---
title: "Functional Beverage Market Clouds Gather: Who Will Prevail?"
description: "The functional beverage market is expanding, attracting capital. The leader Red Bull faces a crisis, creating opportunities for new entrants to break through its barriers. As health awareness grows, carbonated drinks decline while functional drinks surge, with over 20 new products launched in 2017 alone."
author: "陈远枝"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-07-14"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/functional-beverage-market-clouds-gather-who-will-prevail-9ddcb955/"
markdown: "https://xinjignxiao.com/en/articles/functional-beverage-market-clouds-gather-who-will-prevail-9ddcb955.md"
original_source: "https://mp.weixin.qq.com/s/OEL7g53dloOe2qN8rhcvbw"
translation: "https://xinjignxiao.com/zh/articles/%E5%8A%9F%E8%83%BD%E9%A5%AE%E6%96%99%E6%88%98%E4%BA%91%E5%AF%86%E5%B8%83-%E8%B0%81%E4%BC%9A%E7%81%AD%E4%BA%86%E8%B0%81-9ddcb955.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/functional-beverage-market-clouds-gather-who-will-prevail-9ddcb955/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Functional Beverage Market Clouds Gather: Who Will Prevail?

> The functional beverage market is expanding, attracting capital. The leader Red Bull faces a crisis, creating opportunities for new entrants to break through its barriers. As health awareness grows, carbonated drinks decline while functional drinks surge, with over 20 new products launched in 2017 alone.

Click to read the original article for details.
The functional beverage market is expanding, and capital is drawn to the scent. The "leader" Red Bull faces a crisis, which becomes an opportunity for new entrants. Can they seize the chance to break through the barriers it has left?
As people pay more attention to health, carbonated beverage consumption is gradually "cooling down," while functional drinks主打健康牌 are "heating up" sharply, like the weather and atmosphere during the World Cup—hot, restless, and tense.
Apart from established brands like Red Bull and Dongpeng Special Drink, in 2017 alone, over 20 functional beverages squeezed into the same track, including Lehu, Monster, Carabao, Wang Sicong's Ailu, Amway XS, and Li Ka-shing's Celsius... The latest entrant is health product brand By-Health's cross-category product "F6 supershot."
Newcomers want to grab territory; incumbents want to hold onto their interests. A defensive battle in the functional beverage market is intensifying...
**Cats Smelling Blood**
According to China Commercial Industry Research Institute data, from 2012 to 2016, the average annual compound growth rate of retail volume in China's functional beverage industry was about 14%, and the average annual compound growth rate of retail sales was about 15%. It is estimated that in 2018, China's functional beverage retail sales will exceed 45 billion yuan. In the next five years, the functional beverage market is expected to grow at a compound rate of over 12%.
Capital is a cat adept at finding the scent of blood. Since 2017, they have rushed to land, and the functional beverage market has entered an explosive period.
At the beginning of 2017, more than a dozen new functional beverages were launched in the Chinese market. Mizone launched a canned energy drink "Chi Energy," Wahaha's "Suran," and Uni-President's "Gouran" also appeared. At the same time, Celsius, a functional drink sold only in the U.S. and Hong Kong, entered the Chinese market, backed by Li Ka-shing's IP, generating plenty of buzz. Subsequently, Thailand's Carabao, U.S. Fihuo, and Canada's BioSteel successively landed on the "track."
In 2018, the wind continues to blow. After introducing Monster, Coca-Cola launched a new Sprite with added dietary fiber; Yili's "Huanxingyuan" was listed in April; the latest is By-Health's F6 concentrated functional drink new category launched on July 9.
Clearly, under the desire of capital, the functional beverage market is brewing changes.
However, Red Bull, which has dominated the domestic functional beverage market for 20 years, remains the "roadblock" for these latecomers. According to Nielsen data, from January 2017 to February 2018, Red Bull still leads with a 59% market share, while the middle-generation Lehu and Dongpeng Special Drink rank second and third with 11% and 9% respectively. The gap remains huge.
**The "Overlord" Dozes**
In fact, the continuous entry of new brands at this time cannot be said to be without the suspicion of "taking advantage of Red Bull's distraction."
