Pin Yin Hui Media Center: "Sugar-free tea is one of the few categories that skipped the growth phase and went straight to explosive growth." According to Nielsen data, in 2023, the beverage market grew 6% year-on-year, ready-to-drink tea grew 19%, sugar-free tea grew 110%, and the sugar-free beverage market reached 24.1 billion yuan. In terms of development speed, few categories have matched sugar-free tea, which in just two to three years has outpaced the 7-8 year development trajectory of other categories, moving directly from market introduction to maturity. Amid rapid category growth, the intensifying competition in the sugar-free sector cannot be ignored. Old and new brands such as Oriental Leaf, Suntory, Master Kong, Uni-President, Coca-Cola, Jinchen Tea, Genki Forest, Guozishule, and Chaxiaokai have all gathered in this category, launching a flood of related products, competing from flavor to quality, and then from quality to price... The reason for such fierce competition is simple: compared to other Asia-Pacific countries with long tea-drinking histories, especially Japan and South Korea, China's sugar-free tea market is far from saturated. In 2022, sugar-free tea accounted for 7.7% of the ready-to-drink tea market in China, expected to rise to 18.2% by 2025, while Japan had already reached 85.2% in 2022. Clearly, sugar-free tea is just beginning to gain momentum in the domestic market. As the birthplace of traditional tea culture, China has a larger consumer base, making the future of sugar-free tea full of imagination. But "the past cannot be changed, the future is yet to come." Both surviving brands and new entrants need a review and summary to regroup and compete again next year.
2024 Sugar-Free Tea "Free-for-All"
In 2024, competition among major sugar-free tea brands was fierce. First, Oriental Leaf and Suntory engaged in close combat, each unleashing their best; Guozishule and Chaxiaokai broke through strongly, showcasing new brands' understanding of the market; then Uni-President, Master Kong, and Coca-Cola advanced steadily, laying out nationwide plans and demonstrating established companies' control over terminal channels. Outside, the wind and rain were heavy; beneath the surface, undercurrents surged—this is the true picture of this year's sugar-free tea market.
Homogenization is obvious, brands forced to "exchange price for volume" This summer, "exchanging price for volume" became the tone of the involution among sugar-free tea brands. In August last year, rumors circulated online that Suntory had cut prices and deliberately placed products in front of competitors, and then the hashtag "Oriental Leaf Suntory" trended on Weibo. At that time, Suntory denied such claims, with customer service stating there was no price war and no recent price adjustments. If merchants placed products together, it was merchant behavior. Oolong tea generally costs around 5 yuan, but with promotions, it might be around 4 yuan. However, at the terminal, it was evident that Oriental Leaf and Suntory had tacitly begun to cut prices, with average 5-yuan sugar-free teas moving toward the 4-yuan price band after various discounts. But this year, with significantly more entrants, a multi-brand melee formed, and products became homogenized in flavor, specification, packaging, and concept, forcing most companies to use "price for volume" to seize terminals and consumers. At the beginning of 2024, Chaxiaokai launched "Tea and Water Talk" targeting the 4-yuan price band; Zhenghe Foods and Haojiayi leveraged extreme supply chain advantages to launch Youth Shenqi and Wen Chake targeting the 3-yuan price band, making "water substitute" a new synonym for sugar-free tea. By April to May, the price war in sugar-free tea intensified. Based on Mashangying Brand CT data, excluding small-specification sets below 500ml, products from Rangcha, Guozishule, and Suntory entered the list of top SKUs with average prices below the median price. On online platforms, the price war escalated further, with some product prices even falling below the 3-yuan mark. For example, on e-commerce platforms, a 500ml*12 bottle set of Guozishule sugar-free tea sold for only 35.1 yuan, equivalent to about 2.9 yuan per bottle; Suntory's sugar-free oolong tea in the same specification dropped to 2.8 yuan per bottle. Despite the high risk of price cuts, the benefits for brands were also significant. According to Mashangying data, among the top 15 SKUs by market share in April-May, "Guozishule Zhizhi Oolong with Gardenia Flower Flavor 500ml" entered the list dominated by Nongfu Spring and Suntory with a remarkable growth rate of 751.08%. As a new brand, Guozishule also squeezed into the top 3 in sugar-free tea market share, surpassing major brands like Coca-Cola, Uni-President, and Genki Forest. In this regard, the author believes that as the sugar-free tea market cultivation is basically complete, the "double-edged sword effect" of the "price war" is gradually emerging. In the short term, it can bring sales growth, but as consumer habits develop to a certain stage, the "value war" returning to product strength will restart. Looking from the future to the present, whoever can lay out high-end markets early and occupy the high ground of sugar-free tea product value will have the opportunity to reap the dividends of a new round of industry development.
