Source | Mirror Phase Studio In 1962, Qingdao Laoshan Mineral Water Co., Ltd. launched a health drink—Laoshan Baihua Snakegrass Water. This product, using Chinese herbal ingredients recorded in the Compendium of Materia Medica as its core raw materials, claimed miraculous effects such as relieving hangover, protecting the liver, clearing heat, and detoxifying. As one of the earliest "health waters" in China rooted in traditional Chinese food therapy culture, Laoshan Baihua Snakegrass Water quickly became popular in Southeast Asia, even favored by the Cambodian prince and the Singaporean prime minister at the time. In China, however, it became famous for its overly pungent taste, consistently ranking first among the "Top 5 Worst-Tasting Drinks in China." Who would have thought that over a decade ago, this biochemical weapon, criticized for tasting like "footbath water mixed with pickled straw mats," would now transform into a "holy water" for health-conscious young people? Even more surprising, in the past two years, more and more Chinese-style health waters, under the banner of "medicine and food homology," have drawn inspiration from the ancient Compendium of Materia Medica. In first- and second-tier cities, walking into any convenience store, you can see over a dozen health water products from brands like Genki Forest, Haowangshui, Guozishule, Master Kong, and Suntory competing side by side. Driven by "health needs," young people who indulge in hotpot and milk tea while also seeking wellness have propelled Chinese-style health waters to fame, and brands of all sizes are flooding into this track, sparking an ongoing chaotic battle.
Chinese-style health waters are almost compiling a complete Compendium of Materia Medica What exactly is "Chinese-style health water"? According to industry insiders, Chinese-style health water is a ready-to-drink plant-based beverage made from medicinal and edible ingredients such as red beans, red dates, ginseng, and kudzu root, processed through boiling, slow simmering, and extraction. It differs from industrialized beverages and has cultural backing from traditional Chinese medicine classics like the Compendium of Materia Medica.
At first glance, Chinese-style health waters seem to carry an unpleasant herbal taste, not aligning with traditional consumer preferences. Yet, it is precisely this not-so-tasty drink that has seen continuous explosive growth since 2023. In 2023, the market size of Chinese-style health waters was 450 million yuan, a year-on-year increase of 350%; by 2024, the market had grown to 3 billion yuan, with a growth rate exceeding 566%. According to the Qianzhan Industry Research Institute, by 2028, the market size of Chinese-style health waters will surpass the 10 billion yuan mark. The market's heat is also directly reflected in the operational data of terminal merchants. A store manager at a Bianlifeng convenience store in Beijing's Chaoyang District told Mirror Phase Studio that from the end of last year to the beginning of this year, sales of health waters experienced a small surge, selling 20 to 30 bottles a day, sometimes more than sugar-free tea. Even when the weather was still cold, customers often walked in and browsed the hot beverage shelves stocked with health waters. By May, sales had declined but had accumulated a relatively stable customer base, with daily sales of around a dozen bottles.
Industry insiders often attribute the explosion of Chinese-style health waters to the significant trends in the food and beverage industry—health consciousness and sugar-free. Influenced by these trends, sugar-free beverages are one of the few categories in the soft drink market that continues to grow, and health waters are a new sub-category emerging from the sugar-free tea track. But ultimately, the reason new and old brands are doubling down on health waters is that some brands have started making money. In February 2023, Genki Forest launched its "Zizai Shui" series, including red bean and coix seed, and red date and goji berry flavors. Without extensive marketing, by March, Zizai Shui was launched on Genki Forest's Tmall flagship store and sold out within just four days, quickly becoming the company's third product to reach 1 billion yuan in sales within about a year.
Seeing new growth opportunities, traditional beverage giants, emerging consumer brands, and individual entrepreneurs have aggressively entered the Chinese-style health water track. In just the first five months of 2024, the number of new health water products reached 166, with brands like Haowangshui, Nestlé, Dongpeng, and Guozishule joining, and the number of companies entering the market exceeded the total of the past six years. By this year, established food and beverage brands have added fuel to the competition. Master Kong, Uni-President, Panpan, Suntory, and Chengde Lulu have successively launched new health water products; retail supermarket Hema has also crossed over to join the "water war," collaborating with traditional Chinese medicine time-honored brand Li Liangji to launch ancient formula herbal tea; and Chinese time-honored brands like Shanghai Tonghanchuntang and Beijing Tongrentang are not idle either, using local ingredients, grabbing ginseng slices and Luo Han Guo from their pharmacies to make health waters. Various health water products on the market. Image source: Interviewee
To meet consumers' health needs, the Chinese herbal ingredients in various health waters are almost enough to compile a complete Compendium of Materia Medica. Even at the expense of taste, they add Chinese herbs to convey a "healthy" impression to consumers.
