Click to read the original article for details Source: New Game Theory (ID: newgametheory) Fighting against sugar is becoming a new business. From the marketing misstep of Nongfu Spring's sparkling water a while ago, to the recent launch of Genki Forest's electrolyte water, and even the cross-industry newcomer Heytea's new product: Hey Bottle sparkling water, the terms zero-sugar, low-sugar, and anti-sugar are indispensable in beverage products. According to Dongxing Securities' "Food & Beverage: 'Sugar-Free' Series Report," in 2019, China's sugar-free beverage market reached 9.87 billion yuan, and this scale is expected to maintain double-digit growth in the future. New Game Theory selected a large supermarket nearby, Yonghui Supermarket, and found that products touting "0 sugar, 0 calories, 0 fat," "zero sugar," or "sugar-free" often command higher prices. For example, Master Kong's classic 500ml jasmine tea sells for 3 yuan, while the same 500ml sugar-free jasmine tea sells for 4.8 yuan. Even within sugar-free beverages, there is a clear price gradient: Genki Forest's Burn Tea (500ml), Uni-President's Chaliwang (500ml), and Dydo Black Tea (600ml) are mostly around 6 yuan, while Linlong Tea Room's Jasmine Light Tea (500ml) and Suntory Oolong Tea (500ml) hover around 4 yuan. Not only the beverage industry is waving the "anti-sugar" banner; sugar-free cheese, low-sugar biscuits, sugar-free ice cream, anti-sugar rice cookers, and even anti-sugar toothpaste, anti-sugar oral liquids, and anti-sugar pills under the skincare category all show merchants' fondness for the "sugar-free" concept. However, amid the hype, some products have been exposed as a "tax on intelligence" disguised as health concepts, and some consumers have begun to trace the industry chain, seeking ways to diffuse the path of sugar-free products.
Low Sugar, Zero Sugar, Anti-Sugar The "Anti-Sugar" Banner of New Consumption The company that first gave the beverage industry the "sugar-free" mission was not Genki Forest, but it was Genki Forest that opened up the market for the "sugar-free" concept. In 1997, Japan's Suntory Oolong Tea, labeled low-sugar, entered the Chinese market; five years later, Uni-President followed with its first sugar-free tea drink, Chaliwang. However, neither product won consumer favor; around the millennium, the health concept of sugar-free and low-sugar had not yet entered the hearts of Chinese people. It wasn't until 2016 that Genki Forest began launching "sugar-free" Burn Tea and "0 sugar, 0 fat, 0 calories" sparkling water, making the "sugar-free" concept a new industry trend. Public data shows that in 2020, Genki Forest's performance grew approximately 270% year-on-year, with annual sales reaching 3 billion yuan, of which sparkling water accounted for over 70%. What does that mean? Based on a normal retail price of 5 yuan per bottle, sparkling water sales reached 400 million bottles that year. According to Xiang Piao Piao, the sparkling water sold by Genki Forest could circle the earth three times. Relying solely on the "anti-sugar" banner to break into the beverage industry, Genki Forest, founded only five years ago, has already received multiple rounds of financing and is valued at up to $6 billion after the latest round. Since then, traditional beverage giants have increased R&D and mass production of "sugar-free" products, and new beverage unicorns are also trying to replicate Genki Forest's path: Coca-Cola has developed a new product, Xiaoyuzhou sparkling water, based on products like Coke Zero and Sprite Zero; Nongfu Spring, Master Kong, and Uni-President have all quickly launched their own representative sugar-free products; Linlong Tea Room, founded only in 2020, has all its products as "0 sugar, 0 fat, 0 energy." Even new-style tea drinks are transitioning to "sugar-free." The "2021 New-Style Tea Drink Trend Analysis Report" jointly released by People's Daily Health Client, Health Times, and Meituan Waimai shows that over 37% of users pay attention to the nutritional content of milk tea, with the most concern being sugar content, calories, and whether sugar substitutes are used. To adapt to this change, Heytea launched its sparkling water product Hey Bottle, touting "zero calories, zero fat," and during the 2020 Double 11 shopping festival, it sold 500,000 bottles, ranking among the top three internet-famous sparkling waters. Additionally, the report points out that in 2020, there were over 3,400 milk tea shops on food delivery platforms offering sugar-substitute drinks, an increase of 86.2% compared to 2019. While the beverage industry attracts consumers with the "sugar-free" concept, products such as sugar-free ice cream, low-sugar biscuits, sugar-free cheese, and even anti-sugar rice cookers are also emerging. But in terms of scale, another area that has initially formed a market is personal care products. In April 2021, Zhonghua anti-sugar toothpaste, endorsed by Wang Yuan, was launched on JD.com's supermarket, and launched activities such as an anti-sugar storm day sharing session, customized "sugar-coated haws" and signed photos, and exclusive mystery gifts. Before this, Xiaojudan and usmile had already launched their own anti-sugar toothpaste. Unlike the food industry, which uses sugar substitutes (sweeteners) to replace higher-calorie regular sugar, anti-sugar toothpaste mainly uses their own antibacterial and anti-sugar principles to clean sugar residues left in the gaps between teeth. Toothpaste is just the tip of the iceberg in the anti-sugar lineup. Li Jiaqi's live-streaming room has promoted products such as Haa anti-sugar anti-aging essence, AG anti-sugar mask, and Origins Mega-Mushroom Skin Relief Serum; on Xiaohongshu, notes about anti-sugar whitening serum, anti-sugar powder, anti-sugar tablets, and anti-sugar oral liquids have exceeded 245,000.
