Who Is the Leader of China's Beverage Market?

The 2022 beverage peak season is approaching, and every year new faces appear in the market, while many products quietly go off the shelves. The 2021 sparkling water battle is still fresh in memory. What changes will occur in China's beverage market in 2022? First, we need to understand the players in China's beverage market.

We have reviewed the top 10 beverage brands in China, sorting out their main products, market plans, and development directions. Through these 10 brands, we can get a glimpse of the latest trends in China's beverage market.

In China's beverage market, annual revenue exceeding 10 billion yuan is a threshold. Above 10 billion, brands can basically secure a top-10 position; if it exceeds 20 billion, there is a chance to enter the top 5.

From the current list, the top 5 brands follow a route where a single big product serves as the main force, supported by diversified products. If there is only a single big product, it is difficult to sustain, often rising quickly but hitting revenue bottlenecks. In recent years, some innovative beverage brands have emerged with high marketing buzz, but their scale still needs improvement.

TOP Ranking ↓↓↓

NO.1 Wahaha: 51.5 billion yuan First place goes to Wahaha. Surprised? In 2021, Wahaha's revenue was approximately 51.5 billion yuan.

Wahaha reported sales of 44 billion yuan in 2020 in its social responsibility report. Based on its claim of 17% revenue growth in 2021, its 2021 revenue is estimated at around 51.5 billion yuan.

This figure is far from its peak of 78.3 billion yuan in 2013, only 66% of that. But it is commendable, as this is the first time in years that Wahaha has achieved double-digit growth.

Wahaha gives consumers the feeling of being "old," but it remains the ceiling of China's beverage industry, and no company has yet surpassed it.

Wahaha: New leadership, seeking rejuvenation In 2021, relying on the Kellyone brand, Wahaha launched Shengqi Bobo sparkling water, bringing some novelty to its product line and focusing on online channels. The product side covers health products and other categories, building a larger product matrix. Currently, consumers still remember Wahaha's main products as only a few "old products" like purified water, Nutri-Express, AD calcium milk, and eight-treasure porridge.

Notably, the most important "innovation" change for Wahaha in 2021 was that Zong Fuli was promoted from Chairman of Hongsheng and Deputy General Manager of Marketing at Wahaha Group to General Manager of Wahaha Group, just one step away from succeeding the company.

Wahaha's long-standing position is largely supported by its decades-old distribution system. The stable "joint distribution system" binds Wahaha and its distributors together, reaching millions of lower-tier terminals across China. Whether in a large supermarket in Shanghai or a small mountain village in the southwest, you can buy Wahaha products, especially AD calcium milk, which has become a classic product spanning decades.

NO.2 Master Kong: 44.8 billion yuan Master Kong ranking second is also surprising. Master Kong is better known for its instant noodles, with a volume of nearly 30 billion yuan. But its beverage business is stronger, with beverage revenue of about 44.8 billion yuan in 2021, including 16.5 billion yuan from operating PepsiCo beverages.

Master Kong: Relying on the Master Kong-Pepsi alliance Although ranking second, Master Kong may not be as large as Coca-Cola. This is because Master Kong's beverage financial data includes another major beverage brand: PepsiCo beverages. Data shows that Master Kong's carbonated beverage segment revenue was nearly 16.5 billion yuan, which is almost all of PepsiCo's beverage revenue in China.

If this revenue is subtracted, Master Kong would fall behind Coca-Cola and even behind Nongfu Spring.

But there is no "if" in reality; the alliance between Master Kong and Pepsi exists and has reached new heights. In the past few years, data shows that Master Kong's carbonated beverage revenue was generally around 13 billion yuan, but in 2021 it reached 16.5 billion yuan, indicating that PepsiCo beverages have grown larger.

Master Kong's main beverage segment is tea drinks. In 2021, Master Kong's tea beverage revenue reached 17.989 billion yuan, a year-on-year increase of 13.78%, accounting for 40% of the entire beverage business; Master Kong's ready-to-drink tea sales market share was 43.4%, continuing to rank first in the market.

Additionally, its juice and ready-to-drink coffee sales market shares both ranked second in the market. Among them, the sales market shares of juice and packaged water both increased to varying degrees compared to the same period last year.

Of course, the Master Kong-Pepsi alliance is also an embarrassment for Master Kong. Its own beverage business is also large, nearly 30 billion yuan, but how to balance the alliance is crucial.

