On September 26, Luckin Coffee once again 'crossed over' by announcing a strategic cooperation agreement with Louis Dreyfus Group to jointly build a production facility focused on NFC juice and develop a high-quality juice co-brand in China. Similarly, in recent months, Nongfu Spring has been continuously strengthening its presence in the juice market, not only innovating in low-temperature NFC but also upgrading its Nongfu Orchard brand in early September, increasing the juice concentration from 30% to 50%. Whether entering or upgrading, the juice market is undergoing a structural transformation, with various players quietly preparing. What's happening to the juice market? Juice, as one of the most important categories in soft drinks, is currently facing a grim situation with sluggish growth. From 2001 to 2010, China's beverage market maintained double-digit growth, becoming one of the fastest-growing consumer industries. However, over the past five years, the juice category has seen the lowest year-on-year production growth, even turning negative in 2013. Source: China Commercial Industry Research Institute. According to Nielsen retail tracking data, in the first half of 2017, the overall soft drink industry sales grew by 9.0%, while juice industry sales grew by 1.2% year-on-year. The juice industry's growth rate is lower than the overall beverage industry. Breaking down the juice industry, the drag comes from low-concentration juice (juice content 0-25%), with sales declining 7.4% year-on-year. In contrast, high-concentration juice (100% juice) and medium-concentration juice (26%-99%) grew by 27.1% and 11.3% respectively. This shows that the decline in the juice market is primarily due to reduced demand for low-concentration juice, which can be analyzed from two dimensions: First, consumers have more choices—besides freshly made milk tea, new-style tea drinks, and coffee, ready-to-drink options like cold-brewed tea, juice tea, flavored water, and lactic acid bacteria drinks have taken a share of the juice market. Second, consumer upgrading—there is an increased demand for health, nutrition, and natural products. In the past, consumers thought drinking orange juice with pulp was drinking juice, but with increased awareness and health consciousness, younger consumers realize its low nutritional value and naturally reduce demand for low-concentration juice, shifting to medium/high-concentration or pure juice products. Although demand is decreasing, it's important to note that China's juice market structure is severely imbalanced, with low-concentration juice accounting for over 70%. Therefore, the 70% market is rapidly declining, and the entire juice market is in a transition period. As the low-concentration juice market shrinks, medium/high-concentration and pure juice are rising, consumers are increasingly concerned about: what am I drinking, is it healthy, rather than just the taste. With the imminent disappearance of the 70% low-concentration juice market, who will take over this market? Who will take over the low-concentration juice market? Undoubtedly, this is an opportunity for the medium/high-concentration juice market. Although the 100% pure juice market is a definite future trend, due to logistics and price constraints, consumers cannot immediately upgrade from low-concentration to 100% juice. At the same time, due to the uneven development of China's market economy and differences in market tiers, medium/high-concentration juice serves as a 'transitional' product. On one hand, through product upgrades, it can convert some low-concentration juice consumers, meeting their higher health demands—this is also the key reason behind Nongfu Orchard's recent upgrade to 50% juice concentration. Additionally, besides concentration upgrades, horizontal upgrades focusing on functional benefits are another form. In recent years, fruit-flavored/juice drinks have been innovating with cross-category composite flavors. For example, combining with tea or nutrients to create products with distinct benefits, such as vitamin water—Powerade Vitamin Water and saline drinks—Hai Zhi Yan. For consumers, juice serves only as a flavoring, and the product belongs to a new category with clear benefits like mineral supplementation or refreshing effects, switching category tracks and giving consumers more options. Who are the players in the pure juice market? According to Euromonitor, last year Japan's 100% juice consumption accounted for 59.3%, while China's was only 5.2%. By analogy, China's future 100% juice market has more than 10 times the space. Currently, the growth in the pure juice market comes from two forces: FC and NFC, which are growing in opposition, divided into low-temperature and ambient types. FC juice refers to concentrated reconstituted juice, while NFC refers to not-from-concentrate juice. The significant difference between NFC and FC juice is that NFC juice does not undergo heating concentration and reconstitution after extraction, thus retaining nutrients and flavor, making it closer to freshly squeezed juice in taste and flavor. Representative products:

  • FC juice—Wei Chuan Daily C is low-temperature FC juice; Huiyuan 100% series is ambient FC juice;
  • NFC juice—Lingdu Guofang, Nongfu Spring NFC series. In comparison, FC juice has price and transportation advantages, while NFC juice has better nutrition and taste. In the FC 100% pure juice field, although Huiyuan Juice is the category pioneer, due to various complex factors, Huiyuan's sales have been poor in recent years. At the consumer level, Huiyuan's brand is perceived as old and lacking quality. In contrast, Wei Chuan, also an FC juice, has grown rapidly in recent years through product optimization, the popularity of spokesperson Li Xian, and the 'text bottle' marketing. It is understood that its market share in East China is around 40%, with annual sales exceeding 2 billion yuan. Lingdu Guofang, as a rising star, has carved out its own path in just a few years, but constrained by the 16 yuan per bottle price and channel construction cycles, it is still mainly in some first-tier cities, primarily through convenience store channels. In the pure juice field, Nongfu Spring has made the biggest moves. Starting from cultivating orange trees in 2007 to launching its first 17.5° orange juice in 2016, Nongfu Spring has great ambitions for the juice market. Nongfu Spring's 'three-step strategy' for pure juice: The background of 17.5°'s launch was that the main NFC brand at the time, Lingdu Guofang, had already launched in 2011, firing the first shot in the NFC category. To differentiate its NFC product, Nongfu Spring launched 17.5° five years later, initially with a 'craftsmanship' label. Due to limitations in sales environment, price, and consumer awareness, 17.5°'s market is mostly in first-tier cities. Subsequently, Nongfu Spring launched an ambient NFC series with a 120-day shelf life, leveraging its mature brand channels to maximize distribution. The recently launched low-temperature NFC juice is expected to complement 17.5°, establishing Nongfu Spring's position in the category through product combinations and multiple dimensions. Where is NFC juice headed? Although NFC juice is the future, it cannot be ignored that due to insufficient category communication and unformed consumer habits, NFC juice still has a long way to go. Taking Nongfu Spring as an example, although the product name includes NFC, for ordinary consumers, what NFC specifically represents and its advantages over FC have not been clearly explained. Although Wei Chuan products are cheaper than NFC juice, the prominent '100% natural pure' label on the product may lead consumers who do not understand the difference between FC and NFC to choose Wei Chuan, which is very disadvantageous for NFC juice. Additionally, the difference between China and foreign countries lies in the fact that abroad, juice is deeply recognized as a breakfast or meal accompaniment, while domestic consumers still view juice as a ready-to-drink beverage. Strengthening consumer guidance is the primary task for current juice companies, similar to Nongfu Spring's product promotion slogan: 'Drink juice in the morning, drink milk at night.' The core is to bind juice consumption to a high-frequency scenario. At this stage, the juice market is in a structural transition period. Huiyuan, once the industry leader, is struggling to grow, while Nongfu Spring's recent performance seems to indicate an intention to move toward the category leader position. Let's wait and see the outcome! Tips will be paid 400-2000 yuan if adoptedChina FMCG + Internet Professional New Media****Committed to FMCG manufacturer and distributor transformation and channel digital solutions