zhentian Loquat Beverage entered the market with a retail price of 4 yuan, while Uni-President Da Nai Cha is more expensive. In the future, market competition without value will be eliminated. In China's mature consumer market, the choice of value is most critical. Price wars are no longer what Chinese enterprises need in the brand era; value competition is the soul of future market battles.

Therefore, from the current overall Chinese beverage market, the decline of traditional carbonated drinks is irreversible, plant protein drinks' dominance is hard to form a big trend, herbal tea as a traditional plant drink has no opportunity, and the remaining dairy and tea drinks need brand and product innovation to maintain growth. Future high growth in China's beverages will rely on value competition for transformation, and only innovation can bring unlimited possibilities.

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