Tax on Intelligence or Real Health? The Demand Bubble in the "Sugar-Free" Market The rise of the "sugar-free" market is inseparable from the growing health demand. The "2021 Health Consumption Insight Report" points out that most households' annual health spending ranges from 500 to 5,000 yuan, with health care, nourishment, fitness, beauty, and maintenance of various body parts all included in the scope of "health consumption." And using sweeteners (sugar substitutes) to replace sugar intake is more urgent than health care and nourishment. The reason is that excessive sugar intake will combine with proteins to produce advanced glycation end products (AGEs). Currently, multiple studies have proven that AGEs can lead to the occurrence of many chronic degenerative diseases. A research paper from Zhejiang University's College of Biosystems Engineering and Food Science points out: "Histopathological studies show that AGEs play an important role in the occurrence and development of diabetes and its complications, such as diabetic nephropathy, diabetic retinopathy, Alzheimer's disease, atherosclerosis, and aging." Taking diabetes alone, the World Health Organization's "Global Report on Diabetes" states that in 2014, there were 422 million people (or 8.5% of the population) with diabetes worldwide, with China contributing one-third of the world's diabetic patients. Therefore, in 2019, the Healthy China Action Promotion Committee issued the "Healthy China Action (2019-2030)" and called for per capita daily added sugar intake not to exceed 25g, advocating that consumers use sweeteners instead of sucrose in food and beverages. But are sugar substitutes really reliable? Perhaps using this substitute cannot solve people's health concerns once and for all. Sugar substitutes, also known as sweeteners, have been widely used in food production due to their characteristics of no calories, not being absorbed, and high sweetness. Coca-Cola's Coke Zero, Coke Fiber+, and Sprite Fiber+ use artificial sweeteners such as aspartame and acesulfame potassium. In contrast, the natural advantages of sugar substitutes are more suitable for people with weight loss needs or those troubled by diseases like diabetes, but sugar substitutes also carry consumption risks. At the American Diabetes Association's June 2019 meeting, a research report pointed out that drinking beverages with artificial sweeteners daily increased the risk of diabetes by 19%. Subsequently, researchers at Harvard T.H. Chan School of Public Health conducted a new experiment on Asian populations. The results showed that among Singaporean youth observed, those who chose to drink more sugar-free but artificially sweetened soda had a 58% increased risk of developing type 2 diabetes. Another risk of sugar substitutes is that consuming them can produce an excitatory effect in the brain, leading people to eat more high-calorie foods. In other words, consuming more sugar substitutes may increase the risk of obesity. This claim is confirmed in an article by Fan Zhihong, associate professor at the College of Food Science and Nutritional Engineering, China Agricultural University. The sweetness of some sweeteners is usually hundreds of times that of sucrose, which can exacerbate reactive hunger, leading to obesity. For many domestic merchants touting "0 sugar, 0 calories," sugar-free products may just be a way to collect a "tax on intelligence" from consumers. In April this year, Genki Forest issued an apology statement saying that in the labeling and promotion of its milk tea products, it did not clarify the difference between "0 sugar" and "0 sucrose," which could easily cause misunderstanding. The issue here is that although sugar-free sweeteners like erythritol are used, the milk in milk tea naturally contains lactose and crystalline fructose, so the correct statement should be "0 sucrose," not "0 sugar." In fact, many types of sugar-free products have similar situations. Sugar-free ice cream and sugar-free milk tea ignore the lactose in milk, and low-sugar biscuits, while reducing the addition of white sugar, the raw materials of biscuits—wheat flour and starch—themselves contain more sugar. From the above, although replacing white sugar, sucrose, and other sugars with sugar substitutes increases certain production costs, for consumers, spending more money cannot fully meet their health needs. Once they consume too much sugar substitute or even become dependent, the disease troubles they face are still unavoidable.
