Lehu, Zhanma, Monster: The Undercurrents Reshaping China's Energy Drink Rankings in the Next Three Years

Data shows that in 2015, China's functional beverage (specifically energy drinks) market reached 60.6 billion yuan, a year-on-year increase of 15.16%, with consumption volume reaching 1.368 billion liters, a 25% increase, making it the country with the largest sales growth and ranking second globally. However, compared with developed countries, China's per capita consumption of functional beverages is only 0.5 kg per year, far below the global average of 7 kg, indicating significant market potential.

From a market perspective, the domestic market has maintained a pattern of one superpower and multiple strong players for years, with Red Bull alone exceeding 20 billion yuan, while strong brands like Lehu, Dongpeng Te Yin, and Tizhi Nengliang are in fierce competition. In terms of brand ownership, Red Bull, Monster, and Hi-Bang are all imported products, which brings both advantages and disadvantages in competition with local brands. In your view, which brands will strive forward in the next three years, expand their territory, increase market share, and become more influential functional beverage brands?

Red Bull 2017 sales target lowered According to Euromonitor data, Red Bull's global sales reached $9.242 billion in 2015, with China Red Bull accounting for about 35% of that, equivalent to 23.07 billion yuan, and having 3 million sales outlets in China, making it the largest single product in the domestic beverage industry.

However, recent contract renewal disputes have put China Red Bull in the spotlight. It is reported that China Red Bull's internal strategy is "natural sales," with a target sales of about 16 billion yuan for 2017. Of course, even with such volume, it remains the undisputed No.1 in the domestic functional beverage market, but as market demand gradually rises, competition for market share will intensify.

Zhanma Hua Bin's new product as a "double insurance" Zhanma is a strategic new product that Hua Bin Group plans to launch in 2017. Zhanma effectively fills the gap left by its "brother" Red Bull in the PET-packaged functional beverage market. With a 400ml size, one carbonated and one non-carbonated, both designed to compete with rivals, distinguished by different bottle colors.

Lehu Surged 71.4% in the first half of 2016 Lehu was launched by Dali Group in 2013. In 2015, its sales revenue reached 1.419 billion yuan, with a gross margin of nearly 60%, effectively improving Dali Foods' gross margin. In the first half of 2016, Lehu continued its growth, selling 1.092 billion yuan, a year-on-year increase of 71.4%, with expectations of further breakthroughs for the full year.

Lehu's price positioning is its biggest advantage and highlight, highly attractive to young people who need to replenish energy. It has captured a large share of the market in third- and fourth-tier cities and townships at lower prices. Additionally, the introduction of bottled packaging filled the gap left by can-dominated sports drinks, meeting the consumption needs of specific groups.

Dongpeng Te Yin Differentiated positioning wins In the functional beverage battle, Dongpeng Te Yin has developed steadily, crossing the 1 billion yuan club, and enjoys exceptional loyalty and purchase rates in its base markets.

2009 was the most important year in Dongpeng Te Yin's development, as bottled Dongpeng Te Yin entered the fiercely competitive functional beverage market as a dark horse. According to AC Nielsen retail data, the energy drink market grew only 36% year-on-year in 2013. Dongpeng Te Yin, however, achieved a 100% annual growth rate, ranking first in sales volume in South China and leading nationally, impressing the industry.

In 2014, Dongpeng Te Yin established its third large-scale production base in Anhui, expanding into northern markets. In 2015, during its aggressive national expansion, it not only changed its packaging design and repositioned its brand more precisely but also integrated quality resources for deep brand cultivation. In 2016, it launched the new slogan "Young, stay awake and fight," and embedded its products in 14 popular TV dramas. At the start of 2017, Dongpeng Te Yin collaborated with Bai Kainan to release the catchy song "Spring Festival is a Physical Job," firing the first shot in its New Year marketing.

