---
title: "Sugar-Free Tea: Price War Begins?"
description: "After more than a decade of being overlooked, Oriental Leaf finally saw explosive growth in 2023. However, this period of having no rivals did not last long. The intense competition in the sugar-free tea segment has led to a price war, with new entrants aggressively cutting prices to gain market share."
author: "沈庹"
publisher: "New Distribution"
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published: "2024-06-14"
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# Sugar-Free Tea: Price War Begins?

> After more than a decade of being overlooked, Oriental Leaf finally saw explosive growth in 2023. However, this period of having no rivals did not last long. The intense competition in the sugar-free tea segment has led to a price war, with new entrants aggressively cutting prices to gain market share.

After more than a decade of being overlooked, Oriental Leaf finally saw explosive growth in 2023. However, this period of having no rivals did not last long.
Oriental Leaf's massive profitability attracted a wave of followers, each showcasing their strengths in the sugar-free tea niche. The major trend was correctly anticipated by all. In 2023, the sugar-free beverage market reached 24.1 billion yuan, with sugar-free tea accounting for 49% and an annual growth rate of 110%. According to Nielsen's 2024 China Beverage Industry Trends and Outlook report, sugar-free tea has surpassed sugar-free soda to become the largest subcategory in the sugar-free beverage sector. Even with the crown, Oriental Leaf finds it burdensome. Beverage companies and food giants follow closely, exploring all seven major tea categories, with niche teas like Phoenix Dancong and Yashixiang becoming weapons in the sugar-free tea war. The advanced differentiation battle quickly ended, and now it's time for price competition.
**Price War Begins** The bottled water market is fiercely competitive, and June's sugar-free tea market is equally turbulent, with online promotions and offline prices already breaking the 5-yuan mainstream price point. In Wuhan supermarkets and hypermarkets, a 500ml bottle of Oriental Leaf jasmine tea, Qinggan Pu'er, or oolong tea, which used to cost 5 yuan, can now be purchased for 4.2 yuan. Some street-side stores specializing in wholesale and retail even offer prices as low as 3.9 yuan. According to a recent report by Hangzhou Daily, at FamilyMart and Lawson stores in Hangzhou, 500ml Oriental Leaf is sold at 10 yuan for 3 bottles, and Suntory oolong tea is offered at 8.8折 (12% off). Reports indicate that in Guangzhou, many convenience stores and supermarkets are offering Coca-Cola's Ayataka (Chun Tea House) at a flash sale price of 2.99 yuan, and Suntory osmanthus oolong is as low as 3.9 yuan per bottle. Third-party statistics are more direct. According to data from MaxWin (马上赢) Brand CT, from April to May this year, among the top 15 SKUs in the sugar-free ready-to-drink category with average prices below the median (excluding products under 500ml), new forces like Rangcha (让茶) and Guozishule (果子熟了) showed significant price reductions. Rangcha's 500ml high-mountain oolong, jasmine tea, and osmanthus oolong average prices dropped by 14.62%, 14.03%, and 11.48% respectively compared to the overall median. Guozishule's 970ml jasmine Longjing tea (jasmine flavor) average price fell by 9.53% from the median, with its golden osmanthus oolong, zhi zhi oolong, and white tea cherry blossom flavors dropping by 7.50%, 6.86%, and 6.41% respectively.
**Domestic new forces are cutting prices decisively, clearly aiming to exchange price for volume.** With aggressive moves, Guozishule has achieved significant results. In MaxWin's April-May market share top 15 SKUs, the brand's Zhi Zhi Oolong saw a growth rate of 751.08%, jumping to third place, behind Oriental Leaf and Suntory. This brand, which started in Nanjing in 2019, has seen its market share rise year by year. In the April-May 2024 sugar-free tea category C13 ranking, Guozishule ranked third, behind Nongfu Spring and Suntory. **"Thousand Tea" War** The price war is the visible artillery fire among beverage brands, but behind it, the race in product, tea variety, channel, and even brand is the ultimate test of manufacturers' patience and endurance. The breakout of sugar-free tea is the result of long-term market cultivation. As early as the 1990s, Suntory entered the Chinese market, testing the beverage market with an oolong tea. Later, Uni-President and Master Kong captured the market with slightly sweetened tea drinks, leading the sweetened tea market for over a decade. In 2011, Nongfu Spring launched Oriental Leaf, beginning deep cultivation in the sugar-free tea field, enduring like an ascetic monk until last year when it finally exploded. For a long time, Chinese consumers preferred sweet over bitter, but with rising health awareness, under the trend of sugar reduction, natural-flavored tea gradually became mainstream. Nongfu Spring was the first to taste the benefits. In 2023, the company's tea beverage business revenue reached 12.659 billion yuan, an increase of 83.3% year-on-year, accounting for 29.7% of total revenue, becoming a true second growth curve.
