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Preface: Functional drinks can be broadly divided into energy drinks, which primarily aim to refresh and replenish energy, and sports drinks, which replenish electrolytes. In 2015, functional drinks sold well worldwide and were the fastest-growing beverage category. According to a report by global market research firm Mintel, global energy drink sales volume increased by 10% to 8.8 billion liters. The sports drink market was larger at 14.6 billion liters, up 6.7% year-on-year.
The largest consumers of energy drinks are, in order, the United States, China, the UK, Thailand, Vietnam, and Germany. Thailand is the birthplace of Red Bull, where it sold well before entering Western Europe and the US markets. Globally, 2015 saw the most new energy drink product launches, with Germany surpassing the US to become the country launching the most new energy drinks that year, accounting for 9% of global new launches.
China's energy drink consumption reached 1.368 billion liters, a year-on-year increase of 25%, making it the country with the largest increase in energy drink sales value. According to a Mintel report, Red Bull holds a near-monopoly position in the Chinese market. In addition to energy drinks, sports drinks, which primarily replenish electrolytes, also sell well domestically, with Danone's Mizone leading this segment. Compared to 2010, the sports drink market share tripled by 2015.
Currently, the main energy drink products in the domestic market include Red Bull, Dongsheng Teling, Lehu, Qili, and Heika 6 Hours. In terms of market share, Red Bull has always held the top position, maintaining around 80%. Dongsheng Teling ranks second, but its absolute market share is only about 10%. Qili held a certain share starting in 2012, but its market share declined sharply from 2014. In 2015, Red Bull accounted for as much as 75.18%, holding three-quarters of the functional drink market, while Dongsheng Teling held a 10.91% share, up 9% year-on-year.
Red Bull China Sales Account for 35% of Global Total Red Bull is one of the earliest and most successful functional drink brands globally. In 1995, Red Bull Vitamin Drink Co., Ltd. was established in China, using the same Thai Red Bull formula, parallel to Austrian Red Bull. Unlike Austrian Red Bull, which has broad sales coverage, Chinese Red Bull focuses on China and vigorously develops the domestic market.
With nearly two decades of market development in China, Red Bull has 3 million sales outlets and a strong commercial network. Over 20 years, Red Bull has established five major production bases in Beijing, Hubei, Jiangsu, Guangzhou, and Hainan, with over 30 branches and more than 10,000 employees nationwide. Currently, Red Bull has over 3 million sales outlets across China, building one of the world's most powerful commercial networks, with unparalleled penetration in traditional channels.
According to Euromonitor data, Red Bull's global sales in 2015 reached $9.242 billion, a year-on-year increase of 10.08%. Chinese Red Bull's 2015 sales accounted for about 35% of the global market share, reaching $3.245 billion, a year-on-year increase of 17.92%.
Red Bull China's profit margin is higher than the industry average, maintaining around 27%. According to historical data from the China Beverage Industry Association, Red Bull's profit margin in China (total profit/operating revenue, as the association only counts total profit) has remained at a high level in the industry, around 27% in recent years, significantly higher than similar companies, with high product barriers and strong channel bargaining power.
Lehu: 71.4% Growth in First Half of 2016 In the first half of 2016, Lehu continued its rapid growth, with sales revenue reaching RMB 1.092 billion, a year-on-year increase of 71.4%. A standout performance.
Lehu was launched by Dali Group in 2013. It emerged as a dark horse in the fiercely competitive sports drink segment where Red Bull's position is unshakable, achieving impressive sales results. In 2015, Lehu's revenue was RMB 1.419 billion, accounting for 8.4% of Dali Foods' revenue, and Lehu's gross margin was nearly 60%, effectively improving Dali Foods' overall gross margin.
Lehu's price positioning is its biggest advantage and highlight. The 250ml traditional canned product is priced at RMB 5.5, similar to mainstream products on the market, slightly lower. The 380ml PET bottle is only RMB 5, which is highly attractive to young people with limited budgets but high energy needs, allowing it to capture a large share of third- and fourth-tier cities and townships at lower prices. At the same time, the bottled version fills a gap in the sports drink market dominated by cans, meeting the consumption needs of specific groups.
In its 2016 interim report, Dali also mentioned that Lehu achieved good sales results in first- and second-tier cities.
Dongsheng Teling: Winning with Differentiation In the functional drink battle, Dongsheng Teling is a domestic beverage company that has reaped significant rewards, having long crossed the RMB 1 billion club, and enjoys an extraordinary brand designation purchase rate in its base market.
2009 was the most important year in Dongsheng Teling's development, as bottled Dongsheng Teling, like a dark horse, entered the fiercely competitive functional drink market. According to AC Nielsen retail data, the energy drink market grew only 36% year-on-year in 2013. Dongsheng Teling, however, achieved a 100% annual growth rate, ranking first in sales volume in South China and leading nationally, impressing the industry.
