According to data from the National Bureau of Statistics, from January to September 2017, China's soft drink output reached 158.956 million tons, a cumulative increase of 6.7%. Where is the future of China's soft drink industry? In this article, four leading companies in China's beverage industry share their food and beverage development plans and their current judgments on China's beverage industry, and financial and economic experts analyze China's current economic environment and industry policies.
1 Achieving an Upgrade from Quantity to Quality
Is the beverage industry facing overcapacity? Zong Qinghou, Chairman of Hangzhou Wahaha Group, believes that in 2016, the national beverage production and sales reached 183.452 million tons, with per capita consumption of about 130 kilograms, while developed countries have per capita consumption of 240-250 kilograms. That is to say, China's beverage industry still has the potential to double in the future, and the development prospects remain broad. Especially with the healthy and sustained development of China's economy and the successive realization of the residents' income doubling plan, in the next 5-10 years, China will still be one of the countries with the fastest income growth in the world. This huge consumer market makes China's beverage industry a passionate and hopeful industry.
The overall decline in the growth rate of the beverage industry is currently caused by consumers' demand shifting from "quantitative change" to "qualitative change," pseudo-science and online rumors vilifying beverage products, and incomplete reform of the approval system, such as the cumbersome approval procedures for health foods and long approval cycles.
Based on Wahaha's own development, Zong Qinghou suggests that beverage companies should aim at consumption trends and potential market demands, continuously innovate and develop nutritionally diverse products; carry out marketing reforms to win channel and consumer support, and communicate well with consumers in terms of product positioning, pricing, promotion, and sales channels; and adjust and upgrade by using intelligent manufacturing to ensure product quality, reduce consumption, and improve efficiency.
Wei Chunxian, CEO of Master Kong Holdings, shared the company's experience in how to face the new normal, using the example of "cutting overcapacity, reducing inventory, deleveraging, lowering costs, and strengthening weak links." Master Kong believes that with urbanization and the rise of the middle class, consumers' pursuit of the "trinity" of food health, nutrition, and deliciousness will become the "new normal" in the market, and rising purchasing power will continue to release demand for high-quality beverages. To this end, beverage companies should proactively seek strategic brand upgrades, and through the appropriate separation of brand and manufacturing, achieve an upgrade from quantity to quality—this aligns with the mention in the 19th Party Congress report of "focusing on improving the quality of the supply system." At the same time, they should seize the empowerment of the Internet for enterprises.
In today's rapidly iterating new sales channels, Master Kong's experience is to use "Internet+" thinking to strengthen the layout of new channels, shift more resources to consumer-centric product development, scenario interaction, and new retail channel construction, and continuously inject innovative momentum into the enterprise. In addition, in terms of food safety, introduce advanced technology, optimize the efficiency of the industrial chain, improve the speed of quality screening at all levels, and continuously ensure food safety.
2 Reforming Product Details According to Demand
Zhang Jiantao, Vice President of Coca-Cola Greater China and Korea, shared Coca-Cola's experience in better serving consumers. Zhang Jiantao believes that as a full-category beverage company, it is necessary to closely monitor consumer preferences and consumption trends. Today's consumers prefer products that are personalized, have controlled sugar content, and have natural attributes, and they expect the market to provide more choices.
To this end, Coca-Cola has provided various small-pack and sugar-reduced beverage products for the Chinese market this year, and by changing traditional packaging, it has launched a series of social packaging such as nickname bottles, lyrics bottles, dialogue bottles, and sweet talk bottles, strengthening the story and spreadability of products to enhance consumer experience.
Yao Weiwei, Senior Vice President and General Manager of Beverages at PepsiCo Greater China, stated that a nutrition diversification strategy will become a win-win trend for food companies in the future. According to data released by the China Nutrition and Health Food Association, compared with 1986, the dietary structure of Chinese consumers in 2016 has shifted from "basically single" to "rich and diverse," and the demand for food and beverages has gradually transformed from the past "additive supplementation" of "increasing quantity, flavor, and nutrition" to the current "subtractive balance" of pursuing balance and health, which is consistent with the global trend of food and beverage consumers pursuing health, balance, high-end upgrades, and convenience.
To this end, PepsiCo has launched a sustainable development vision since 2006, including improving products, protecting the planet, and empowering people. Specifically, it starts with investing in R&D to refine products, focusing on building nutrition brands, and creating more healthy choices, with the goal of achieving "reducing sugar, fat, and salt": by 2025, at least two-thirds of its beverages should have no more than 100 calories from added sugar per 12 ounces; at least three-quarters of its food should have no more than 1.1 grams of saturated fat per 100 calories; and at least three-quarters of its food should have no more than 1.3 milligrams of sodium per 100 calories. At the same time, it launches related brands to sow healthy eating concepts among consumers. He believes that nutrition diversification will promote the sustainable development of the food and beverage system.
3 Guiding Consumption and Developing Healthy New Products
In addition, Zong Qinghou also mentioned that all sectors should guide consumers to consume beverages correctly. He suggested reducing commercial hype, and companies should calm down and conduct more in-depth scientific research to develop products with greater nutritional value and benefit national health. At the same time, an authoritative industry information release platform and a national nutrition and food safety science popularization platform should be established as soon as possible to promptly clarify various rumors and false information. More publicity and popularization of scientific and nutritional knowledge that the public really needs should be carried out to promote the formation of a true scientific understanding in the industry and society, and to give consumers correct guidance. Only in this way can it be more conducive to the development of the industry and the sector, and more beneficial to the nutrition and health of consumers.
Zong Qinghou also suggested that taking advantage of the full implementation of the Traditional Chinese Medicine Law this year, the pace of expanding the variety of raw materials for health food filing should be accelerated, thereby further expanding the scope of the health food filing system, allowing companies to continuously develop healthy foods and make greater contributions to economic development and consumer health.
Zhang Jiantao mentioned the issue of corporate social responsibility. He believes that in addition to product innovation and serving consumers, companies should actively participate in public welfare activities. In recent years, Coca-Cola has conducted a series of explorations in areas such as water resource replenishment and the construction of Hope Primary Schools, hoping that social responsibility can become a long-term commitment for every enterprise.
Source: China Food News
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