Mindshare matters, but channels are the bigger battlefield Despite the questionable actual effects, consumers still flock to Chinese-style health waters. In this promising new market, the primary goal for brands is not so much to "out-compete" rivals but to seize the first-mover advantage, specifically by waging marketing wars, awareness wars, and channel wars.
Last year, Liu Lei, who primarily works in consulting, discovered the largely untapped potential of Chinese-style health waters while conducting market research for a client. After discussing with a few friends, they decided to start a business and collaborate with research institutes to develop health water products. After surveying the market, Liu Lei found that health waters have almost no technical barriers; brands are still competing on packaging, mindshare, and product services, seeing who can leave a deeper impression on consumers faster.
First, packaging is used to enhance product persuasiveness. To give consumers a more intuitive "health feel," some brands use "key Chinese characters" to present the production process or raw material information. For example, the bottle of Genki Forest's Zizai Shui (now renamed "Hao Zizai") features a prominent character "煮" (boil), aiming to convey the health significance behind the "slow-cooking" process. Liu Lei, on the other hand, chooses to put some raw materials directly into the packaging bottle. Although this shortens the product's shelf life, it more directly presents the product's functional selling points. Hao Zizai series products. Image source: Genki Forest official mini-program
Second is the raw materials, that is, delving into product efficacy and taste. According to Liu Lei's observations, health water products on the market fall into two categories: one is light health products represented by Genki Forest, Keyang, and Haowangshui, using daily ingredients like red beans and coix seeds, with better taste. The other is food-nourishing products represented by Hema and Yizheng Gen, which directly add Chinese medicinal herbs as "heavy ingredients," placing more emphasis on efficacy, often requiring fruits or sugar substitutes to balance the bitterness of the herbs.
But ultimately, beverages are a channel business. The carefully designed bottle and improved taste are just the entry ticket. For Liu Lei, who is just starting his business, the biggest obstacle is the inability to penetrate terminal channels. Whoever can occupy more shelf space in merchants will be able to stand firm in the health water melee.
Last summer, Zhao Wei, a beverage distributor in Shijiazhuang, Hebei Province, met salespeople from five or six beverage brands, all of whom mentioned the same product—Chinese-style health water. The sales pitches were also quite similar. To promote new products, these health waters could be ordered first and paid after sale, with "after-sales support" in the initial sales period, and near-expiry products replaced for free. Additionally, salespeople would help find suitable urban outlets, conduct door-to-door research, and screen channels with good customer relationships for distributors. They would also help merchants with sales through offline stalls. With the mindset of "not putting all eggs in one basket," Zhao Wei secured agency rights for three health water brands. What attracted him, besides the benefits for new product launches, was the relatively high gross profit margin of health water products—compared to low-margin, high-turnover products like carbonated drinks and mineral water, health waters are characterized by high margins and low turnover. Zhao Wei calculated that as long as the turnover rate was maintained at around 0.8 per month, every additional box sold was pure profit.
The sales speed of new products exceeded Zhao Wei's expectations. After distributing health waters to terminal merchants, new orders came in within less than two months. Health waters appeared overnight in community stores and convenience stores in Zhao Wei's city. By this year, Zhao Wei had met over a dozen health water salespeople. "On the surface, health water is still a blue ocean market, but in the terminal market, it's already a fiercely competitive red ocean." Salespeople from various brands are engaged in a battle for point positions; whoever offers more money and higher rebates can secure a place in the terminal market. Salespeople not only make multiple visits to persuade terminal merchants to sign contracts but also provide display fees. Besides convincing merchants to stock products, the placement of shelves is also a focal point of competition among health water brands. Zhao Wei once overheard a salesperson from a certain brand chatting with a merchant, saying that to secure the top position in a FamilyMart convenience store's freezer, the salesperson paid out of pocket, returning 0.5 yuan to the store for every bottle sold.
Sometimes, competition can appear in a more brutal form. In the offline market, salespeople from big brands often sit at the top of the food chain, and their methods for seizing shelves are more direct. During routine store inspections, if they find their products obscured by competitors, they immediately demand the store owner adjust the display order. In Zhao Wei's view, this phenomenon has long become the norm.
Becoming the next "sugar-free tea" is still a bit difficult The current Chinese-style health water market, despite being a rapidly developing market, is a mismatched competition with uneven heat. In the eyes of entrepreneurs and beverage brands, health water is still a promising new market, but from the perspective of terminal owners, it is difficult for a new winner to emerge in the short term, and it even seems like "sales are stalling." This is because Chinese-style health water is more like a new concept created by the industry. No matter how grand the marketing or how well it sells online, once it goes to the vast offline market, it easily falls into the awkward situation of poor sales and low turnover.
