Amid a sluggish beverage market, companies tend to blindly follow trends in product iteration, leading to a succession of so-called category trends that fail to sustain strong market momentum. Observing product hotspots over the past two years, categories such as pre-mixed cocktails, coconut juice, ambient lactic acid bacteria drinks, and light beverages have continuously spawned new brands, attempting to divert market share from traditional beverages. In 2016, 'black water' once again emerged as a potential 'dark horse', prompting companies to follow suit and distributors to scramble for agency rights...
During peak seasons and hot categories, companies and distributors should engage in cool-headed thinking. Will the beverage industry's profit points in 2016 converge on these emerging categories? The answer is not certain. Faced with the recent 'old tea in new bottles' products promoted by established beverage companies, are you tempted? Today, let's first taste the tea before speaking.
The Tea Beverage Market Is Full of Smoke According to Nielsen data, in 2015, the overall beverage industry sales increased by 1.2% year-on-year, while the ready-to-drink tea (excluding milk tea) market continued to weaken, declining by 0.7% year-on-year. In this market environment, Uni-President's 'Xiao Ming Tong Xue' achieved a situation of high profits and high sales against the trend last year. As the summer of 2016 approaches, food companies such as Master Kong, Uni-President, Nongfu Spring, and Jianlibao have all increased their focus on tea beverages.
| Product Name | Launch Time | Specification (ml) | Market Price (yuan) | Flavors |
|---|---|---|---|---|
| Jianlibao Hong Cha Jun | February 2016 | 500 | 5 | Lemon, Grapefruit |
| Nongfu Spring Cha π | March 2016 | 500 | 5 | Grapefruit Green Tea, Jasmine Green Tea, Peach Oolong Tea, Lemon Black Tea |
| Uni-President Ti La Tu | March 2016 | 450 | 5.5 | German Classic Fruit Tea, French Jasmine Tea |
| Uni-President Liu Liu Da Tea | March 2016 | 480 | 5 | Lactic Acid Bacteria Flavor |
| Master Kong Nong Nong | End of April 2016 | 450 | 5 | Lemon Green Tea, Lemon Black Tea |
| Wahaha Tea Coffee | Early May 2016 | 400 | 4 | Flavored Tea Beverage |
Tea Beverages Are Different from Tea China is the homeland of tea and the birthplace of tea culture. The discovery and use of Chinese tea has a history of four to five thousand years, and it has remained prosperous and spread globally. Under the scorching sun, various tea drinks that emphasize the 'health card' are highly favored by consumers. However, most tea beverages on the market are flavored teas, and the content of tea polyphenols, one of the important testing standards for tea beverages, is not indicated by the vast majority of tea beverage brands.
From current channel observations, the variety of tea beverages from major brands is very rich, including black tea, green tea, oolong tea, and flower tea, all of which are 'protagonists' on the shelves. Although these tea beverages prominently label themselves as 'green tea' or 'black tea' on the packaging, they are marked with inconspicuous small characters after the product name or elsewhere as 'compound tea beverage', 'flavored tea beverage', or 'original tea beverage'. The ingredient lists of these beverages are also quite complex, including not only tea or tea concentrate, but also water, high-fructose corn syrup, white sugar, food additives, and food flavorings.
It is understood that tea polyphenol content is one of the important testing standards for tea beverages, but among the 12 bottles of products from different brands and tea types selected, only 4 bottles clearly indicated the tea polyphenol content on the label, while the others did not. In fact, the national standard 'GB21733-2008 Tea Beverages' has strict requirements for tea polyphenol content in tea beverages, stipulating that the tea polyphenol content in tea beverages (tea soup) should be greater than or equal to 300 mg/kg, with green tea, oolong tea, black tea, and flower tea requiring 500 mg/kg, 400 mg/kg, 300 mg/kg, and 300 mg/kg respectively. If the standard is not met, it indicates that the tea polyphenol content in the tea beverage is not up to standard.
During interviews, many consumers expressed ignorance about tea polyphenols, saying they choose tea beverages because they believe they are healthier than carbonated drinks, and they mainly pay attention to taste and flavor when purchasing, without noticing the ingredients.
Tea Beverages Sell Well in Japan According to relevant media reports, the reason tea beverages sell well in Japan is actually the word 'sugar', but if you want to capture more market share, things are not that simple.
The 'sugar-free' solution that emphasizes health may face consumer protests in China—those beverages that only taste of tea are really hard to drink. But in the Japanese beverage market, adding sugar to tea beverages is suicidal.
Taste preferences indeed affect people's consumption decisions. Strictly controlling sugar intake is almost one of the health rules for ordinary Japanese people. Because of this, almost all beverages in the Japanese market suppress sugar content, and this rule is thoroughly implemented in tea beverages.
Data from the Japan Soft Drink Manufacturers Association shows that in 2015, Japan's total production of tea beverages was approximately 5.5 billion liters, exceeding the consumption of carbonated beverages, the single-product champion.
Japanese people's preference for tea beverages is obvious, and they have very detailed classifications. The largest demand is for green tea beverages, followed by black tea, mixed tea (a blend of barley, brown rice, and other ingredients, positioned as healthy), oolong tea, and barley tea.
The main difference in taste from China is in green tea. In terms of production, Japanese green tea is primarily steamed to prevent fermentation, while China uses 'pan-frying' at this step. The resulting tea leaves are more fragrant in China but have a lighter taste, while Japanese tea has a lighter aroma but a stronger tea flavor. For health reasons, Japanese green tea beverages are unsweetened, but brands have continuously developed new technologies to bring out different tea flavors.