Since entering China in 1995, Red Bull has long dominated the domestic functional beverage market with its time advantage. But starting in 2016, disputes over its trademark authorization expiration have continued. Chen Wei, brand consultant at Levit Brand Consulting, analyzed to Time Finance: "The unresolved Red Bull trademark lawsuit has led to a certain vacuum in the functional beverage market."
According to the financial report of Red Bull's main packaging supplier, O.R.G. Packaging (002701.SZ), last year the company's revenue was 7.342 billion yuan, down 3.37% year-on-year, and sales of its main product (metal packaging products) fell from 9.51 billion cans in 2016 to 9.12 billion cans, down 4.09% year-on-year.
Nielsen retail monitoring data also shows that Red Bull's market share in the functional beverage category fell from 63% in 2016 to 58% last year. From 2015 to 2017, Red Bull China's sales were 23.04 billion yuan, 21 billion yuan, and 19.6 billion yuan, with year-on-year growth of 15%, -7%, and -19% respectively.
Clearly, Red Bull, mired in trademark disputes, has freed up some market space for other brands. It is precisely this space that directly stimulates the hormones of "capital" that are obsessed with the huge market scale.
Yan Xiaofeng, CEO of Liujiaoshou Beverage, a holding subsidiary of By-Health, frankly told Time Finance: "After Red Bull's troubles, everyone is rushing into the functional beverage market. They may not become the leader, but they will definitely have a share of the pie. That's self-evident."
Red Bull's position is not yet shaken, but it is already difficult to prevent middle-generation brands like Dongpeng and Lehu from gradually eroding its market. Dali Foods' Lehu has seen rapid growth in recent years; Dali's beverage sales increased from 7.346 billion yuan in 2015 to 7.645 billion yuan in 2016, with functional beverage sales growing by as much as 43.5%. Recently, Dongpeng Special Drink disclosed at the Spring National Sugar and Wine Fair that its 2017 sales exceeded 4 billion yuan.
**The "Overlord's" Spinning Kick**
The domestic operator of Red Bull, Huabin Group, which is beset by internal and external difficulties, is by no means an ordinary player. In fact, they have done their best to prepare for the future.
In March 2017, Huabin launched bottled "War Horse" to further develop the functional beverage market space; in early March this year, the red-can "War Horse" was launched nationwide.
Regarding Huabin Group's push for "War Horse," renowned strategic positioning expert Xu Xiongjun analyzed to Time Finance: "'War Horse' is Huabin's bargaining chip in the Red Bull trademark negotiations. If it fails, they can at least have a substitute for 'Red Bull.'"
That's true. In April this year, Huabin Group Chairman Yan Bin said at a meeting that Huabin Group currently has over 4 million terminal sales outlets and cumulative national sales of 33 billion cans since listing. Huabin Group has set a sales target of 1.5 billion yuan for "War Horse" this year.
"If the Red Bull trademark renewal fails, War Horse as a substitute will be widely distributed to ensure the original market share is not quickly divided," Chen Wei told Time Finance. "Facing the continuous attacks of latecomers, the most nervous are the brands currently competing for the second position in the industry."
**The Awkward Middle Generation**
The "industry second" in domestic functional beverages is indeed still undecided. Although the market shares of brands like Lehu and Dongpeng have improved significantly in recent years, their market positions have not been finally confirmed.
In the beverage market, supermarkets, convenience stores, etc., are competitive channels for major brands. Among them, buy-one-get-one activities, prime shelf positions, and QR code red envelopes inside bottle caps have become plus points for functional beverages to capture the market.
On July 12, at a Vanguard supermarket in Zhujiang New Town, Guangzhou, citizen Mr. Huang lingered in the functional beverage section for 10 seconds and finally took two cans of Red Bull from the top shelf. "Although some other brands are also famous, I have the deepest impression of Red Bull," he told Time Finance. Price is not his final guide; he mainly looks at brand recognition.
Time Finance saw at the supermarket that functional beverages occupied an entire shelf, with basically all current brands available. Compared to carbonated drinks priced at 2-3 yuan, functional beverages are generally "expensive," mostly in the 5-8 yuan per bottle range. Among them, Red Bull in 250ml specification sells for 6 yuan per can; Dongpeng Special Drink in the same specification sells for 5.5 yuan per can and is placed right next to the former on the shelf.