Initially, when contacting terminal owners to order health water products, Zhao Wei found that due to the sluggish beverage market, convenience store and community store owners were relatively receptive to health waters, hoping for additional income from differentiated new products. At first, health waters did sell well. Zhao Yuanjun previously worked in operations at a chain convenience store brand. After the pandemic ended, he returned to his hometown of Zhengzhou and opened a community convenience store of less than 100 square meters near a mid-to-high-end residential area. Last autumn, a new Genki Forest salesperson came to his store to promote Genki Forest's Zizai Shui. The salesperson told him that the product sold very well online, "also called weight-loss water or health water; customers who know how to drink it love to buy it." With a try-it-out mindset, Zhao Yuanjun signed the order and placed Zizai Shui on the shelves. The initial performance did not disappoint Zhao Yuanjun. In his store, the best-selling drinks were still sugary beverages like cola and iced tea, but the sales of Zizai Shui were also "steady," selling at least two boxes a week.
The turning point came faster and more cruelly than imagined. The "good business" of health waters only lasted until this spring, when signals of unsold stock began to appear. In the not-so-large track of Chinese-style health waters, almost all notable Chinese beverage brands are crowded in, and such crowded market competition naturally triggers price wars. In offline convenience stores, the selling price of health waters is basically between 5 and 10 yuan. As competition intensifies, everyone has started promotions, with "second item for 1 yuan" becoming the most common promotional tactic. Under such activities, the average price per bottle of health water drops to 3-5.5 yuan, a decrease of more than 40%. But even price cuts cannot save the declining sales of health waters.
In March this year, Zhao Wei stocked a new shipment of health waters, but when delivering to various stores, he found that except for Genki Forest's "Hao Zizai" series, which needed restocking, other health water brands were not short of stock. Some beverages with shelf life from July or August of last year were still sitting on shelves, awaiting sale. The decline in sales is also reflected in the form of price inversion, with "cross-region dumping" becoming increasingly common. Goods are piling up unsold, and near-expiry health waters sent back to the manufacturer cannot be returned or exchanged. Distributors have to keep lowering prices and selling to other regions. The purchase price of the two health water products Zhao Wei distributes is even higher than the selling price on Pinduoduo and snack stores: "This is a vicious cycle. Products don't sell, near-expiry stock increases, terminal merchants' selling prices keep dropping, ultimately leading to market chaos, and business becomes impossible."
Poor sales have also directly affected distributors' attitudes toward brands. This spring, Zhao Wei and the distributors he knows have rarely stocked health waters. When manufacturers come to promote, they show little interest, sometimes even asking manufacturers to first find channels that can sell the products: "We'll stock only if there are sales."
Summarizing the reasons for the decline in health water sales, there are mainly two. First, health water products are dense but homogeneous. The vast majority of health water raw materials are concentrated in red beans, coix seeds, tangerine peel, goji berries, longan, chrysanthemum, etc. A single bottle of red bean and coix seed water accounts for half of the health water market. In this single category, due to early layout and being the first to become popular, Genki Forest holds an absolute advantage with a 58.6% market share, making it extremely difficult for other products to compete for market share. Common "food supplement" materials in traditional Chinese medicine are also the most common raw materials for health waters. Image source: Visual China
The second reason is the imbalance in the current channel layout of the Chinese-style health water category. According to iiMedia Research data, Chinese beverage consumers mainly purchase beverages offline, accounting for 67.3%, which requires a high number of terminal outlets for brands. Currently, the key sales channels for Chinese-style health waters are still concentrated in modern channels like convenience stores, mainly in first-tier cities. In second- and third-tier cities and the broader lower-tier markets, emerging health water products cannot penetrate. Furthermore, even if products are placed on terminal shelves, sales are a major challenge. Zhao Wei told Mirror Phase Studio that many Chinese-style health waters' scale and strength cannot yet support brands entering distribution channels. Salespeople have to find alternative ways, breaking into restaurants one by one, and even niche scenarios like gyms and internet cafes. In the short term, this channel disadvantage undoubtedly increases the difficulty for health water brands to grab share in the health beverage market.
Genki Forest is currently the brand with the largest market share in health waters. In 2024, Genki Forest had a total of 1.2 million offline terminals. As early as the end of May 2020, Nongfu Spring had covered 2.43 million retail terminal outlets nationwide, more than twice that of Genki Forest. For the beverage industry, there is no innovation in channel distribution; it must rely on long-term meticulous cultivation, slowly and clumsily filling channel gaps. The essence of Chinese-style health water is still a beverage, and channels control the survival bottom line of beverage brands. Health needs may bring a track to fame, but only by breaking the channel dilemma can "medicine and food homology" truly settle from a trend into the norm. After all, what young people need is not a "health illusion" in a bottle, but a truly cheap and thirst-quenching bottle of water.