Although Japan's tea-drinking tradition came from China, the change in consumption patterns originated with a beverage company called Ito En, which launched canned oolong tea and canned green tea in 1981 and 1985 respectively. By 1996, the earliest 500ml PET bottled green tea beverage was launched, changing Japanese people's tea-drinking habits.
Ito En produced the world's first canned oolong tea product.
Since the 1990s, convenience stores have gradually spread throughout Japan, and vending machines that handle both hot and cold drinks have become increasingly common on the streets. It has become convenient and natural to buy a small bottled drink when thirsty. Naturally, young people are too lazy to experience the ritual of their parents' generation, who had to bring out tea sets and go through the trouble to drink a cup of tea.
In the Japanese beverage industry, people use the 'beverage conversion rate' indicator to judge market potential. Applied to tea products, it means the proportion of tea beverages in the total production of tea products. According to Ito En's estimates, in the past five to six years, Japan's green tea beverage conversion rate has been between 20% and 30%, far lower than the coffee beverage conversion rate of 35%, indicating that green tea beverages still have broad market space.
Beverages certified as 'Foods for Specified Health Uses' by the Consumer Affairs Agency are gaining more attention. They emphasize health, stable sugar absorption, or the ability to adjust body functions. Due to their relatively high prices, they are less affected by tax increases, and they are the real high-profit source for beverage companies.
The image above shows some beverages that have already received 'Foods for Specified Health Uses' certification.
Improving the taste of tea is also one of the research and development focuses of various companies. They add matcha or develop new mixed tea flavors such as cold tea. The sales of caffeine-free barley tea are also increasing, as more women are reducing caffeine intake, and many people do not want to drink caffeinated beverages at night.
In retail stores, the oolong tea beverage category is not as popular as imagined. The production method limits its taste, and oolong tea initially expanded its business channels through restaurants and izakayas, which remain important sales channels even today. When Suntory launched oolong tea beverages in 1981, it emphasized that the tea polyphenols in oolong tea could inhibit fat absorption, and because no extra flavors were added, it was seen as an excellent partner for various dishes. Today, under Suntory's monopoly of 56% of the oolong tea market share, including black oolong tea, few companies can find a breakthrough in this category.
Suntory oolong tea is regarded by many consumers as a weight-loss companion.
Due to high market demand, Japan's tea beverage production has increased for three consecutive years. Similarly emphasizing health, the production of fruit juice beverages has fluctuated—not due to consumer resistance to sugar, but due to raw material prices. In the past three years, the prices of orange, pineapple, apple, and other fruit juice raw materials have been rising, making beverage companies hesitant when determining production plans.
The only category that goes against health but maintains high popularity is carbonated beverages. During Japan's bubble economy, cola itself had a cultural power, and its refreshing taste attracted many young people. Coupled with the fact that people were not so concerned about sugar at the time, cola consumption experienced a rapid rise. The most obvious sustained increase in carbonated beverage consumption in recent times began in 2007—the year Coca-Cola Zero was launched in Japan. Since then, various carbonated brands have continued to compete on taste and low-calorie concepts. Most importantly, unlike tea, it is a beverage that 'cannot be brewed at home'.
Zero uses aspartame instead of sucrose, making the beverage's calories negligible.
Domestic Tea Beverages Still Have a Long Way to Go Unlike the majority of domestic 'special flavors' that are either sweet or sour, Japan has mature experience and stable technology in the fresh extraction of tea beverages, basically maintaining the nutrition and original taste of tea. Therefore, in Japan, which also has a tea-drinking habit, healthy tea beverages naturally become one of the most sold varieties in the summer market.
Looking at the domestic tea beverage market, compared to the exploration and innovation of previous years, it feels like it is regressing rather than advancing. Instead, there are many products on the market with concepts like pure tea and healthy tea, including some from Suntory, Ito En, and even products processed in Japan and shipped back to China.
Some domestic beverage giants, despite years of involvement in tea beverage production, processing, and packaging design, have left an impression of being low-end, with 'special' tastes that are not pure tea, targeting younger and more rural markets. For the future huge demand for healthy pure tea beverages, they are struggling. Various reasons contribute to this, but one thing is clear: it is not that more consumers do not like pure tea, but that consumption habits need education and guidance. More importantly, your understanding of tea and production processes are not yet capable of producing a proper good tea drink.
In recent years, domestic companies have launched some refreshing and good-tasting tea beverages, but the packaging style still has a non-mainstream feel compared to the true, pure, simple, and mature nature of tea. In the research and development and packaging concepts of tea beverages, it is better to be more authentic to avoid deviating from the cultural characteristics of tea itself. For this, look at the best-selling tea packaging in Japan; it has not weakened the simplicity and truth of tea despite continuous changes in packaging design. Of course, some lively and light styles on product packaging are also good as a supplement and to attract attention. Overall, to establish a position in the domestic market during this period of vacancy and weakness, it depends on which company's strategic layout can be more advantageous.
As a country of tea, everyone naturally reaches a stage where drinking tea is natural, and healthy tea beverages will eventually be one of the most popular beverages among Chinese people. It is just a matter of who can calm down and do better in tea beverage technology, packaging freshness, cost control, and tea packaging design. If so, we have every reason to believe that this beverage company and brand will also become a sustainable century-old store.
Source: Food Journal
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