---
title: "Domestic Sugar-Free Beverages Enter Explosive Growth Period, Upstream Business Also Booming"
description: "As demand for sugar-free beverages surges, the market price of erythritol has risen to around 25,000 yuan per ton. This growth is driving existing manufacturers to expand capacity and attracting new investors, intensifying competition in the erythritol industry."
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published: "2021-09-08"
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# Domestic Sugar-Free Beverages Enter Explosive Growth Period, Upstream Business Also Booming

> As demand for sugar-free beverages surges, the market price of erythritol has risen to around 25,000 yuan per ton. This growth is driving existing manufacturers to expand capacity and attracting new investors, intensifying competition in the erythritol industry.

**Click to read the original article for details**
Source: China Business Network (Yicai)
As demand increases, the market price of erythritol has also risen. According to reporters, the current market price of erythritol has risen to around 25,000 yuan per ton.
It is worth noting that as the prosperity of the erythritol industry continues to improve, it is driving existing manufacturers to expand production capacity and attracting new investors, which will make market competition in the erythritol industry increasingly fierce.
In the financial reports of several beverage companies released recently, sales of sugar-free beverages have grown significantly, especially driven by new consumer brands such as Genki Forest. The use of new sugar substitutes like erythritol has accelerated the explosion of the sugar-free beverage category. Upstream listed companies selling raw materials have also benefited, with significantly improved performance growth.
**The Explosion Is Just Beginning**
On an afternoon in early September, at a convenience store near Wudaokou in Beijing, the best display positions in the refrigerator were filled with beverages labeled "0 sugar" and "sugar-free," while traditional popular sugary drinks like iced tea were squeezed to the bottom of the refrigerator.
At a small grocery store near a residential area not far away, the shop owner, Shu Yixue, was restocking the store's only refrigerator, placing the most bottles of sugar-free sparkling water from Nongfu Spring and Genki Forest, because they "sell well."
Unconsciously, sugar-free beverages are rapidly seizing the center stage of beverage consumption.
At the China Beverage Health Consumption Forum held during this year's Beijing International Services Trade Fair, Ruan Guangfeng, director of the Science and Technology Department of the China Food and Nutrition Information Exchange Center, released the "Healthy China Beverage and Food Sugar Reduction Action White Paper." He stated that the domestic sugar-free beverage industry is entering a period of rapid growth, with the market share of sugar-free beverages nearly doubling over the past three years.
At the same forum, a third-party related institution stated that in 2020, Genki Forest achieved revenue of 2.7 billion yuan, a year-on-year increase of 309%. Genki Forest is also considered the driver of this round of sugar-free beverage craze, having launched sugar-free sparkling water products in 2018 and quickly becoming popular.
It is worth noting that in the financial reports of several beverage companies that recently announced their semi-annual results, they also emphasized the growth of their sugar-free beverage businesses.
According to Swire Coca-Cola's 2021 semi-annual report, revenue in the first half of the year reached HK$27.55 billion, a year-on-year increase of 28%, with net profit of HK$1.47 billion, a year-on-year increase of 55%.
Among them, mainland China business achieved revenue of HK$14.77 billion, a year-on-year increase of 25%, with coffee and sugar-free beverages becoming the highlights of the first half.
At the results briefing, Swire Coca-Cola President Su Wei stated that in mainland China, the soda category is leading growth, especially the 0 sugar 0 calorie series. Swire Coca-Cola has launched multiple sugar-free products, including Coca-Cola Zero Sugar, Sprite Zero Sugar, and Fiber+ series.
Swire Coca-Cola also replied to China Business Network, saying that in the first half of 2021, sales of sugar-free products in the mainland China market increased by more than 70% year-on-year in the first seven months. In addition to the sugar-free soda series, the two sugar-free tea brands, Pure Tea House and Sunshine Tea, also saw considerable growth.
Another Coca-Cola bottler in China, China Foods (00506.HK), reported that in the first half of 2021, its sugar-free soda category maintained rapid growth with a growth rate close to 50%, driving China Foods' soda business revenue to 8.61 billion yuan, a year-on-year increase of 16.7%.
Nongfu Spring's 2021 first-half revenue reached 15.18 billion yuan, a year-on-year increase of 31.4%. Revenue from packaged drinking water, tea beverages, juice beverages, and other categories (coffee, soda water, etc.) grew by 58.8%, 36.4%, 29.9%, and 86.6%, respectively. Among each category, sugar-free products grew faster.
Food industry analyst Zhu Danpeng told China Business Network that under the pandemic, consumers' demand for health management such as healthy eating and calorie control has greatly increased, which has also driven the domestic sugar-free beverage category to rapidly enter an explosive period.
