---
title: "What Trends Shaped the Beverage Industry Over the Past Year? It's Not Just About 'Consumption Upgrade'"
description: "In 2016, social media could already create 'hit drinks'; traditional beverage companies and internet brands took different paths in 'consumption upgrade'; beverage 'customization' began to emerge; and innovative marketing on small packaging became increasingly diverse. Even niche markets like NFC juice are being seen as 'windfalls' by some companies. For many, 'what to eat today' is an eternal problem. In comparison, 'what to drink' also seems to be gradually becoming a question that is not easy to answer."
author: "何承轩"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-01-13"
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# What Trends Shaped the Beverage Industry Over the Past Year? It's Not Just About 'Consumption Upgrade'

> In 2016, social media could already create 'hit drinks'; traditional beverage companies and internet brands took different paths in 'consumption upgrade'; beverage 'customization' began to emerge; and innovative marketing on small packaging became increasingly diverse. Even niche markets like NFC juice are being seen as 'windfalls' by some companies. For many, 'what to eat today' is an eternal problem. In comparison, 'what to drink' also seems to be gradually becoming a question that is not easy to answer.

> In 2016, social media could already create 'hit drinks'; traditional beverage companies and internet brands took different paths in 'consumption upgrade'; beverage 'customization' began to emerge;
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>
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> And innovative marketing on small packaging became increasingly diverse. Even niche markets like NFC juice are being seen as 'windfalls' by some companies.
For many people, 'what to eat today' is an eternal problem. In comparison, 'what to drink' also seems to be gradually becoming a question that is not easy to answer. 'Regular products' like Coke, Sprite, Wong Lo Kat, and Minute Maid Pulpy are still standard in almost every restaurant, but in FamilyMart and 7-Eleven convenience stores, the variety of beverages has increased dramatically in recent years, and the same is happening in large supermarkets and e-commerce platforms.
We can see that giant beverage companies like Coca-Cola, Pepsi, Uni-President, Wahaha, and Nongfu Spring are accelerating their new product development, while also introducing more overseas beverage brands to China. Meanwhile, some original small and medium-sized brands and internet brands are increasingly participating in the competition in the beverage industry.
In 2016, social media could already create 'hit drinks'; traditional beverage companies and internet brands took different paths in 'consumption upgrade'; beverage 'customization' began to emerge; and innovative marketing on small packaging became increasingly diverse. Even niche markets like NFC juice are being seen as 'windfalls' by some companies.
The following is a set of observations about the beverage industry in 2016, from which we have summarized 5 trends—the keywords themselves are not new, but in the past year, there have been many interesting events around them, and could this indicate a new direction for this market in 2017?
**Social Media Communication: Some Drinks**
**Suddenly Become Popular for No Apparent Reason**
In April 2016, a review of the 'worst-tasting drinks' went viral. In this review, the final version that circulated included five such drinks: Nongfu Spring's Oriental Leaf and Red Scream, Wahaha's Gevas, Heysong Sarsaparilla, and Laoshan White Flower Snake Grass Water.
Eventually, this turned into a business: many merchants sold these 'five divine waters' online in bundles, and indeed many consumers bought them after reading the review. Especially Laoshan White Flower Snake Grass Water, which was originally a niche drink with strong regional characteristics, became a well-known 'internet celebrity' product after winning the title of 'No. 1 Holy Water of Bad Taste'. Laoshan's Tmall flagship store took advantage of this to use 'divine water' as a marketing strategy, and further updated all product packaging, selling it nationwide.
Similar to this is the 'high-end drinking water guide' that has been circulating for years: Voss, Antipodes, and other bottled waters with high prices and design-heavy packaging are listed, and Nongfu Spring's later high-end glass bottled water was also added to the list. And they have all become 'regulars' in high-end supermarkets and e-commerce platforms.
Distinctive features, strong topicality, and unit prices within consumer tolerance are all characteristics of potential hits. In 2016, Four Loko and BLK became popular through social media, both typical cases. The former was called 'blackout drink' and was banned in both China and the US, while the latter is a unique 'black mineral water' priced at 69 yuan per 500ml.
Looking back at China, 'Le Pur' yogurt is also a leader in effectively using social media communication. Despite being controversial, this brand, founded two years ago, continues to conquer the market with its advanced marketing concepts and gradually mature R&D and supply chain. 'From food R&D to brand building, promotion, sales and delivery, and continuous optimization of user experience, through WeChat, Weibo, or offline tasting events, it is built by hundreds of thousands of food-loving, health-loving fans, and products are launched after more than half a year of development,' this is Le Pur's typical product operation model.
**Consumption Upgrade: What Opportunities**
**Do New Beverage Brands Have in the Internet Era?**
For traditional beverage companies, 'low sugar' and 'youthfulness' seem to be two areas to focus on.