Diverse flavors, differentiated innovation Oolong tea was the original representative category of sugar-free tea, but with more entrants and intensified competition, many sugar-free tea brands have launched products with more flavors. Consumer survey data from EO Intelligence shows that among consumers' expectations for original tea varieties in sugar-free tea beverages, West Lake Longjing, Tieguanyin, and Biluochun rank in the top three, with a clear trend of regional and varietal differentiation in tea flavors. At the same time, flavors from famous origins such as Tieguanyin, Zhengshan Xiaozhong, Dahongpao, and Biluochun are gradually becoming known and loved by more consumers. For example, as a new brand, Chaxiaokai, at the beginning of its entry into the sugar-free tea track, focused on niche tea varieties, launching products represented by Phoenix Dancong, Longjing, Tieguanyin, and Zhengshan Xiaozhong, becoming one of the fastest-growing brands in the sugar-free tea track. Master Kong also launched a new sugar-free tea brand "Tea's Descendants" in early May, with the new product "Minnan People's Tieguanyin" selecting Tieguanyin from Anxi, a tea town in southern Fujian, using 16 complex processes to present the most authentic original tea fragrance to consumers. In addition to unblended pure teas, more blended-flavor sugar-free tea products have also emerged, becoming one of the future directions for category product innovation and upgrade. This flavor blending mainly focuses on tea variety + flower/fruit fragrance, providing richer flavors while retaining the refreshing taste of sugar-free tea. Among them, new brands Guozishule, Chaxiaokai, and Rangcha are representative players. Guozishule has launched blended flavors such as Gardenia Oolong, Bamboo Oolong, Osmanthus Oolong, Jasmine Longjing, and Cherry Blossom White Tea; Chaxiaokai has also introduced Gardenia Biluochun, Osmanthus Longjing, and Jasmine Piaoxue; Rangcha has launched flavors like Osmanthus Oolong, Sweet Osmanthus Oolong, and Bamboo Oolong. By "taking unconventional paths," these new brands have quickly gained traction in the market, becoming new forces in sugar-free tea that attract industry attention and young consumers, and bringing new inspiration for the innovation and development of the entire sugar-free tea category. At the same time, the gradual diversification and segmentation of sugar-free tea flavors also reflect the current healthy development trend of the sugar-free tea market. Based on this, the author observes that in the future, whether it is leading brands expanding product lines to cover segmented populations or new brands entering the market with differentiated products, there is ample room for development. However, to create the next blockbuster sugar-free tea product, higher-level marketing requirements are proposed for brand culture, consumption scenarios, product value, functionality, and other dimensions.
Large packaging becomes popular Specification competition is actually an extension of the sugar-free tea price war. According to Mashangying CT data, from August 2023 to July 2024, the average price per item generally followed seasonal patterns. Since entering the peak season in April 2024, the average price per item has declined, but the overall decline is not significant, maintaining a relatively stable range. However, the average price per 100ml is completely different. Since February 2024, the average price per 100ml in the sugar-free ready-to-drink tea category has shown a significant downward trend. The average price per item has basically not decreased, but the average price per 100ml has fallen, due to large-specification products gradually eroding and replacing the market share of original small-specification products. Specifically, Oriental Leaf launched a 900ml value pack in early 2023; Suntory, based on its original 1.25L specification, also launched a 900ml value pack in 2024; Rangcha also introduced a 900ml specification for the first time in May this year; new brand Maiduoduo targeted the 750ml specification from the start, emphasizing large quantity and value; in addition, brands like Guozishule, Chaxiaokai, and Genki Forest have also followed suit, making large-pack sugar-free tea a complete summer trend. For giants, large bottled beverages can quickly capture lower-tier markets and build competitive moats. For new brands or new products, large bottles are also a low-cost marketing method. On the one hand, they are more visually attractive and enhance their appeal in offline spaces; on the other hand, they can amplify differentiated selling points and increase consumer repurchase rates. In the author's view, large bottled beverages can not only help products achieve "off-position competition" and establish differentiated advantages, but also help small or new brands achieve "counterattack."
