---
title: "Many Brands Fall as Lactic Acid Bacteria Beverage Industry Faces Major Shakeout?"
description: "After a period of explosive growth, lactic acid bacteria beverages are showing signs of fatigue. Facing strong competition from substitutes like yogurt and product upgrades, the industry is finally undergoing a shakeout. A Beijing Business Today investigation found that in the Beijing market, low-temperature lactic acid bacteria beverages still dominate, with brands like Junlebao, Mengniu, and Wei Chuan all offering their own products. Promotions are widespread, with buy-one-get-one-free and discounts being common. Overall, the low-temperature lactic acid bacteria beverage industry has entered a bottleneck period, and the industry is facing a ceiling. In the future, with consumption upgrades, some small and chaotic brands may be cleared out."
author: "孙麒翔 王子扬"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2017-07-04"
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# Many Brands Fall as Lactic Acid Bacteria Beverage Industry Faces Major Shakeout?

> After a period of explosive growth, lactic acid bacteria beverages are showing signs of fatigue. Facing strong competition from substitutes like yogurt and product upgrades, the industry is finally undergoing a shakeout. A Beijing Business Today investigation found that in the Beijing market, low-temperature lactic acid bacteria beverages still dominate, with brands like Junlebao, Mengniu, and Wei Chuan all offering their own products. Promotions are widespread, with buy-one-get-one-free and discounts being common. Overall, the low-temperature lactic acid bacteria beverage industry has entered a bottleneck period, and the industry is facing a ceiling. In the future, with consumption upgrades, some small and chaotic brands may be cleared out.

After experiencing explosive growth, lactic acid bacteria beverages are showing signs of fatigue. Facing strong competition from substitutes like yogurt and product upgrades, the industry is finally undergoing a shakeout. A Beijing Business Today reporter's investigation found that in the Beijing market, low-temperature lactic acid bacteria beverages still dominate, with Junlebao, Mengniu, and Wei Chuan all having their own products. In the once extremely popular low-temperature refrigerated cabinets, various lactic acid bacteria brands are promoting to varying degrees, with buy-one-get-one-free and discounts being the most common methods. Overall, the low-temperature lactic acid bacteria beverage industry has entered a bottleneck period, and the industry's development is facing a ceiling. In the future, with consumption upgrades, some small and chaotic brands will face the possibility of being cleared out.

Development Enters Bottleneck Period
**After nearly two years of rapid development, lactic acid bacteria beverages are entering a bottleneck period, with growth slowing down.** A survey shows that after continuous double-digit high growth in urban low-temperature lactic acid bacteria beverage sales from 2011 to 2014, it began to decline from 2015, with sales decreasing by 2% compared to the previous year. The reason for the decline is the continuous drop in per-household purchase volume. In 2015, the per-household purchase volume of low-temperature lactic acid bacteria beverages was 4.4 liters, close to the 2011 level, and this was also the first year-on-year decline since 2011.

**Another manifestation of slowing growth comes from the sales side.** Low-temperature lactic acid bacteria beverage brands currently on the market are still frequently offering discounts and promotions. At a supermarket near the Third Ring Road in Beijing, a Beijing Business Today reporter found that Wei Chuan's low-temperature lactic acid bacteria products were on promotion. Wei Chuan lactic acid bacteria 950ml bottles were priced at 9.9 yuan. Another Wei Chuan lactic acid bacteria 450ml product was sold at two bottles for 10 yuan. It is understood that similar packaged low-temperature lactic acid bacteria products on the market sell for around 8 yuan. Another lactic acid bacteria beverage brand, Junlebao, was also promoting. Junlebao's 0-fat lactic acid bacteria beverage 900ml, originally priced at 14.2 yuan, was now 7.99 yuan. The reporter checked the production date of this product, which was February 27, with a shelf life of 30 days, meaning it was nearing its expiration date. According to supermarket staff, discount promotions are sometimes organized by the company, and sometimes because the products are nearing their expiration date, so the supermarket needs to clear them. Additionally, at the 11th International Symposium on Lactic Acid Bacteria and Health held in June last year, Wei Chuan also revealed that due to industry reasons, its low-temperature lactic acid bacteria beverage business faced negative growth in 2016. In response to a Beijing Business Today reporter's interview, Mengniu also stated that every brand and category has its own life cycle, and the market development of low-temperature lactic acid bacteria has entered a bottleneck to some extent.

Consumer Education Still Needed
Currently, China's big health industry is booming, and lactic acid bacteria beverages have risen with the trend. **Zhu Danpeng, a food and beverage industry researcher at the China Brand Research Institute, introduced that lactic acid bacteria beverages have gone through three development stages.** The first stage was the initial stage with brands like Wahaha and Robust, where products were relatively low-end, and the bacteria in the products were dead bacteria, having little effect on the human body. The second stage saw the entry of well-known brands like Mengniu and Junlebao, as well as the promotion of low-temperature products. This stage was a brand upgrade stage, where technological innovation led to the layout of low-temperature lactic acid bacteria products. The third stage is from 2012 to the present, which is a stage of chaotic competition among many players. The large number of room-temperature lactic acid bacteria products and the fragmentation of niche brands have made the market increasingly hot, but it also shows a weakening trend. Before the industry reshuffle, consumer education needs to be completed.

