---
title: "Imitators Crowd In, Plant-Based Protein Beverage Market Still Unsettled"
description: "Coconut Palm and Lulu have long dominated the plant-based protein beverage segment, but the industry as a whole has yet to see a leading company emerge. VV Group and Dali Foods have both announced entry into the ready-to-drink soy milk market. Plant-based protein beverages are seen as a blue ocean, with high profits attracting some beverage giants, but product taste limitations and uneven quality mean the segmented market is always full of imitators."
author: "孙麒翔 王子扬"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-04-18"
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# Imitators Crowd In, Plant-Based Protein Beverage Market Still Unsettled

> Coconut Palm and Lulu have long dominated the plant-based protein beverage segment, but the industry as a whole has yet to see a leading company emerge. VV Group and Dali Foods have both announced entry into the ready-to-drink soy milk market. Plant-based protein beverages are seen as a blue ocean, with high profits attracting some beverage giants, but product taste limitations and uneven quality mean the segmented market is always full of imitators.

Coconut Palm and Lulu have long dominated the plant-based protein beverage segment, but the industry as a whole has yet to see a leading company emerge.
VV Group and Dali Foods have both announced entry into the ready-to-drink soy milk market. Plant-based protein beverages are seen as a blue ocean, with high profits attracting some beverage giants, but product taste limitations and uneven quality mean the segmented market is always full of imitators.
More Players Enter
Plant-based protein beverages have been hot in recent years, riding the wave of the health trend, and have become a focus of the beverage market. Many companies have entered the plant-based protein beverage market, hoping to grab a share before intense competition erupts. Recently, Dali Foods launched three soy milk products, announcing its entry into the soy milk industry.
Before that, VV Group also revealed that its upgraded soy milk powder product had completed regional market testing and was being rolled out nationwide, and soon it would be available in major supermarkets and even restaurants in major cities. VV Group stated that the launch of liquid plant-based protein beverages is its latest product, a transition from "powder" to "milk," not a simple repetition but a "second venture" for VV.
Due to poor performance in its soy milk main business, VV Group has embarked on a diversification path, but repeated setbacks on that path have also made the company taste the bitter fruits of performance. It is understood that in recent years, besides soy milk, VV has been involved in dairy, liquor, real estate, mining (coal), and finance, but without particularly impressive results. With this launch of ready-to-drink soy milk products, industry speculation is that VV Group is returning to its main business to strengthen its advantages.
Unlike the intense competition in sub-sectors like carbonated drinks and purified water, plant-based protein beverages are still a blue ocean with broad market prospects. Seeing the business opportunities hidden behind the market, besides established companies like Coconut Palm, Lulu, Six Walnuts, and Yinlu, many other companies are also brewing their own plant-based protein beverage products. This has led major food and beverage industry giants including Yili, Mengniu, and Huiyuan to rush in, and their entry has to some extent driven the counter-trend growth of plant-based protein beverages.
Mixed Fortunes for Companies
Because plant-based protein beverages have higher profit margins than traditional beverages, more and more food companies see them as future growth points, investing heavily in product R&D and marketing, driving the industry's development last year. Globally, the plant-based protein beverage industry grew 14% from 2010 to 2016.
Data shows that in 2015, China's plant-based protein beverage market sales exceeded 100 billion yuan, and it is expected to reach 160 billion yuan by 2019. Zhu Danpeng, a food and beverage industry researcher at the China Brand Research Institute, said that since 2014, plant-based proteins have been sought after by the market, especially as the health trend has taken root, and the entire industry has developed rapidly. The plant-based protein field has broad prospects, both in terms of development and growth, with huge space for the overall market size.
Compared to the overall positive trend, individual company development has been mixed. In the soy milk business, Vitasoy, which currently has the highest market share, previously released its half-year results for fiscal 2016/2017, showing that mainland China business has become Vitasoy's largest operating market. Vitasoy China's first-half revenue and operating profit both rose 7%, to HK$1.619 billion and HK$282 million, respectively.
Compared to the smaller soy milk beverage segment, the top three in the plant-based protein beverage industry—walnut milk, almond milk, and coconut juice—are developing steadily. Yangyuan Zhihui, Chengde Lulu (000848, stock code), and Coconut Palm are the leaders in these three areas, respectively. In terms of production capacity, Yangyuan Zhihui has an advantage: in 2015, its walnut milk output exceeded 1 million tons, while Chengde Lulu's capacity was 325,000 tons and Coconut Palm Group's output was 388,000 tons.
Zhao Bo, chairman and general manager of Coconut Palm Group, admitted that in 2016, the group's output value was 4.021 billion yuan. Although this figure is still beyond the reach of many brands in the same category, it was the third consecutive year of decline since 2013. It is understood that Coconut Palm Group's output value peaked at 4.456 billion yuan in 2013, the highest in nearly a decade, and has declined for three consecutive years since, with 2016 output value down more than 10% from three years earlier. According to Chengde Lulu's 2016 semi-annual report, in the first half of 2016, Chengde Lulu's net profit was 273 million yuan, a year-on-year increase of 6.13%.
Soy Milk Business Not Well Regarded
Plant-based protein beverages are developing strongly, but sub-category development is uneven. Zhu Danpeng pointed out that as a member of plant-based protein beverages, the soy milk industry has encountered a development window this year, with many companies making moves. China's soy milk industry is characterized by regional brands dominating and a lack of national brands. Through the efforts of some companies, this situation may improve in the future. However, Zhu Danpeng is not optimistic about this category: "The current situation of regional brand dominance and the difficulty in reflecting core competitiveness mean the overall added value of products cannot rise much." Currently, the category has low pricing power and little product taste differentiation, and Zhu Danpeng does not believe soy milk beverages are a category with sustainable development potential.
Overall, a national brand will emerge in the soy milk beverage industry, but the category's size and capacity are not large, so growth space is not ideal, and companies' ideas of making it a strategic big single product will be hard to realize. Zhu Danpeng believes that Dali's soy milk business will not be very large in the first year, possibly with sales of 1 billion yuan, which is still insignificant compared to Dali Foods' annual revenue of 17.8 billion yuan.
Currently, how soy milk products interact with the new generation of consumers, build brand awareness, and win over new consumer groups tests manufacturers' marketing capabilities. In the context of consumption upgrading, the health industry is booming, and the plant-based protein beverage industry, riding the tailwind, has shown signs of becoming a blue ocean. But facing the aging of product categories and low innovation, the soy milk beverage industry, which aims for super big single products, still has a long way to go.
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