Sugar-free tea drinks, once mocked as "unpalatable," have finally found their moment. According to the "2018 Global Sugar-Free Tea Beverage Industry Market Status Research Report" released by Xinsijie Industry Research Center, China's demand for sugar-free tea beverage products was 3.727 million tons in 2017, and it is expected that this number will nearly triple to 10.858 million tons by 2021. As concepts such as weight loss and sugar control for skin care began to sweep across major social platforms like Douyin and Bilibili, sugar-free tea drinks, which had been "cold-shouldered" for a long time, have started to gain favor in recent years, even feeling like they are taking the center stage. Sugar-free tea is not a new thing. In 1997, Japan's Suntory brought sugar-free oolong tea into the Chinese market. Among domestic brands, the earliest was Uni-President's Chali Wang, which was officially launched in mainland China in 2004. As for Oriental Leaf, which is more familiar to consumers, it did not arrive until 2011. According to Trout's market leadership law, being "first" is always better than being "leading." But as the earliest domestic brand to enter the sugar-free tea market, Chali Wang's current popularity is actually not as high as that of the "latecomer" Oriental Leaf. Although both have experienced a "cold bench period," these two brands have gradually diverged onto different development tracks. -01- The Wind Has Not Yet Come: The Pioneer and the Successor Among domestic sugar-free tea brands, Chali Wang is definitely a pioneer. In June 2004, Uni-President officially launched Chali Wang in the mainland market, offering two flavors: light green tea with low sugar and pure sugar-free green tea. At that time, apart from Suntory's oolong tea from Japan, there were few other sugar-free tea brands on the market. In a blue ocean market, seizing the first-mover advantage is particularly important. Therefore, Uni-President had high hopes for Chali Wang. Not only did it launch the marketing slogan "Feels like freshly brewed," but it also used promotional tactics such as "high-profile support for Guangzhou's Asian Games bid" and "one yuan reward for finding Chali Wang" to quickly establish market awareness. Unfortunately, even with awareness, Chali Wang did not bring surprises to Uni-President. In 2011, just seven years after entering the mainland market, Chali Wang chose to exit the market due to persistently low sales. There are many opinions on why Chali Wang "failed." Besides the commonly discussed issues like "the 3.5 yuan pricing excluded consumers below 3 yuan," "the 2010 Shanghai Kunshan production scheduling error," and "promotional activities that were not innovative enough and weak in intensity," Mantis Finance believes that the biggest problem with Chali Wang was its failure to "understand young people." Chali Wang's brand positioning targeted young office workers aged 25-35, but both its packaging and its highlighted product feature of "hui gan" (aftertaste) did not align well with its target audience. Especially "hui gan," a term that only professional tea tasters and tea enthusiasts would care about, holds little appeal to young people because they are extremely unfamiliar with it. A Zhihu respondent, allegedly a former PM for Chali Wang, also pointed this out when analyzing why Chali Wang declined: terms like "hui gan," which are actually only valued by older people, destined the brand tone to differ from expectations. As a pioneer in the sugar-free tea industry, Chali Wang exited the market hastily just seven years after its launch. Although this event was not epoch-making, it attracted some major brands to enter the sugar-free tea field, including Nongfu Spring. Interestingly, it was precisely in 2011, the year Chali Wang exited, that Nongfu Spring's Oriental Leaf was officially launched. In hindsight, the latter seems to have taken on the role of a "successor." However, Oriental Leaf was not well received at first either. Since its launch, it was labeled "unpalatable" by consumers accustomed to "sweet drinks." In 2016, a widely circulated online list of "Top 5 Most Unpalatable Drinks in China" included Oriental Leaf. At that time, there were other sugar-free tea brands on the market, such as "Yuanye" by Coca-Cola and Nestlé, and "Benwei Tea House" by Master Kong, but these two were even less well-known than Chali Wang. In short, whether it was the pioneer Chali Wang, the successor Oriental Leaf, or other sugar-free tea brands, they all failed to gain much advantage in the early challenge to conventional sweet drinks. And Oriental Leaf, although it did not directly "exit the market" like Chali Wang, also experienced a "cold bench period" of seven years before re-establishing its market positioning in 2018. Its fate was not much different from the former. -02- After the "Real Fragrance" Moment: The Also-Ran and the Comeback China's sugar-free beverage market truly began to embrace the trend only in recent years. Mantis Finance believes the driving forces come from two levels. First, under the pressure of "body anxiety" and "appearance anxiety," the public has begun to consciously control their love for "sugar." On social platforms like Bilibili, Douyin, and Xiaohongshu, many fitness and beauty bloggers, when sharing their weight loss and skincare experiences, will definitely single out "sugar" as the "culprit" and "criticize" it. In their fat-reducing recipes, they also deliberately emphasize the concept of "sugar-free." As a result, young men and women outside the screen, shrouded in "body anxiety" and "appearance anxiety," have begun to follow suit. At the same time, sugar-free tea and sugar-free soda have become their first choices when buying beverages. Second, new consumer brands represented by Genki Forest have allowed the sugar-free concept to rapidly penetrate consumers' minds. In today's sugar-free beverage market, Genki Forest is definitely a "dark horse." According to the 2021 China New Consumer New National Brand TOP 100 ranking released