However, this year's 3·15 pickled cabbage incident will have a significant impact on the Master Kong brand. Zhu Danpeng, an analyst at China Food Industry, believes that the 3·15 pickled cabbage incident will more or less affect the Master Kong brand. While repairing the instant noodle image, Master Kong may invest more resources in beverages.

NO.3 Coca-Cola: 43 billion yuan Coca-Cola's revenue in 2021 exceeded 43 billion yuan. Of course, it may be on par with Master Kong or even surpass it. This is because Coca-Cola's business in China is handled by two bottling companies: Swire and COFCO. The combined beverage revenue of the two exceeds 43 billion yuan, but this does not include products operated by Coca-Cola itself, such as BodyArmor.

Coca-Cola: Two engines, resuming growth Coca-Cola China has not disclosed specific sales data in the Chinese market. The 43 billion yuan figure comes from the financial reports of Coca-Cola's two bottling companies in China.

Swire Coca-Cola, under the Swire Group, reported revenue of HK$28.774 billion (approximately RMB 23.258 billion) in mainland China in 2021, a year-on-year increase of 15%; net profit was HK$1.418 billion (approximately RMB 1.146 billion), a year-on-year increase of 36%.

COFCO Coca-Cola's China Foods reported revenue of RMB 19.784 billion in 2021, a year-on-year increase of 14.7%; net profit exceeded the 1 billion yuan mark for the first time, reaching RMB 1.075 billion, a year-on-year increase of 12.80%.

Together, the two companies' revenue in mainland China is approximately 43 billion yuan.

In 2020, both companies saw increases in revenue and profit, but sales volumes declined by 4% and 2.9% respectively for Swire Coca-Cola and China Foods. In 2021, sales volumes recovered, growing by 8% and 13.5% respectively.

This is inseparable from their emphasis on offline scenario consumption. When the COVID-19 pandemic hit, offline terminals were affected by reduced out-of-home consumption, leading to sales declines.

As the impact of the pandemic diminished and out-of-home consumption recovered, Coca-Cola's sales increased. COFCO Coca-Cola alone has over 2 million customers. Its network now covers 100% of cities, 100% of counties, and over 60% of townships, with controllable business accounting for nearly 90% of overall business, demonstrating strong terminal control.

However, Coca-Cola, long a giant, is facing pressure from all sides. In carbonated beverages, Nongfu Spring proposed the concept of "new carbonated drinks," and Genki Forest's sparkling water has taken away billions of yuan in market share. Coca-Cola, while having Schweppes, had to launch AH!HA! to respond. In sports drinks, Coca-Cola's Powerade has been suppressed by Pepsi's Gatorade, and it hopes to turn the tide with BodyArmor.

In fact, compared to other brands' multi-category approach, Coca-Cola is relatively rare in having a full product line. In carbonated beverages, it remains the first choice. A survey by Moose New Consumption found that when choosing carbonated drinks, consumers still prefer Coca-Cola, especially in home consumption and dining scenarios.

NO.4 Nongfu Spring: 30 billion yuan Fourth place is Nongfu Spring. In 2021, Nongfu Spring's revenue surged to nearly 30 billion yuan. The proportion of its water business is shrinking, while tea drinks are growing. Functional drinks and juice drinks also contribute high revenue. However, apart from water, it has not yet formed products with absolute advantage. Nongfu Spring needs to create more advantageous products to go further.

Nongfu Spring: Stability first, lacking highlights In 2021, Nongfu Spring's revenue was nearly 30 billion yuan, recovering from the decline in 2020. Nongfu Spring and Wahaha are both headquartered in Hangzhou, Zhejiang, and their rivalry has a long history, comparable to the competition between Coca-Cola and Pepsi. Nongfu Spring has many categories, and most are relatively large single products in the industry.

Some believe that the competition between Nongfu Spring and Genki Forest may be the main contradiction in China's future beverage market. In fact, Genki Forest's model has disrupted the entire beverage industry, leveraging capital to shake up the landscape.

In Nongfu Spring's view, Genki Forest is a tough opponent but not the most important one. In other vertical fields, Nongfu Spring faces more pressing competitors, such as Wahaha's purified water, Master Kong's tea drinks, and Coca-Cola's sodas.

Now, as Nongfu Spring grows larger, it still emphasizes offline terminals. As of May 31, 2020, Nongfu Spring covered more than 2.43 million terminal retail outlets nationwide through 4,454 distributors.

