Click the image above for details With rising consumption levels, there's no doubt that people are becoming more particular and demanding about food. Although Chinese cuisine is profound, Western, Japanese, Thai, and other world flavors have already gained a large following. Take breakfast, for example: previously, people favored soy milk and fried dough sticks, but now more and more are eating milk and bread. This indicates that consumers' dietary habits are being influenced by internationalization. In this international trend, we've noticed a category that is very popular in Europe, America, Japan, and South Korea, where people have established consumption habits, but it remains somewhat lackluster in China. That is NFC juice. Compared to over 30% market share abroad, domestic NFC juice holds only 1%, making the category seem somewhat desolate. NFC juice seems to have never really taken off. Around 2015, 30-40 NFC juice brands emerged in the market, but by 2017, except for a few powerful large enterprises, most newly emerging small and medium brands had nearly vanished. We've compiled a list of some domestic NFC juice brands over the past decade. What exactly caused the downturn in domestic NFC? Does NFC juice have a chance to turn the tables in the future? How will NFC juice develop in the next decade? We've observed the current situation and new trends in NFC juice. After in-depth communication with Zero Degree Fruit Workshop, Ipsos China, and Louis Dreyfus Group, we also see new opportunities in the NFC juice market. -01- The NFC Juice Market Is Heating Up At the end of June this year, Heytea's sub-brand Heytea Little Shop announced the launch of its second brand, "Heytea Little Shop Bottling Plant," and immediately unveiled two bottled NFC juices. Heytea's first foray into bottled beverages chose NFC juice as its debut. Image source: Weibo @Heytea Little Shop Bottling Plant Heytea's moves have always attracted industry attention. Why launch NFC juice when its tea drinks are doing well? Let's look at a set of NFC juice data. According to Euromonitor International's 2019 China Juice Report, from 2013 to 2018, NFC juice retail volume increased several-fold from approximately 5.8 million liters to approximately 46 million liters. Additionally, the market sales scale of NFC juice grew from 300 million yuan to 2.57 billion yuan. Behind the rapid growth of NFC juice is the increasing preference for pure juice. Based on juice content, juice beverages can be divided into three types: low-concentration juice (0-25% juice content), medium-concentration juice (26%-99%), and pure juice (100% juice). NFC juice falls under pure juice. According to Nielsen retail tracking data, in the first half of 2017, juice industry sales grew 1.2% year-on-year, lower than the overall beverage industry growth rate (9.0%), but pure juice grew 27.1% year-on-year, medium-concentration juice grew 11.3%, and low-concentration juice decreased 7.4%. Looking at overall market trends, the low-concentration juice market is declining while the pure juice market is seeing double-digit growth. In terms of specific brand performance, Chu Cheng and Luckin Coffee have successively entered the NFC juice market; Zero Degree Fruit Workshop partnered with Hema last year to launch a co-branded NFC juice with Hema Fresh, and this year launched a new "Rainforest" series. Hema Fresh X Zero Degree Fruit Workshop NFC Juice Image source: Hema APP NFC juice is getting more and more lively. -02- Why Is NFC Juice a "Potential Stock"? In addition to NFC juice, pure juice also includes FC juice and HPP juice, depending on processing technology. FC juice is concentrated by heating after juicing to remove water, then reconstituted with the same proportion of water during bottling; NFC juice is directly bottled after juicing and sterilization, without a concentration process; HPP juice uses high pressure to inactivate microorganisms in the juice, which is costly and less common in the industry. But it's worth noting that NFC juice is the mainstream category in international juice consumption. In the United States, Japan, and Europe, NFC juice holds about 50% market share, and in the UK, it's as high as 70%. According to data provided by Ipsos, in 2018, pure juice accounted for only about 5% of China's juice market, far lower than in Europe and America. China's per capita NFC juice consumption is only 16 milliliters, while neighboring Japan's per capita consumption exceeds 2.5 liters, and the US per capita consumption reaches 10 liters. China's juice type composition Image source: Ipsos If domestic per capita consumption could grow to 1 liter, the entire market capacity would increase by more than 60 times, bringing a qualitative leap to the category. So, does NFC juice have the ability to become this "potential stock"? As a product closer to freshly squeezed juice, NFC juice holds several "trump cards" whether facing competition within the category or in the broader beverage and health food market. Natural, healthy nutrition supply with irreplaceable nutritional advantages. As consumer information transparency increases, people are starting to study the processes and nutritional components behind products. Previously, many people chose food by checking the shelf life