Monster First year in China, reaching 50,000 terminal stores In September 2016, the Chinese version of Monster Beverage, known as Monster, was first launched in Beijing and Shanghai. In October, it entered the Hunan market and held a launch event in Changsha, revealing three major strategies for the Chinese market:

First, in terms of product positioning, Monster targets males aged 18-34 as its core consumer group, with a lifestyle that is avant-garde, cool, dark, mysterious, fun, and a bit evil. Second, in marketing, Monster will use music, extreme motorsports, video games, and hot girls as its four marketing pillars to attract consumer attention. Finally, in terms of pricing and display, Monster has adopted strategies such as "focus display next to Red Bull," "retail price consistent with Red Bull," and "fully utilize channel tools."

It is reported that Monster is currently mainly entering convenience stores and small shops. As of November, it had entered 50,000 terminal stores, covering about 18% of the population by year-end, with a target of capturing 30%-33% of the functional beverage market. Monster's Chinese agent has repeatedly declined interviews with Food Board but hinted at "big moves" in 2017.

Hi-Bang Introducing Dutch elements, online debut In October 2016, COFCO Group and Refresco, Europe's largest beverage producer based in the Netherlands, jointly established a sports energy laboratory to develop a new generation of guarana-flavored energy drink called bigbang, and held a new product launch conference.

bigbang is an exploration by Womai.com to understand the consumption needs of young people. Its Chinese name is "Hi-Bang," breaking conventions with bold attempts in ingredients and taste. Unlike similar products, it does not contain artificial caffeine but uses guarana and taurine to provide energy, and has higher vitamin content than similar products. Combined with a low-carbonation taste, bigbang is positioned as a carbonated fruit-flavored functional beverage. It is reported that bigbang quietly launched online sales in September, with key promotion periods set for the Spring Festival and April 2017.

Qili New packaging, new slogan, starting anew In the functional beverage market, Qili is a typical example of a flash in the pan. Within less than three years of its launch, its market share dropped from 4.9% in 2012 to 0.9% in 2015.

When it was launched in 2012, the 250ml canned Qili was priced the same as or slightly higher than Red Bull. However, it failed to establish its own characteristics in taste, efficacy, and market positioning. As a latecomer with insufficient brand power, its high price led to poor initial distribution and sales, causing channel dumping and serious cross-region selling. In originally popular regions, due to many low-priced dumped products, it eventually could not sell at normal prices. To change this situation, in 2015 Qili launched new gold and red can packaging, accompanied by new market policies and marketing tactics, and changed its slogan to "Drink Qili, Dad is more powerful."

Additionally, Zong Qinghou stated in a media interview that Wahaha will successively launch 24 functional beverage products that improve sleep, help lower blood sugar and lipids, increase bone density, and provide antioxidant effects.

Tizhi Nengliang A "big guy" from Henan Food Board has always paid close attention to Henan, a gathering place for food enterprises. Jujube drinks, soda water, and apple cider vinegar are representative beverage categories in Henan, but over the years, beverage companies have not achieved major breakthroughs: generally small scale, low industry concentration, and few beverage products with sales exceeding 100 million or even 50 million yuan. Therefore, Henan beverages are jokingly called "grassroots beverages" by the industry.

However, in Food Board's investigation of Tizhi Nengliang, it was learned that this "Henan-born" functional beverage has a distribution rate of nearly 90% in Beijing, Henan, and Jiangsu. In 2014, it achieved remarkable sales of over 1 billion yuan for a single product, with Jiangsu market sales increasing by 50%-100% for several consecutive years, reaching about 120 million yuan in 2013.

Furthermore, based on the selling point of "the power to move forward bravely," Tizhi Nengliang has a high fit with special channels, so Zhongwo strategically targets and controls these consumption channels. In summary, the manufacturer uses various methods at different times to maximize control over key energy drink consumption channels.

Heika 6 Hours Brazilian specialty selling well in northern markets Heika 6 Hours was launched in 2010. It is understood that this product combines coffee and guarana, two natural energy elements, utilizing coffee's quick and strong effect and guarana's mild and lasting properties, supplemented by a scientific B-vitamin complex, to more effectively and comfortably meet the needs of target consumers.

Additionally, Heika 6 Hours has invested significant effort in packaging design. The bottle shape has a strong muscular feel, and the label boldly uses a black style that is traditionally taboo in China, creating a strong contrast with conventional beverage packaging. Currently, it performs strongly in northern regions, especially in Xinjiang and Henan, where it ranks among the top in local market share.

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