NO.5 Huabin Group: 23 billion yuan Fifth place is Huabin Group, with estimated revenue of around 23 billion yuan in 2021. Huabin Group's sales revenue in 2020 was 24.2 billion yuan. In 2021, Huabin Group only disclosed that its controlled China Red Bull orders were 21.8 billion yuan. However, in 2020, China Red Bull claimed to have completed the set target of 22.8 billion yuan. The two calibers are inconsistent, making comparison difficult, but it may indicate a sales decline.

Industry insiders believe that these five companies have strong brand power, are household names, have strong products as a foundation, and have extensive and controllable terminal channel layouts.

But Wahaha is mainly facing product aging, Master Kong is affected by the 3·15 pickled cabbage incident, Coca-Cola is mediocre, Nongfu Spring may hit a development ceiling, and Huabin Group's "Red Bull" brand dispute with Thai Tencel remains a time bomb for Huabin's FMCG business.

Huabin Group: "Red Bull" brand dispute remains a time bomb In 2021, Huabin's revenue definitely decreased.

In 2020, Huabin Group announced revenue exceeding 24 billion yuan, with China Red Bull completing the set target of 22.8 billion yuan. In 2021, Huabin Group did not disclose overall sales data, only stating that China Red Bull's order amount was 21.8 billion yuan, a significant gap from the 22.8 billion yuan completed in 2020. The different calibers indicate a possible decline.

This also indirectly proves that some measures taken by Thai Tencel in 2021 have had some effect.

It is understood that Thai Tencel, through litigation in Hunan, Shandong, and other places, has requested some local China Red Bull distributors to remove products from shelves. Huabin Group has also responded tit-for-tat, taking countermeasures such as counterclaims to protect distributor interests, and claiming that the 50-year agreement has been submitted to the Supreme Court.

In the market, it is observed that more Red Bull vitamin flavored drinks imported by Thai Tencel and Red Bull Anji produced in mainland China are appearing on the original shelves of China Red Bull. The three products have very similar packaging, making it difficult for consumers to distinguish them.

A survey of consumers found that many consumers only recognize the yellow iron can packaging when buying Red Bull and pick it up without hesitation. Only when drinking do they notice the taste difference: Red Bull vitamin flavored drink is similar to China Red Bull, but Red Bull Anji has a ginseng taste, which consumers may mistake for counterfeit Red Bull.

Whether this situation constitutes legal infringement is difficult to judge until the dispute between Huabin Group and Thai Tencel is formally concluded.

Huabin Group also owns consumer brands such as Zhanma, Voss water, Vita Coco, and Capri-Sun juice.

Huabin Group claims that Zhanma has entered the second tier of energy drinks; from the current perspective, its volume should be over 1 billion yuan. Huabin Group is also making efforts on Voss water, which can be seen in many films and TV dramas. Vita Coco has a certain market share in coconut water drinks, but its high price makes it difficult to become a mass consumer product. Capri-Sun has only 10% juice content, so its competitive advantage is not obvious.

What Huabin Group can rely on now is its terminal advantage. It is understood that China Red Bull has 4 million sales networks and 600,000 core terminals, and it continues to invest in terminals.

For now, if the Red Bull brand dispute is not resolved, it will remain a time bomb for Huabin's FMCG business. If it doesn't explode, they continue to make money. If it explodes, Huabin Group's FMCG business may be greatly constrained.

Of course, it is difficult for any company to take over the market that China Red Bull has built. With Thai Tencel's existing factories, channels, and operational level, it may not be able to swallow it all at once. Dongpeng Beverage and Lehu both have opportunities to carve out a piece of the market.

NO.6 Uni-President: 14.7 billion yuan Juice drinks grow fastest When it comes to Uni-President, one must mention Master Kong, which ranks second. Both come from Taiwan and are known as "Kang-Tong" in the instant noodle market. In the beverage field, they have similar product matrices, and even their advertisements are strangely similar.

Uni-President's 2021 financial report shows that during the reporting period, it achieved revenue of approximately 25.231 billion yuan, a year-on-year increase of 10.8%, setting a new historical high; but net profit was approximately 1.501 billion yuan, a year-on-year decrease of 7.7%, with revenue increasing but profit not. Among this, beverage business revenue reached 14.738 billion yuan, and food business revenue was 9.525 billion yuan.

In the beverage business, Uni-President's 14.738 billion yuan is only one-third of Master Kong's beverage business. There is still a big gap from Master Kong. However, Uni-President's tea drinks, juice, and milk tea data are relatively outstanding. Tea beverage revenue was 6.272 billion yuan, up 15.2% year-on-year; juice revenue was 2.219 billion yuan, up 40.6% year-on-year; milk tea revenue was 5.743 billion yuan, up 13.3% year-on-year.