Compared with beverage markets in other countries such as Japan, the market share of sugar-free beverages in China is still relatively low, leaving significant room for improvement.
According to a research report from Dongxing Securities (12.240, 0.24, 2.00%), the market size of China's sugar-free beverage industry was 1.66 billion yuan in 2014, accounting for only 0.27% of the total beverage market. By 2019, it had grown to 9.87 billion yuan. It is predicted that by 2027, the domestic sugar-free beverage market will reach 27.66 billion yuan.
In comparison, in the Japanese market during the same period, sugar-free beverages accounted for more than 50% of the total in 2019, with the growth of the beverage market basically contributed by sugar-free beverages.
It is worth noting that some consumers are concerned that sugar substitutes may have other side effects on the human body.
At the China Beverage Health Consumption Forum, Chen Junshi, an academician of the Chinese Academy of Engineering and chief consultant of the National Food Safety Risk Assessment Center, stated that sweeteners are currently divided into natural sweeteners and artificial sweeteners. Those approved by the government are safe, and the state stipulates the scope of use in food. For the beverage industry to develop, replacing sugar with sweeteners is a trend.
**Boosting the Upstream "Sweet Business"**
With the hot sales of sugar-free beverages, upstream sugar substitute manufacturers have also benefited. Especially in this round of sugar-free beverage craze, new consumer brands such as Genki Forest have used erythritol extensively as a sugar substitute raw material, which has also made erythritol raw material suppliers very happy.
A person in charge of a domestic beverage company told China Business Network that erythritol is not a new product. Although its taste is closer to sucrose, due to its low sweetness and high cost, beverage companies prefer to use sweeteners.
However, with the rapid growth of erythritol's popularity, beverage companies have had to accelerate the launch of sugar-free products using erythritol.
According to a research report from Huaan Securities (5.690, 0.12, 2.15%), based on per capita consumption forecasts, optimistic estimates suggest that China's total erythritol market consumption will reach 160,000 tons in 2025, with a neutral estimate of 130,000 tons. In 2019, global erythritol production was approximately 85,000 tons.
Baolingbao (12.720, 1.16, 10.03%) (002286.SZ), the first domestic functional sugar manufacturer to complete industrial production of erythritol, reported in its semi-annual report that in the first six months of 2021, its operating revenue was 1.26 billion yuan, a year-on-year increase of 24.1%.
Despite a significant rise in raw material corn prices in the first half, net profit reached 64.545 million yuan, a year-on-year increase of 48.7%, also setting a new high since its listing in 2009. Among them, revenue from sugar alcohols (mainly erythritol) was 260 million yuan, a year-on-year increase of 22.3%.
Baolingbao stated that its erythritol production line has been running at full capacity in the first half. The company began investing in September 2020 to build an expansion project with an annual output of 13,000 tons of erythritol, and by the end of July 2021, production capacity basically met design requirements.
The project's completion will further enhance the company's market share of erythritol products and have a positive impact on second-half performance.
Another major erythritol producer, Shandong Sanyuan Biotechnology's prospectus (submitted for review) shows that in 2018, 2019, and 2020, erythritol products accounted for 96%, 60%, and 80% of its main business revenue, respectively.
From 2018 to 2020, Sanyuan's customers were mainly overseas, but in the first half of 2021, Genki Forest became its largest customer, and well-known beverage companies such as Nongfu Spring, Coca-Cola, Heytea, Jinmailang, Dali Group, and Uni-President also successively became its important customers.
As demand increases, the market price of erythritol has also risen. According to reporters, the current market price of erythritol has risen to around 25,000 yuan per ton, while from 2018 to 2020, the average unit price of erythritol exported by Sanyuan to the United States was around 15,000 yuan per ton.
It is worth noting that as the prosperity of the erythritol industry continues to improve, it is driving existing manufacturers to expand production capacity and attracting new investors, which will make market competition in the erythritol industry increasingly fierce.
The prospectus shows that if Sanyuan lists on the Shenzhen Stock Exchange's ChiNext board, it plans to raise 900 million yuan, with more than 85% of the funds to be invested in the annual output of 50,000 tons of erythritol and technology center project.
Another functional sugar alcohol and starch sugar producer, Huakang Shares (44.760, 2.13, 5.00%) (605077.SH), simply changed the use of raised funds, terminating the "Comprehensive Utilization Industrialization Project of Viscose Fiber Pressing Liquid" and changing it to the "Annual Output of 30,000 Tons of High-Purity Crystalline Erythritol Construction Project."
In Zhu Danpeng's view, the sugar-free beverage category is still growing rapidly, and the good days for upstream sugar substitute companies will continue in the future.
**Are you "watching" me?**


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