Upstream Sourcing and DIY The Path Diffusion of the Health Industry When finished products fail to give consumers enough trust, dietary health products are showing an "upstream" trend, where consumers buy ingredients themselves and combine personalized healthy recipes. Since 2020, Guan Xiaotong has posted multiple homemade food videos under the Weibo topic #Guan Xiaotong's Eating, Drinking, and Beauty#, with the tutorial on vegetable sandwiches receiving up to 490 million views. Subsequently, homemade foods such as improved Luosifen, avocado energy egg rolls, and rice-free sushi have sparked imitation among netizens. Take the avocado energy egg roll: apart from a little olive oil for frying the egg and a little pepper for seasoning, ingredients including avocado and lettuce strive to be low-fat, low-sugar, and nutritionally balanced. The effect of homemade food is not only reflected in celebrities' demonstrations; on social platforms such as Bilibili, Douyin, Kuaishou, and Xiaohongshu, videos with keywords like healthy meals, fat-reducing meals, and zero-sugar cakes also play an important role. For example, Bilibili UP master Jinjiang Chibupang's video "Can you lose weight by eating cake?! Low-calorie delicious matcha yogurt mousse cake to satisfy your craving this summer!" features a matcha cake made with ingredients that all consider sugar intake: sugar substitute erythritol, sugar-free whole wheat bread, low-calorie bananas, sugar-free plain yogurt, and pure animal cream. This reduces the overall calorie content to 76 kcal/100g. To make the above healthy foods at home, a stable and high-quality ingredient supply chain is also essential. The "2021 Food and Fresh Produce Consumption Trends and Business Innovation Outlook" points out that the global pandemic has activated the home scenario for food and fresh produce. Driven by home fitness needs, consumers are making healthier choices in ingredients and recipes. On one hand, low-temperature milk with shorter shelf life but fresher quality is ushering in development opportunities, with its industry growth rate rising from 6.1% in 2015 to 11.6% in 2019, and its consumption share increasing from 8.3% in 2014 to 13.2% in 2019. On the other hand, e-commerce platforms are also setting more detailed SKUs for various ingredients. For purple sweet potatoes, merchants can specify product information down to origin, growing environment, taste, management system, planting technology, packaging technology, and even logistics system. This trend can be called "branding" in the fresh produce field. Yu Jian, General Manager of Kantar Worldpanel Greater China, pointed out, "Fresh produce branding can bring more considerable added value to products, such as standardized production, more premium space, raw materials, quality assurance, and shortening consumer choice paths." By breaking through the barriers of fresh produce "branding," young users unfamiliar with fresh produce procurement will gain a more convenient and relaxed consumption experience. Data shows that the customer flow growth rate of young groups in the fresh produce category has significantly improved, currently ranking first among all groups at 17%. From "0 sugar, 0 calories, 0 fat" beverages to nutritionally balanced, low-salt, low-sugar homemade foods, it can be seen that consumers' dietary needs are shifting towards personalization and health. For the "anti-sugar" army like Genki Forest and Linlong Tea Room, the risks of sugar substitutes themselves may have already planted a landmine for the current rapid growth. But for consumers, this is not a bad thing. In the continuously upstreaming food industry chain, people have transformed from passive consumers to active leaders, blowing away market bubbles and meeting their own needs by selecting ingredients and making homemade food.
PS: The 2021 (4th) China FMCG Conference, hosted by "New Distribution," is about to open in Shanghai. Focusing on industry trends + practical cases + growth connection as the core, 3,000 FMCG practitioners will gather at the event. 10 themed forums cover new retail O2O, community group buying, short video live e-commerce, distributor transformation, rise of new consumer brands, new wine and beverage interpretation, distribution B2B supply chain, omni-channel marketing, B2B2C new technology applications, etc., with operators from various segments bringing the latest case studies. Some of the confirmed heavyweight guests so far include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, General Manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, Global Expert Partner at Bain & Company and former Vice President of Marketing for Coca-Cola China; 4. Chen Xiaodong, Senior Vice President of Nestlé Greater China; 5. Zhang Fujun, President of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, General Manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, Vice President of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, General Manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, General Manager of E-commerce at Gold Hong Ye Paper Group... A grand event for FMCG professionals, you must be there! Are you "watching" me?