As an established company, Uni-President's beverage business, with a volume of over 10 billion yuan, cannot squeeze into the top five, but it is tens of billions ahead of the seventh-place C'estbon.

Notably, Uni-President has dozens of food and beverage OEM companies in mainland China, producing for many brands. Among them, Genki Forest's early products were produced by Uni-President's factories, but this revenue is not consolidated into the listed company.

NO.7 C'estbon: Estimated 10 billion yuan Not just bottled water C'estbon is a brand under China Resources Group. According to China Resources Group's 2021 results, revenue reached 769.2 billion yuan, with net profit of 60.1 billion. As in 2020, China Resources C'estbon's 2021 revenue data was not disclosed to the public.

China Resources C'estbon's 2019 performance data shows that in 2019, C'estbon's operating revenue was 10.396 billion yuan, and in 2018 it was 10.435 billion yuan; total profit was 863 million yuan, and in 2018 it was 727 million yuan.

Additionally, according to previously released information from China Resources C'estbon, in the first half of 2021, China Resources C'estbon's water category revenue grew nearly 30% year-on-year on the basis of an annual scale of 10 billion yuan, beverages nearly doubled, and the core water category's market share increased by 1 percentage point. Rough estimates suggest that China Resources C'estbon's 2021 revenue should also exceed 10 billion yuan.

According to a report by Guanyan Tianxia, the bottled water market is highly concentrated. Nongfu Spring leads with a market share of 26.5%, followed by China Resources C'estbon with 21.3%, then Master Kong with 10.1%. Wahaha, Ganten, and Ice Dew have market shares of 9.9%, 7.4%, and 5.3% respectively.

C'estbon's eye-catching green packaging, like Nongfu Spring's red packaging, has been rooted in the terminal market for years. However, relatively single product line is also a challenge for C'estbon.

Liu Hongji, General Manager of China Resources C'estbon, said that China Resources C'estbon became famous for "water." With consumption upgrades, an ordinary bottle of water can no longer meet consumer demand. "Walking on two legs with water and beverages" has become the breakthrough focus for China Resources C'estbon during the "13th Five-Year Plan" period.

According to the "2020 Social Responsibility Report" released by China Resources C'estbon in July 2021, as of the end of 2020, C'estbon's SKUs in sale increased to 35 from 2019, covering 8 major categories including purified water, milk tea, coffee, functional drinks, lactic acid drinks, and fruit drinks.

It owns 9 proprietary brands including "C'estbon," "Jialinshan," "Moli," "C'estbon Honey Water," "Xiaozhujun," "Zuowei Tea," and the Japanese-licensed "Afternoon Milk Tea" and "FIRE Coffee" series.

The purified water market is becoming saturated and highly competitive. Although C'estbon has developed many brands, the response seems lukewarm. New brands generally follow the market, and so far, no hit product has been created. Many consumers still associate C'estbon with purified water.

NO.8 Wanglaoji: Around 10 billion yuan Accelerating expansion into non-herbal tea drinks As one of the four major segments of Guangzhou Pharmaceutical Baiyunshan, the health business achieved revenue of 10.851 billion yuan in 2021, a year-on-year increase of 38.07%, with a gross margin of 47.34%. Although the gross margin decreased by 0.53 percentage points, it remains the highest among the four segments. The revenue of Guangzhou Pharmaceutical's health segment mainly comes from Wanglaoji herbal tea.

In addition to Wanglaoji, Guangzhou Pharmaceutical Baiyunshan's health segment is also expanding into other categories, such as promoting the market construction, channel construction, and brand building of the Cili Ji series. At the same time, it is strengthening market expansion for potential products like throat lozenges, turtle jelly, coconut juice, and Leilong, and accelerating the launch of new lychee products to create new growth points.

Previously, Wanglaoji stated that in 2020, Cili Ji revenue exceeded 500 million yuan, and in 2021, revenue may be around 1 billion yuan, becoming a new growth point. Wanglaoji's peak was in 2012, when sales exceeded 20 billion yuan, making it the No.1 canned beverage in China. But later, with the trademark tug-of-war between Wanglaoji and JDB, the herbal tea market quickly shrank.

However, Wanglaoji's ambition remains. Wanglaoji Health Company held its 10th anniversary conference, released a new ten-year strategy, and proposed to build "Digital Wanglaoji, Fashion Wanglaoji, Innovative Wanglaoji, and Responsible Wanglaoji," with the mission of "making the world more auspicious," striving to become the "Global Beverage No.1."