Can "Organic" Spark a New Wave?
After this year's competitive reshuffle, how will the second half of the sugar-free tea competition unfold?
1. Upgrade tea source quality, process, and packaging to comprehensively enhance consumer experience. Research reports from EO Think Tank show that the purchase motivations for sugar-free tea fall into two categories: refreshing and energizing while being sugar-free and burden-free; and as a water substitute to replenish fluids. It can be said that sugar-free tea has become a healthy "water substitute" product, with the potential to carve out part of the bottled water market. But whether it replaces water or serves as a functional beverage, product strength is the most critical factor. Therefore, improving the overall quality of tea beverages and making the tea drinking experience more perceptible—clear tea soup, fresh-brewed flavor and texture, and flexible and portable product forms—are all innovation aspects that can be optimized. With breakthroughs in technology and packaging, the tea experience can be upgraded. For example, in 2011, Oriental Leaf used a million-level (log6) sterile production line and triple barrier technology, avoiding the need for full label wrapping like Japanese tea products, allowing the tea soup color to be more transparently displayed. In 2024, Jinchen Tea took the lead in the industry by introducing the "organic tea" concept, pushing sugar-free tea products to the "ceiling" of quality by shaping extreme product strength, bringing differentiated choices to the market.
2. A complete industrial chain advantage is the prerequisite for the birth of new blockbuster sugar-free tea products. From this year's reshuffle process, two types of enterprises have the weakest risk resistance: first, trend-following companies that attempt to make a quick profit from the wind and leave, lacking strategic determination and sustained strategic investment, with weak market competitiveness, often becoming "naked swimmers" after the tide recedes; second, new brands that cannot control supply chain resources. The core of sugar-free tea lies in the stability and sustainability of tea source quality. Once the supply chain fluctuates significantly, these companies lack market bargaining power, cannot achieve cost competitive advantages, and ultimately lack pricing power in the market. Even if marketing is well done, they face risks of "out-of-stock" and "supply chain bottlenecks" during peak seasons. Based on this, the next round of competition in sugar-free tea, in addition to quality competition, will also focus more on competition in industrial chain advantages among brands.
3. The "organic" concept may become the next competitive direction for sugar-free tea. According to the "2023 Organic Market New Trends" report, from 2018 to 2021, the number of people purchasing organic food at Hema quadrupled, and by 2022, the total number of organic users approached 10 million. Among them, 73% of consumers believe that "true organic" is the most important consideration, far higher than price and product richness. Organic tea, as an advantageous product among China's organic products, has had a higher proportion of organic tea cultivation area compared to conventional tea from 2013 to 2020 than grains, fruits and vegetables, fruits and nuts, and beans and other oil crops. Among them, Yunnan, Hubei, and Guizhou ranked in the top three for organic tea production area (2020). However, compared to the importance foreign countries place on organic tea and even organic food, China still has much room for development. Taking neighboring Japan as an example, as a major tea-producing and consuming country, Japanese consumers' awareness of organic tea is as high as 83%, while only 28.4% of Chinese consumers choose organic tea beverages when purchasing organic food. The author has learned that Jinchen Tea, which once invited Yang Yang and Wang Junkai as spokespersons for its tea bag and tea beverage series, will soon launch an organic sugar-free tea with China Organic Product Certification, which may bring new opportunities to the involutionary sugar-free tea market. Judging from the current competitive situation of sugar-free tea, when the space for price reduction is limited, flavor innovation is no longer fresh, and specification competition is difficult to sustain, telling a good story through "organic" and increasing product premium space may become the next direction for sugar-free tea "involution." The book "Thirty Years of Organic Tea in China" points out that Japanese consumers generally believe that the price of organic tea can increase by 20%-30% on the existing basis, and 76% of surveyed consumers are willing to pay 100%-200% more for organic tea than ordinary tea. Especially as more and more heavy tea drinkers begin to love "sugar-free tea," they not only integrate tea drinking into various life scenarios but are also more willing to pay for high-value-added "tea."