by the authoritative institution Dolphin Society, Genki Forest won first place in the growth rate of the national beverage and alcohol industry, with sales increasing by as much as 2.7 billion yuan in 2020, a year-on-year growth of 309%. The rapid rise of Genki Forest not only ignited the concept of "0 sugar, 0 fat, 0 calories," but also attracted a host of brands like Heytea and Naixue to cross over into the market, and the wind of sugar-free beverages has grown stronger. When consumers finally began to appreciate sugar-free beverages, sugar-free tea brands naturally would not miss the "free ride." As soft drink giants represented by Master Kong successively increased their investment in the sugar-free tea track, in 2019, Uni-President could no longer sit still and chose to "recall" the "delisted" Chali Wang, listing it as a key brand for high-end development. On the other hand, Nongfu Spring, after an 11-year gap, officially "updated" Oriental Leaf's flavors this year, launching two new products: Qinggan Puer and Genmaicha, also promoting the concept of "0 sugar, 0 calories, 0 fat, 0 flavoring, 0 preservatives." However, as "brothers in adversity" who both sat on the "cold bench," Chali Wang and Oriental Leaf have begun to have different fates. Oriental Leaf's "comeback" trend is obvious. According to AC Nielsen data, Oriental Leaf holds over 50% market share and has been the number one sugar-free tea brand for many consecutive years. At the same time, in the Chnbrand 2021 China Customer Recommendation Index (C-NPS) for tea beverages, Oriental Leaf also occupied the top position with an absolute advantage. Chali Wang, on the other hand, has gradually become an "also-ran." In Uni-President's 2020 performance announcement, sales data for Chali Wang was not explicitly disclosed, only a brief statement that "Chali Wang achieved doubled growth." Moreover, when searching for "sugar-free tea" on Taobao, Chali Wang's sales are far behind Oriental Leaf. Why has this gap formed? Mantis Finance believes that the answer may be found in the taste and packaging that influence purchase intention for tea beverages. The taste of tea is largely determined by its extraction process. According to official introductions, Chali Wang uses a combination of high and low temperature extraction processes. Although it better restores the "freshly brewed" taste, it also inevitably has the astringency of the original tea. Oriental Leaf, on the other hand, is a typical cold-brewed tea, with a more moderate tea flavor that is easier to swallow. For tea professionals, Chali Wang may indeed have advantages, but for consumers who just want to choose a good-tasting sugar-free tea, Oriental Leaf is clearly closer to the public in taste. From the packaging perspective, Oriental Leaf and Chali Wang actually share great similarities; both choose nearly transparent bottle packaging, with illustrations only on one side. However, Oriental Leaf's illustrations are unique for each flavor, and the designs are exquisite. In contrast, Chali Wang appears much more perfunctory, distinguishing flavors only by color, with the pattern uniformly being a "Charlie King" that echoes the brand name. Comparing the two, it is self-evident which one is more attractive to young people who pursue aesthetics. In summary, after years of silence, Oriental Leaf has gradually established a leading position in the sugar-free tea market by relying on flavors, packaging, and marketing that are closer to young people. Chali Wang, which made sugar-free tea earlier, despite catching the new "sugar-free" trend, has failed to innovate with the times and is increasingly losing its grip on consumers. -03- The Sugar-Free Tea Battlefield New Stories Are Hard to Write It has been 24 years since Suntory oolong tea entered China in 1997. Now that sugar-free tea has finally found its moment, can sugar-free tea brands represented by Oriental Leaf really tell a new story? Mantis Finance believes they can, but it won't be easy. One reason is that more brands are vying for a piece of the pie, making it increasingly difficult to break through. New brands, represented by Genki Forest and Rangcha, are rapidly rising with "high-appearance packaging + high-density marketing." Old brands like Master Kong and C'estbon are also accelerating their layout in the sugar-free tea beverage field. With everyone coming to grab a piece of the pie, the market has indeed grown, but breaking through has become harder. For example, in terms of product concepts, "involution" has become increasingly evident. Early on, Suntory highlighted "healthy and refreshing," later Oriental Leaf emphasized "sugar-free," and the newly joined Ran Tea began promoting "de-oiling." In the future, what kind of marketing slogans will attract consumers? Sugar-free tea brands may need to continue "racking their brains." Another reason is that brewed tea bags have joined the battlefield, bringing new opponents for sugar-free tea brands. Just as the coffee industry has seen both Luckin and Three Squirrels emerge, sugar-free tea brands are also facing new competitors—brewed tea. According to iiMedia Research data, the online market for tea bags in China grew by as much as 156% in 2020, with the market size reaching 12.87 billion yuan. In recent years, many new players have entered the brewed tea field. Among them, new brands represented by Chali are gaining attention in the consumer market. It is reported that CHALI Chali has been the top seller in the herbal tea category on Tmall's Double 11 for five consecutive years, and has sold over 800 million tea bags cumulatively over eight years. In terms of development speed, it is not an exaggeration to call it the "Genki Forest" of the brewed tea field. Therefore, whether sugar-free tea brands represented by Oriental Leaf can withstand the attack of new opponents remains to be seen. The next decade for sugar-free tea is still undecided; let's wait and see. Source: Mantis Finance (ID: TanglangFin) Tips will be paid 400-2000 yuan upon adoption.