**Junlebao told Beijing Business Today that the domestic low-temperature lactic acid bacteria beverage market still faces challenges.** Since low-temperature lactic acid bacteria require refrigerated sales, but the domestic cold chain development started late, consumers lack purchase convenience, directly affecting the speed of category promotion and development. Consumer awareness of product functions needs to be further deepened, and practitioners need to continue educating on lactic acid bacteria functions and health guidance.

In addition, some enterprises overemphasize short-term interests, and a few products are uneven in quality, affecting the consumer experience and development of the entire category. **Mengniu also gave a similar response. Mengniu believes that,** on one hand, consumers need more popularization of the awareness of room-temperature and low-temperature lactic acid bacteria. On the other hand, in the context of consumption upgrades, product innovation for low-temperature lactic acid bacteria beverages also needs to develop towards stronger functionality. The emergence of room-temperature lactic acid bacteria products has squeezed low-temperature products. According to Zhu Danpeng, currently, low-temperature lactic acid bacteria products are relatively strong in first- and second-tier cities, while in third- and fourth-tier cities, room-temperature lactic acid bacteria products dominate.

A report shows that key and provincial capital cities account for 51% of total sales of low-temperature lactic acid bacteria beverages, while sales in the broader prefecture-level and county-level markets are mediocre. In contrast, 85% of room-temperature lactic acid bacteria beverage sales are completed in prefecture-level and county-level markets. The industry generally believes that low-temperature products have higher nutritional value, but in market competition, room-temperature products have left low-temperature products behind. Enterprises seem to understand that consumer education urgently needs to be strengthened. It is reported that Junlebao has been doing related work since 2000. In 2012, Junlebao launched the "Yogurt Museum Industrial Tour" project. Last year alone, 500,000 consumers visited Junlebao to tour the pasture and factory, experience products, and learn about the functions of lactic acid bacteria on-site.

Industry Shakeout Imminent
Currently, the domestic low-temperature lactic acid bacteria market is represented by brands like Mengniu and Junlebao, while room-temperature lactic acid bacteria brands are mainly niche brands like Wei Dongli and Hao Caitou. **It is understood that since 2013, domestic room-temperature lactic acid bacteria beverages have almost shown a blowout trend, and in recent years, the market share of room-temperature lactic acid bacteria beverages has maintained double-digit high growth.** Zhu Danpeng pointed out that the current domestic lactic acid bacteria market is in a state of brand chaos, with room-temperature and low-temperature products in a melee. Enterprises of all sizes want to share the market, but after years of development, the lactic acid bacteria beverage market is about to face a reshuffle. In the future, the lactic acid bacteria beverage market will mainly focus on low-temperature products, and products are constantly being upgraded and updated. Some enterprises that cannot keep up will be cleared out. Since low-temperature products have high technical requirements and transportation costs are generally not low, enterprises that cannot afford to enter the low-temperature lactic acid bacteria product segment will also be cleared.

Zhu Danpeng believes that the lactic acid bacteria beverage market has entered a red ocean stage, with enterprises competing fiercely for market share. Unlike the yogurt industry, where only large enterprises are involved and small enterprises have not dared to enter, the lactic acid bacteria beverage market is quite different. Countless enterprises are flooding in, and the blue ocean has turned red. The product differentiation is not significant, which is not conducive to the development of the industry. **2017 is the year of reshuffle for the lactic acid bacteria beverage industry. If enterprises want to develop, they need to continuously improve product research and development capabilities to better meet consumer demands.** It is understood that cold chain construction is the most direct means to promote low-temperature lactic acid bacteria into households and expand consumer groups. Junlebao continues to increase investment in this area, jointly engaging in cold chain construction in the Chinese market. Mengniu is also about to launch a new product called Youyi C "LC-37" lactic acid bacteria, where live bacteria can maintain strong activity at 37 degrees Celsius, regulating intestinal flora balance. At the same time, Youyi C is about to launch a new low-sugar + fruit and vegetable enzyme flavor to meet the needs of specific groups.

**In the future, with product upgrades, more dietary fiber or low-sugar and sugar-free products will enter the market. In China, many consumers have incorporated sugar intake management into their overall health management, so low-sugar is also a current consumption trend. Both the dairy and beverage industries are moving towards low-sugar development. After product upgrades and brand changes, the lactic acid bacteria beverage market will usher in a reshuffle.**

**Source: Beijing Business Today**
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