first, but now more and more people are paying attention to ingredient lists and nutrition labels. This is very favorable for NFC juice. NFC juice has only one ingredient—juice—making its natural attributes simple and clear. NFC juice does not undergo a concentration process, better preserving natural vitamins, pulp, and natural dietary fiber. This is also a significant advantage that distinguishes the category from other beverages and juice drinks, with low cross-category substitution potential. For example, NFC juice has excellent advantages as a choice for children's beverages. Cheng Hao, Senior Research Director at Ipsos, mentioned: Mothers prefer to use healthy foods like juice to replace carbonated drinks and other beverages, providing nutritional support for their children's growth. At the same time, these natural healthy ingredients, like milk and plant-based milk, can provide daily basic nutrition and are more universal. Reasons consumers choose NFC juice Image source: Ipsos Additionally, convenience is a key benefit that consumers value highly. This convenience is not just about making drinking juice easier, but also about making nutrient intake more convenient. Under the trend of youth wellness, consumers buy various health supplements to meet their wellness needs, and juice can supplement multiple nutrients, replacing supplements in a convenient and natural way. Looking back at consumption upgrade products in recent years, convenience is a very important point. The rapid growth of household appliances like dishwashers and robot vacuums frees users' hands; various self-heating pots, fruit oatmeal, and suggested-cooking steaks are all products that simplify user labor. Making consumption more convenient makes users more dependent. Compared to other juice products, NFC juice is also an excellent "flavor transporter." Since NFC juice does not undergo concentration and reconstitution, it is directly squeezed and bottled, better preserving the fruit's flavor characteristics and providing better taste. This is very friendly to fruits with exotic flavors or those that are inconvenient to transport or store. For example, Zero Degree Fruit Workshop's Rainforest series uses high-quality tropical rainforest fruits as raw materials, allowing people to experience the rich flavor of tropical rainforest fruits. Zero Degree Fruit Workshop Rainforest Juice Series Image source: Zero Degree Fruit Workshop Official Account Flavor is not a necessary factor for product functionality, but as a beverage, it is a rigid condition to attract users. Good flavor will continuously attract users to repurchase. In summary, NFC juice meets the needs of consumption upgrades, providing healthier and safer products; in terms of value, it is irreplaceable and has the opportunity to become a new healthy category after milk. Multiple flavors also add competitiveness to the category. Gao Jiajia, General Manager of the Juice Platform at Louis Dreyfus Group North Asia, analyzed the width and depth of the NFC juice track. He believes: From the perspective of consumption width, the total capacity of China's juice industry is large enough; China is the second-largest juice consumer after the United States. Whether from the perspective of creating demand or consumption upgrades, replacing medium and low concentration juices with NFC juice, this industry has great potential; From the perspective of consumption depth, China is currently undergoing a leapfrog consumption upgrade. China has skipped the traditional European and American juice growth model of moving from low fruit content to high fruit content to pure juice NFC, directly entering the final NFC stage. From the perspective of consumption upgrade, NFC has already entered the fast lane and is in a stage of acceleration and overtaking. -03- To Become a National Juice, Several "Mountains" Must Be Crossed It can be seen that NFC juice has the potential to become a national juice based on its value attributes, but before achieving this goal, we must also face the current challenges of the category. Barriers to consumer non-selection of NFC juice Image source: Ipsos The first mountain is the high price. The high price of NFC juice is the first threshold preventing consumers from trying it. A 300ml bottle of NFC juice typically retails for 15-20 yuan in supermarkets and convenience stores. This price is not only significantly higher than other ready-to-drink juice drinks and tea beverages, but also higher than the cost of buying fruit and squeezing it yourself. In reality, consumers do not have a fixed anchor for beverage prices. For example, Heytea's fruit tea products are priced around 30 yuan, which is already considered "luxury" in the beverage industry, yet consumers are still enthusiastic about buying them. This is because for consumers, price is not only about absolute value but also the relative value brought by cost-performance. A bottle of NFC juice mainly provides functional satisfaction, making it difficult to achieve emotional or social needs. In this case, users compare it to squeezing their own juice, eating fruit, or even FC juice. In such situations, a bottle of juice is hard to equate with a pound or even several pounds of fruit, and due to insufficient category promotion, consumers' understanding