Functional beverage brands are already numerous, and their distribution in the supermarket is relatively even, "but Red Bull still sells better," the convenience store staff told Time Finance.
Iced drinks are the primary choice for consumers in summer, but at Shenjia Supermarket on Huacheng Avenue, Guangzhou, Red Bull is the only functional beverage on the refrigerated shelf; other brands are piled on regular shelves. "We once promoted other functional beverage brands, but sales were average," the supermarket staff told Time Finance.
At a Meiyijia convenience store on Huasui Road in Zhujiang New Town, Red Bull is still placed in the most prominent position on the functional beverage shelf, with some gold-can Dongpeng Special Drinks mixed among the Red Bulls.
From Time Finance's sample visits to mainstream sales channels, the old overlord Red Bull remains the primary choice for consumers, middle-generation brands like Dongpeng Special Drink and Lehu have carved out some market share, and a host of new brands are eagerly joining and accelerating their capture of market terminals.
Facing the situation of "Red Bull blocking the front, and new wolves chasing from behind," the middle-generation brands in the second tier are in a delicate position, but they are not sitting idle.
Dongpeng Special Drink launched a gold-can product in 2017 that is extremely close to Red Bull in packaging and positioning to enhance consumer recognition. This year, they did not miss the World Cup hotspot, becoming a CCTV World Cup broadcast sponsor for 165 million yuan. As for Lehu, the low-price strategy has become a sharp tool for rapid market expansion, especially in third- and fourth-tier cities where price is more important to consumers, amplifying the price advantage and further expanding market share.
**The Breakthrough of Newcomers**
The functional beverage market has huge potential, and many brands want to squeeze in for a share, including well-known companies like Yili and Coca-Cola. In addition, in 2017, Wang Sicong entered with "Ailu," and Li Ka-shing endorsed Celsius. These products with built-in topics attracted attention upon launch. Direct selling company Amway launched the functional drink "XS" in September last year. According to its own data, sales reached 10 million cans within just 29 hours of external sales. Time Finance learned that newcomers like F6 and Carabao have quickly distributed to convenience stores such as 7-11 and Meiyijia.
Ms. Chen, a white-collar worker in an office building on Huangpu Avenue, Guangzhou, told Time Finance, "Because I often stay up late, I used to drink Red Bull, but now there are more choices, and I also compare which is healthier and more effective."
The new entrants with constant topics lack neither funds nor traffic; these are their basic advantages for attack. But whether it will be a hundred flowers blooming or a flash in the pan remains to be seen.
In June 2018, Thai functional beverage brand Carabao suddenly announced the resignation of General Manager Huang Bao, who had been in office for less than three months. This was the second senior management change within three months for Carabao.
According to Beijing Business Today, Carabao's sales in 2017 were around 100 million cans, but half of them were stuck with distributors, while Carabao's plan for that year was to sell 170 million cans in China.
Regarding the endless emergence of functional beverages, Xu Xiongjun pointed out to Time Finance: "They all need to answer one question: What is the difference between their product and Red Bull?"
In Yan Xiaofeng's view, everyone is following and imitating, which only pushes others higher. This is a misunderstanding in the FMCG industry. Therefore, he positions By-Health's F6 for high-end white-collar workers, completely abandoning the "thirst-quenching" function and focusing on the refreshing effect. With a capacity of only 60 ml per bottle, the official guide price is 15 yuan! For reference, functional beverages on the market usually cost 5-8 yuan.
The higher pricing allows F6 to avoid direct confrontation with other brands. Yan Xiaofeng told Time Finance, "We do not see functional beverages on the market as competitors. Frankly, we do not intend to become a mass brand and do not care about being everywhere."
At present, the continuous influx of capital highlights the prosperity of the functional beverage industry. The crisis of the industry leader has become an opportunity for other brands to attack. The market structure is on the eve of change, and the competition, development, and changes in the functional beverage market are full of unknowns and variables.
Source: Time Finance
-END-


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671