NO.9 Dongpeng: 6.978 billion yuan Nibbling at Red Bull, single product It can be said that Dongpeng is the first brand to dare to snatch food from Red Bull's mouth and succeed most successfully.

According to financial reports, Dongpeng Beverage's 2021 revenue was 6.978 billion yuan, a year-on-year increase of 40.72%, and net profit was 1.193 billion yuan, a year-on-year increase of 46.90%, achieving significant double growth. At the same time, net profit increased by 46.90% year-on-year, reaching 1.193 billion yuan.

Nielsen data shows that from December 2020 to November 2021, Dongpeng Special Drink sales increased by 28.4% year-on-year, nearly three times the average growth rate of 10.8% in the energy drink industry; sales market share increased from 20.2% in 2021 to 23.4%. In terms of energy drink sales volume (in tons), the share reached 31.7%, surpassing Red Bull to become the market leader.

From a product perspective, Dongpeng Special Drink and other beverages had operating revenues of 6.592 billion yuan and 372 million yuan respectively, a year-on-year increase of 42.34% and 22.19%. Among them, Dongpeng Special Drink revenue accounted for 94.66% of main business revenue, nearly 95%, making it the largest main product of Dongpeng Beverage.

Do you think Dongpeng only sells Dongpeng Special Drink? In fact, there are also Yougan Lemon Tea, Dongpeng Jiaqi, Dongpeng Zero Sugar, Chenpi Special Drink, Dongpeng Water, and Dongpeng Daka.

Dongpeng faces the risk of severe dependence on a single product, which has not been well improved.

When the sales situation changes, it will directly impact Dongpeng Beverage. The compound growth rate of the functional drink market far exceeds that of other beverages, and industry competition is intensifying.

Uni-President launched Goran, Yili launched Huanyuan, China Resources launched Zhanma, and Dali Foods launched Lehu, all following Dongpeng, wanting to grab more market share. Especially after the "Red Bull" trademark battle began, the situation of Red Bull dominating the energy drink industry is changing, and the market rankings of various brands have not yet settled.

NO.10 Yangyuan: 6.906 billion yuan Success and failure both due to "walnut" Because of the advertising slogan "Use your brain often, drink Six Walnuts," Six Walnuts became popular nationwide, becoming a best-selling beverage for New Year gifts, just like Wanglaoji and JDB herbal tea.

Yangyuan, the parent company of Six Walnuts, achieved total operating revenue of 6.906 billion yuan in 2021, a year-on-year increase of 55.99%; net profit attributable to shareholders was 2.111 billion yuan, a year-on-year increase of 33.77%. After deducting non-recurring gains and losses, Yangyuan's net profit in 2021 was 1.763 billion yuan, a year-on-year increase of 59.9%.

In the long run, Yangyuan's performance is actually not ideal. In 2015, revenue reached 9.117 billion yuan, the peak so far.

From 2016 to 2018, revenue was 8.9 billion yuan, 7.741 billion yuan, and 8.144 billion yuan respectively, with year-on-year changes of -2.38%, -13.03%, and 5.21%. 2018 was the year Yangyuan successfully listed, with a slight rebound in revenue, but still lower than 2015.

In 2019, the company achieved operating revenue of 7.459 billion yuan, a year-on-year decrease of 8.41%. By 2020, Yangyuan's revenue had dropped to 4.427 billion yuan, halving in five years. On the stock market, Yangyuan's current market value has also fallen by nearly half from its peak.

Yangyuan mainly relies on "Six Walnuts" with annual revenue close to 7 billion yuan, which is surprising to squeeze into the top ten. Betting on the single large variety of walnut milk "Six Walnuts" series, from 2016 to 2020, walnut milk accounted for as high as 97.03%, 98.45%, 98.51%, 98.95%, and 98.62% of revenue. Even with new products launched in recent years, walnut milk still accounts for the largest proportion.

Innovation in the beverage market is a necessary path for most players. According to Yangyuan's official website, its product categories currently only include 3 types: Six Walnuts series, 2430 series, and plant milk series. The latter two were developed and launched after 2020, which is very few compared to other brands with dozens of beverage matrices. Yangyuan's slow growth and declining revenue in recent years are also related to the lack of predictable growth points for Six Walnuts.

*Reference source: Moose New Consumption

Who Is the Leader of China's Beverage Market? (Part 1)

Who Is the Leader of China's Beverage Market? (Part 2)

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