of NFC juice's nutritional value is inadequate, further reinforcing the stereotype that NFC juice is overpriced. Buying a liter of NFC might cost $2 or even less; in China, you might pay that for 300ml. The space for cost reduction through industrialization and shelf price reduction is enormous. The second mountain is insufficient category promotion. According to Ipsos research data, consumers' correct awareness of NFC juice is only 35%. Although their perception of its healthiness is higher than FC juice, the difference is not significant. Compared to FC juice, NFC juice requires greater investment in production, transportation, and channels, resulting in higher costs. Proportion of consumers with correct awareness of NFC juice Image source: Ipsos Comparison of penetration vs. healthiness of different juice types Image source: Ipsos During the exchange, Cheng Hao mentioned that currently no brand is vigorously promoting the category. NFC juice is currently doing more packaging promotion, while multi-channel marketing is relatively rare. This is because NFC juice is a category that requires significant upfront investment, with higher requirements for supply chain and logistics than FC juice. As a category primarily based on cold chain, it requires substantial financial support on both the supply chain and channel sides. With limited funds, emerging companies are currently focusing their main energy on front-end production and back-end logistics and channel construction, reducing the cost for consumer education and communication, making it difficult to achieve large-scale category promotion. Even mature beverage companies like Nongfu Spring, when entering the NFC juice market, spend less on advertising compared to other forward-looking categories like sugar-free tea drinks, and their voice is smaller. The result of insufficient promotion is that users cannot fully understand the advantages of NFC juice, especially when NFC juice and FC juice are in the same selling environment; consumers may be influenced by price and give up NFC juice. The third mountain: Compared to foreign countries, the domestic procurement environment is different. Foreign consumers are keen on centralized purchasing and stocking up at large supermarkets like Costco and Walmart, where mainstream supermarket sales account for a high proportion, and the cold chain sales channels equipped in supermarkets are already mature. In China, current cold chain resources are more concentrated in first- and second-tier cities, with low coverage in lower-tier markets. This also leads to limited logistics and distribution coverage for low-temperature products. Multiple NFC juice brands compete in limited channels in first- and second-tier cities, leading to local market saturation, while lower-tier markets are under-covered due to channel shortcomings. The fourth mountain: The domestic fruit market is abundant, and consumers have not developed juice consumption habits. With intensified e-commerce competition, e-commerce platforms are beginning to go deep into upstream supply chains to obtain better price advantages. With the maturity of drop-shipping models and cold chain distribution services, online fruit purchases can penetrate lower-tier cities. Consumers can easily access fresh seasonal fruits, which to some extent affects NFC juice consumption. The fifth mountain: Strong competition from other categories squeezes NFC juice from both ends. Consumers now have increasing choices, with cross-category competition from yogurt, coffee, and milk tea; and within the category, pressure from different price points. Downward, FC juice has a price advantage, such as Wei Chuan FC juice; upward, there are freshly squeezed juices and new tea drinks that are fashionable and interesting, attracting young consumers' attention. Of course, freshly squeezed juices from offline tea shops have reshaped consumers' understanding of pure juice products, allowing them to understand the taste and texture of real juice. From this perspective, it is beneficial for the long-term development of the category. But if NFC juice cannot achieve scale, it will be eroded and lose a relatively large market share. In summary, although NFC juice has advantages such as nutrition, convenience, and good taste, due to price and insufficient terminal communication by brands, consumers find it difficult to gain recognition for the category, resulting in limited sales growth. -04- Learn from Milk and Find the Right Growth Path As another standard beverage in foreign meals, milk has achieved a qualitative leap in China. In 2018, milk consumption was 22.1 kilograms, an increase of 333% compared to 1996. From a development stage perspective, NFC juice faces similar problems that the milk category faced a decade or so ago: how to get users to accept the category and make it a daily necessity to expand the category's market share. Today, using the market development experience of the milk category, we have found some ideas and methods for the development of NFC juice. Determine core communication points and penetrate multiple consumer groups. Milk brands have successfully shaped milk into a rigid demand product by promoting functional benefits like high protein content and natural high