Oriental Leaf's popularity made other brands envious, and they rushed to join the fray. Manufacturers like Master Kong and Genki Forest only needed to upgrade their classic sweetened tea drinks to sugar-free versions; Dali launched its new sugar-free tea brand Chaoye, continuing its follow strategy; more manufacturers are entirely new entrants. According to MaxWin data, **since the beginning of this year, 10 manufacturers have launched 34 new sugar-free tea products**, with Chaxiaokai (茶小开), Guozishule, and Wahaha launching 10, 6, and 5 products respectively, ranking in the top three. In the thousand-tea war, tea varieties have become the focus of competition among major brands. Although the sugar-free tea market is still dominated by oolong tea, followed by jasmine tea, green tea, Pu'er, and Tieguanyin, niche teas like Phoenix Dancong and Yashixiang have been successively explored. Among them, Yashixiang has become the signature product of the Guangdong sugar-free tea brand "Youcongqi" (有丛气). Product homogenization is becoming increasingly severe, with tea origin elements and plantation altitude being packaged as gimmicks. Some brands are also innovating in production processes; Dongpeng Beverage, for example, uses processing techniques as a selling point, launching "Shangcha" (上茶). In April this year, the company cooperated with Zhejiang Tiancao Biology and Anhui Agricultural University to establish a joint research center for deep tea processing and beverage development. Nongfu Spring focuses on three main products: oolong, Qinggan Pu'er, and jasmine tea, dominating the market with a strong presence. Although its product range is limited, it is enough to dominate. This year, it launched a seasonal product, Mingqian Longjing new tea, priced at 8 yuan for a 335ml bottle, which is hard to find. On secondary markets like Xianyu, it was speculated to over 40 yuan per bottle, demonstrating its market influence.
**Moving Towards "Water Substitute"?** Now, sugar-free tea occupies the C-position in convenience store coolers, attracting a large number of young consumers who previously did not drink tea. According to research by EqualOcean Intelligence, consumers' motivations for purchasing sugar-free tea include refreshing themselves while also supplementing hydration and health benefits. Industry insiders predict that based on these "functional" attributes, **sugar-free tea is likely to carve out a piece of the market share from bottled water and functional beverages.** In terms of price, sugar-free tea is infinitely approaching high-quality bottled water. According to MaxWin data, among the 34 new sugar-free tea products launched this year, 11 are in the 4-yuan price band, and 14 are in the 5-yuan price band, with 500ml as the main capacity. That is, most products are concentrated in the 4-5 yuan price range, roughly the price of a high-quality bottled water of the same capacity, clearly indicating the intention to squeeze the bottled water market. In the peak season for beverages, the sugar-free tea war is in full swing, but the leading brand Nongfu Spring seems relatively calm. According to MaxWin analysis, from June last year to May this year, the average price per 100ml of Oriental Leaf's 900ml series remained at 0.78 yuan, lower than the 1 yuan average for 500ml products, improving cost-effectiveness, increasing consumption, and boosting its market share.
Many manufacturers have already seen the potential for sugar-free tea to become a water substitute. Last December, Chaxiaokai, still in its growth phase, incubated a new brand "Cha Yu Shui Shuo" (茶与水说), launching a tea water series priced slightly lower than Chaxiaokai, with a unit price of around 3 yuan, further approaching bottled water. Earlier, Master Kong launched its Chuncui zero-sugar high-mountain oolong tea product, also proposing the "water substitute" concept. However, some market observers believe that sugar-free tea does not need to dwell on whether it becomes a "water substitute." After the sugar reduction and zero-sugar trends, the opportunity based on sugar-free tea will be its functional attributes, which is one of the directions that can be deeply explored in traditional Chinese tea. **From August 20-22, 2024, the 2024 6th China FMCG Conference & 3rd China FMCG Hard Discount Conference & 3rd China FMCG Distributor Conference, themed "Crossing the Era of Shrinkage," hosted by New Distribution, will be grandly held in Shanghai.**
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