As another low-sugar tea drink promoted by Nongfu Spring after Oriental Leaf, 'Chapi (π)' became a big product with sales exceeding 1 billion yuan across all channels within half a year. In terms of taste, Chapi is not as 'bland' as its predecessor Oriental Leaf, but its sweetness is significantly lower than other domestic sugary tea drinks on the market.
Uni-President's 'Xiaoming Classmate' launched in 2015 is similar. It is not only positioned as a light-tasting 'cold-brewed tea', but also highlights the personified image of 'Xiaoming Classmate' with its dry humor and teasing style. In the first five months after launch, sales of 'Xiaoming Classmate' exceeded 500 million yuan.
Although it changed hands to CITIC at the end of November, the 'national drink' Jianlibao also made a similar attempt in early 2016—launching a lactic acid bacteria black tea drink 'Hongcha Jun', trying to attract consumers with a new package and exaggerated comic image.
Youthful, fashionable packaging gives consumers the initial motivation to try, while product positioning such as low sugar and sugar-free increases the repurchase rate of consumers with 'health' needs, which is inseparable from the generally high sugar content of domestic beverages.
After Chapi, Nongfu Spring launched a fruit-flavored water series. In June, Wong Lo Kat also launched its own sugar-free product. In November, Coca-Cola's Schweppes, which had just entered China, launched a new fruit-flavored sparkling water focusing on low sugar and low calories.
Plant-based beverages are another direction. For example, coconut water, which has risen rapidly in recent years, is represented by 'Vita Coco', introduced by China Red Bull's parent company Huabin Group. The entry of many coconut water brands into the Chinese market has posed a significant threat to the once-dominant coconut juice brand Yeguo.
For 'e-commerce-oriented' brands and internet-native brands, how to use more suitable products and content to get close to users is a better choice. This is especially evident in the alcohol category.
In September, Tmall held an event called 'Global 9.9 Wine Festival'. To promote purchase conversion, imported wine merchants launched small bottles of about 200ml with lower unit prices in their Tmall flagship stores before the event, meeting the needs of young online consumers for first-time experiences.
In terms of baijiu, traditional baijiu manufacturers like Yanghe are trying to make their products moderately softer, while Chongqing Jiangji Liquor Industry created the 'Jiang Xiaobai' brand, shaping it as youthful by designing cartoon images and embedding it in films and TV dramas. Chen Zhenyu, a second-generation liquor entrepreneur and post-90s founder, developed and brewed baijiu like a tech product, using KOLs and communities to sell 'Guanyun' baijiu at 189 yuan per bottle, with an overall repurchase rate of 20%.
▲ Jiang Xiaobai
Rice wine, fruit wine, and beer with low alcohol content and sweet taste may be more suitable for building brands targeting young groups. In terms of specific brand-building methods, merchants are also using various tricks. Shanghai-based Mike Rice Wine, with osmanthus and apple flavors as its main offerings, also claims its products can be used to mix cocktails. Laibao Fresh Beer, defined as 'craft beer', launched a crowdfunded beer 'Rock and Roll Has Temper' featuring images of musicians like Li Zhi and Zhao Lei. After the Taobao program 'One Thousand and One Nights' aired, 'Little Peach Red'—a fruit wine with only 3 degrees and priced at 29.9 yuan per 200ml—was also sold out.
**Customization: Should Consumers**
**Decide What to Drink?**
Recently, Oreo held an online activity allowing consumers to 'customize packaging'. In the beverage industry, customized products have long been a reality. The popularity of freshly mixed drinks and Starbucks coffee shows that beyond highly standardized, industrialized beverages, consumers also have a strong desire for personalized choices.
'Kellyone' has achieved personalized customization of canned beverages. This fruit and vegetable juice brand, founded by Zong Fuli, daughter of Wahaha founder Zong Qinghou, has been generating discussions since its launch in July 2016. Of course, not only because of Zong Fuli's family identity label, but also because the product form is quite innovative.
On the purchase page embedded in Kellyone's WeChat official account, consumers can choose 3 to 5 different fruits to mix themselves, and the system will tell them whether it is 'delicious' based on the set percentage. After mixing, consumers also need to give it a name. Prices are 28, 38, and 48 yuan depending on the number of fruits.
In stark contrast to her father Zong Qinghou's rejection of the internet and e-commerce, Zong Fuli's Kellyone is full of novelty and personality, even using her English name 'Kelly' in the naming. Currently, Kellyone only supports delivery in Shanghai, with additional shipping fees. By early 2017, it will complete the second phase of construction.
However, the method of customizing flavors seems difficult to simply replicate in other beverage categories beyond fruit and vegetable juices. Dairy company Mengniu took a different route: abandoning traditional market research that takes 12 to 18 months, and instead working with Alibaba's research team to use big data to identify precise consumer groups, customizing formulas and products based on market demand, with flavors and packaging decided by consumers.
Ultimately, Mengniu launched a sweet milk drink called 'Tian Xiao Hai' within 3 months, starting online sales in June 2016. It comes in two cartoon packaging designs for men and women, paired with soft macaron colors. Guo Rui, general manager of Mengniu's digital marketing center, told 'World Netease' reporters: 'We are now selling sweet milk as a beverage, paying more attention to taste and drinking scenarios.' Recently, Tian Xiao Hai also launched its own yogurt drink.