In 2014, Dongsheng Teling established its third large-scale production base in Anhui and expanded into the northern market. In 2015, during its aggressive national expansion, Dongsheng Teling not only adopted a new design and packaging but also repositioned its brand with more precise focus, integrating quality resources for deep brand cultivation. In the energy drink brand arena, Dongsheng Teling and Red Bull began to differentiate their core target audiences. In 2015, Dongsheng Teling's market share in the domestic energy drink market reached 10.91%.
Wahaha Qili: Channel Chaos and Failure, Zong Qinghou Plans 24 Functional Drinks In the functional drink market, Qili is a typical example of a flash in the pan. Within less than three years of its launch, its market share plummeted from 4.9% in 2012 to 0.9% in 2015.
As a latecomer with a high profile and high pricing, poor channel control led to widespread cross-regional selling. At its launch in 2012, the suggested retail price for a 250ml can of Qili was RMB 7, equal to or slightly higher than Red Bull's retail price. However, it failed to establish its own characteristics in terms of taste, efficacy, and market positioning. As a latecomer with insufficient brand power, the rash high pricing led to poor initial sell-through, channel dumping, and severe cross-regional selling. Originally popular regions were flooded with low-priced cross-regional products, ultimately preventing normal price sales.
Recently, however, Wahaha founder Zong Qinghou said in a media interview that Wahaha will successively launch 24 functional beverage products with functions such as improving sleep, assisting in lowering blood sugar and blood lipids, increasing bone density, and antioxidant effects.
Monster Beverage: Not Yet Launched but Already Attracting Attention, Seen as Red Bull's Rival Monster Beverage, the number one functional drink brand in the US market, announced in the fourth quarter of 2015 that it would enter China in 2016. Due to delays in negotiations with partners and approval of health food batch numbers, it has begun distributing in regional Chinese markets under the name "Ghost Claw," but has not yet obtained a health food approval, selling as a carbonated drink.
Despite intense competition in the US beverage industry, Monster Beverage quickly gained market share through its excellent competitive strategy, surpassing Red Bull in 2008 to become the industry leader. In 2014, it held 42.3%, and after integrating with Coca-Cola in 2015, its market share reached 52.8%.
Therefore, Monster Beverage's entry into the Chinese market via Coca-Cola, directly competing with Red Bull, has been closely watched by industry insiders.
Mizone: Victory of Multi-Flavor Light Sports Drinks Unlike Red Bull, Mizone is positioned in another functional drink segment—vitamin sports drinks—with flavors like lime, peach, and orange. In the recent trend of light beverages, it holds an absolute advantage.
With its product characteristics, Mizone leads the market in both bottled functional drinks and vitamin functional drinks. Its sales in the Chinese market over 13 years have brought it strong brand influence. From sales data, since 2010, Mizone has consistently ranked first in the bottled functional drink market, with its share rising year by year to 91.2% in 2015, an unshakable position. In 2013, terminal retail sales were RMB 6.7 billion, in 2014 RMB 8.6 billion, and in 2015 RMB 9.8 billion, with annual growth rates stable in double digits—a remarkable performance.
New Food Era · New Distribution —— 2016 China "FMCG + Internet" Summit Forum ——
This is a grand event focused on how FMCG industry channels will transform under the trend of Internet+ transformation
Agenda 09:00-09:30 Registration 09:30-09:35 Host opening 09:35-10:05 2016 China FMCG Industry Trend Analysis Report — Zhao Bo 10:05-10:25 FMCG Enterprise Transformation Strategy and Path — Liu Chunxiong 10:25-10:45 Opportunities and Challenges from FMCG Channel Transformation — Liu Zhao, CEO of Waiqin 365 10:45-11:25 Alibaba Retail Link All-Round Empowerment — Guo Kunkun, Alibaba Retail Link 11:25-12:00 Roundtable Forum — Brand Transformation: Improvement vs. Reconstruction? (Guests TBD) 12:00-13:30 Lunch 13:30-14:00 Distributor Transformation: Urban Distribution Trends — Wang Qi, CEO of Weijie Urban Distribution 14:00-14:30 Roundtable Forum — Why Should Distributors Transform into Logistics? 14:30-15:00 Detailed Explanation of Zhongshang Huimin's One Machine, Two Wings Strategy — Su Xiaoxin, VP of Zhongshang Huimin 15:00-15:30 Detailed Explanation of Zhanghe Cloud Factory Strategy — Yang Lixiang, Zhanghe Tianxia (Topic TBD) 15:30-16:00 Supply Chain Finance as a Lubricant for B2B Driving Traditional Business — Chen Xian, CEO of 51 Order 16:00-16:30 2B Investment Principles and Approaches — Xu Xiaoping, Founder of ZhenFund (Guest TBD) 16:30-17:00 Small Retail, Big Opportunity: China's Retail Transformation and Upgrade — Wang Jianfeng, General Manager of E-commerce Division, Yurun Group 17:00-17:30 Roundtable Forum — Who Is the King of FMCG B2B Models? (Guests TBD) 18:00-20:00 Dinner
For manufacturers and distributors interested in transformation, this grand event is not to be missed. Interested friends can long press the QR code below or click "Read Original" to register.
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