calcium, claiming that milk can improve physical fitness. The essential scenario of family consumption and daily required intake ensure the product maintains its vitality for ten or twenty years. For juice, its characteristics of being rich in vitamins and natural plant dietary fiber can effectively compensate for nutrient deficiencies caused by not eating fruit on time, and it is natural and healthier. Currently, consumers have a need for a serving of fruit every day. Brands need to guide users to replace fruit with juice as a category substitute, allowing users to accept the nutritional coverage effect of juice. Supplementing natural vitamins and natural pulp fiber can cover a broader consumer group. In terms of demographics, we can first target the young white-collar group with the most spending power, driving these consumers to form KOC functions to influence a wider consumer base. Prioritize creating a high-frequency scenario to help users form consumption habits. Milk is now firmly bound to the breakfast scenario. As an important supplement for vitamins, NFC juice can also guide users to form consumption habits by binding to a high-frequency scenario. Similar to milk, the family scenario is also a key consumption scenario for NFC juice abroad. We can also quantify the product, reminding consumers to consume a certain amount of NFC juice at a fixed time every day to meet health needs. Anchor NFC juice as a nutritional supplement and health product that everyone needs, de-beverage it, and make it a product that everyone can access and drink daily like milk, triggering high-frequency consumption. Zero Degree Fruit Workshop launched the "Morning Orange Good" series, binding to the breakfast scenario to awaken consumer drinking and bring breakthroughs to the category. Nongfu Spring 17.5° NFC Juice Image source: Official WeChat Account Zero Degree Fruit Workshop Morning Orange Good Image source: Zero Degree Fruit Workshop Official WeChat Account Low-temperature + ambient temperature, a product combination punch. This is very similar to the growth model of the milk category. Early on, low-temperature fresh milk was limited by the radius of milk sources and demanding operations and sales environments, making large-scale sales difficult. The emergence of UHT ambient milk successfully promoted milk to a wider range of channels and was more conducive to distributor operations. As consumers' demands for nutrition and product freshness increased, low-temperature dairy products began to receive attention again and have grown rapidly in recent years. If NFC wants to quickly open up category awareness, it needs to provide consumers with richer channel access, allowing the NFC concept to enter users' minds, and only then can it have the opportunity to become their choice. Ambient NFC can cover richer channels and reduce operating costs. Ambient products can also have a price advantage. In 2017, Nongfu Spring launched an ambient NFC juice series, reducing transportation difficulty and extending shelf life from 45 days to 4 months. The specification was reduced by 30ml, but the price dropped from 16 yuan to under 10 yuan. NFC can follow the replication route of milk. In first- and second-tier markets, be the "Bright" of juices, using low-temperature high-quality products to gain loyal consumers; in lower-tier markets, be the "Yili" of juices, expanding the consumer base with ambient products, cultivating category loyalty, and gradually transitioning from ambient to low-temperature as the market matures. A dual-type combination punch expands the category's market share. Use demand to drive product innovation and accelerate product innovation. We often say that wherever consumers are, products should be there. If we turn NFC into a high-frequency daily necessity, then product price, specifications, and sales formats all need to be considered. In communication with Sun Jun, Chairman of Jiajun Beverage, he mentioned that Zero Degree Fruit Workshop developed the Ecolean product line, adjusting specifications to 200ml. For the same refrigerated product, the unit price can be controlled below 8 yuan, and sales are very good in channels like campuses and canteens. At the same time, Zero Degree Fruit Workshop has also deepened cooperation with Hema Fresh, combining the power of new retail and new technology, integrating global supply chains, and developing more NFC products around 10 yuan to meet the needs of Hema's young consumer group and urban middle class. -05- Summary NFC juice is not mysterious. Like milk, it provides the daily nutrition the human body needs. Finding broader channels and higher-frequency scenarios for NFC is the only way to guide the category to achieve a magnitude change like milk. Consumption is upgrading, and entrants are increasing. NFC juice has the opportunity to overtake on the curve and become a leading sub-category in the juice category. How to take it from niche to mainstream requires joint efforts from brands in product, communication, and channels. The category still has significant room for development. Can NFC juice accumulate strength and burst forth? What are your views on the next decade of NFC juice? Welcome to discuss in the comments. Source: FBIF Food & Beverage Innovation (ID: FoodInnovation)