**Packaging Changes: New Bottles for Old Wine,**
**Does Playing More Tricks Work?**
Just as Coca-Cola changes its packaging and launches 'limited editions' from time to time, for the beverage industry, 'packaging changes' bring high-cost-performance market drivers. Of course, how to tell this story well is important.
During the 2016 Tmall Double 11, Yili launched its first online-exclusive new product 'Byebye Jun', a skim milk. With a comic girl image, bright color combinations, and witty language style, it aims to meet the needs of the internet-born generation of young female consumers who 'love nutritious and healthy milk but fear gaining weight'.
Of course, skim milk is not new; Yili's promotion of 'Byebye Jun' only changed the packaging and brand language, but it is still a beneficial attempt to communicate with young consumers. However, finding the sensitive points of young people may not be so easy.
RIO cocktails also made a similar attempt. In addition to launching the slim 'S can' in September, it also launched a Line Friends limited edition can before Christmas. However, using popular images to boost sales is also due to RIO's own weak sales. According to the financial report released by RIO's parent company Shanghai Bairun, in the first half of 2015, it lost 145 million yuan, and sales of pre-mixed drinks fell by 78%.
In fact, rather than imagining what consumers like, it is better to let them truly participate in the design process. The bayberry wine brand 'Wu Wine', founded by financial writer Wu Xiaobo, used this approach. If the product itself is difficult to innovate, how can you make consumers continue to buy?
In 2016, Wu Wine created four packaging designs representing the four seasons through crowdfunding design from the community behind Wu Xiaobo's channel on WeChat. In the view of Wu Wine CEO Lu Bin, 'To avoid product homogenization, we need to provide differentiation based on our own group. Telling stories through the community and conveying new emotional symbols will be more precise and easier.'
**Niche Products: The Ever-Popular**
**NFC Juice, Is It Really a Good Business?**
As one of the representative products of healthy drinks, the NFC (Not From Concentrate) juice market is being favored by more and more companies. In addition to the aforementioned Kellyone, there is Heyjuice, invested in and endorsed by actress Angelababy, and a host of NFC juice brands represented by Zero Degree Fruit Workshop.
Even Wei Chuan, which built its market with concentrated reduced juice, is unwilling to let NFC juice be divided by other brands, launching the 'Daily Body Management' series of new juices in June 2016, priced at 11.9 yuan per 300ml.
At a recent industry summit, Li Yaxin, head of the Chu Orange brand and grandson-in-law of Chu Shijian, announced that Chu Orange has decided to do deep processing of agricultural products, and its self-built factory has been completed, with plans to officially launch Chu Orange brand NFC juice in 2018. In an interview with the media, Li Yaxin said this would not only further improve the overall quality of Chu Orange but also give a use for substandard fruits.
Even for substandard fruits, for NFC juice, the high requirements of processing equipment, sterile environment, and short shelf life are sources of cost pressure for all brands. Li Yaxin said that Chu Orange juice is not entirely made from expensive high-sweetness Chu Oranges, and its final pricing inevitably invites speculation.
Of course, whether Chu Orange can successfully launch juice is still a future matter. But with Sunkist and Dole taking the lead, it seems natural for fruit industry brands to further process and squeeze juice.
Correspondingly, when Nongfu Spring promoted its 17.5° oranges, which it had cultivated for nine years and grown itself, in 2016, it also launched two NFC juices, including cold-chain and room-temperature versions with 4 SKUs. At the end of January 2016, Nongfu Spring's 17.5° NFC juice using full cold chain was first launched, with orange juice and apple juice, priced at 12.90 yuan per 330ml bottle and 29.90 yuan per 950ml bottle.
Perhaps due to the unsatisfactory market performance of 17.5° NFC juice, in September 2016, Nongfu Spring launched an affordable NFC juice that can be stored at room temperature, with two flavors: orange juice and apple-banana juice, with an official price of 7 yuan per 300ml.
Interestingly, this product no longer has the 17.5° logo, but has a very prominent 'NFC' label on the outer packaging. The promotional strategy is still fresh fruit cold-pressed, without any additives, water, or sugar. But compared to the cold-chain version's 45 days, the room-temperature version has a shelf life of 120 days, which has been widely questioned as not solely using cold-pressed technology.
In any case, apart from the effects of brands like Wei Chuan, Chu Orange, and Nongfu Spring themselves, NFC juice does not seem to have formed a particularly effective moat in product technology and taste. 'The entire 100% pure juice market share is still very small, only accounting for 6% of the juice market, and NFC is even smaller, seemingly less than 1%.' Jiang Hongyi, beverage brand manager of Wei Chuan's mainland cold chain business, once told Yicai, and he believes it is difficult for big brands to emerge in this industry.
**Source: Food Commune**
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