In recent years, the concept of 'probiotics' has become increasingly popular, with various advertising slogans such as 'nourish the stomach' and 'promote digestion' emerging, making these products synonymous with health. Probiotic drinks have thus come into being, and most now contain lactic acid bacteria, hence the name 'lactic acid bacteria drinks'. When it comes to lactic acid bacteria drinks, one cannot avoid mentioning Yakult, which boasts '10 billion live lactic acid bacteria', achieving the feat of 'one product, 85 years, annual sales of 27 billion', and earning the nickname 'one red bottle conquers the world'. In 2019, it captured over 60% of China's probiotic drink market, with daily sales of 7.6 million bottles in China. Recently, Yakult has further expanded its strategy in China by entering the cosmetics industry and selling cosmetics. ▲Image source: Sina Weibo On July 23, Yakult's cosmetics brand 'Yakult Overseas Flagship Store' officially opened on Tmall Global. Industry insiders say this expansion undoubtedly reveals Yakult's ambition for the Chinese market. However, for Yakult, regardless of how its cosmetics perform in China, it remains a company that can dominate the market with just its lactic acid bacteria drinks. While lactic acid bacteria drinks represented by Yakult are highly sought after, they have also attracted dairy giants such as Mengniu, Yili, and Junlebao to enter the market competition. In this race for the lactic acid bacteria drink market, who will become the most dazzling star? -01- 85-year-old Yakult sells 'lactic acid bacteria' cosmetics? Yakult was initially remembered for its unique probiotic concept and its only 100ml red bottle low-temperature lactic acid bacteria drink. Public data shows that when Yakult entered the Chinese mainland market in 2002, it sold approximately 60,000 bottles per day. In 2011, with its single-product strategy, Yakult's sales exceeded 2 billion yuan in just 28 cities, with coverage less than 1% of its competitors, firmly establishing its leading position in the low-temperature lactic acid bacteria market. Today, Yakult is not just a live lactic acid bacteria drink. Especially in Japan, Yakult has expanded its probiotic field from drinks to food, cosmetics, and pharmaceuticals. Yakult's cosmetics line has been running for nearly 70 years. Its parent company, Yakult Honsha Co., Ltd., was founded in 1935. In 1955, Yakult's Shirota Research Institute established the Ogo Research Institute for pharmaceuticals and cosmetics, setting up a factory and beginning trial production and sales of cosmetics. Full-scale sales began in 1971, and in 2006, the cosmetics business was officially named Yakult Beautiens. ▲Image source: Yakult Tmall flagship store It is understood that currently, all products in the 'Yakult Overseas Flagship Store' are Yakult's Japanese domestic cosmetics, with brands such as Lecoto, Revisis, Pariao, and Yiketi, covering categories like lotions, essences, creams, masks, and cleansers. Prices range from 100 to 2000 yuan. In product descriptions, Yakult's cosmetics also highlight the 'lactic acid bacteria' selling point, with the slogan 'With the power of lactic acid bacteria, help the skin's natural power', attracting attention. However, in terms of market awareness, observations of e-commerce platforms show few shares or discussions about Yakult cosmetics. Even on Xiaohongshu, a platform with high activity, there are only 548 notes, with most posts mentioning 'I didn't know Yakult also has cosmetics'. Although the cosmetics business is not satisfactory, Yakult's lactic acid bacteria drinks maintain a leading position in the Chinese market. According to relevant data, in 2019, Yakult's domestic sales in Japan reached 259.1 billion yen (approximately 16.9 billion yuan), and in China, it captured over 60% of the probiotic drink market, with daily sales of 7.6 million bottles. Industry insiders believe that as the second-largest market after Japan, Yakult has greater ambitions for China. Although Yakult's low-temperature lactic acid bacteria drinks have achieved over 60% market share in China's probiotic drink market, with the entry of large dairy companies like Yili, Mengniu, and Junlebao, Yakult's market share faces the risk of being divided. In this context, Yakult is taking a different path by introducing cosmetics, but its cosmetics brand awareness is low, making it difficult for Yakult to expand its territory in China through cosmetics. The competition in the lactic acid bacteria drink market is becoming increasingly fierce. The logic of race-like competition in the industry is that defeating one opponent leads to the emergence of a new one. How can Yakult, which has existed in the lactic acid bacteria drink market for 85 years, compete with old brands? -02- China's 10-billion-yuan lactic acid bacteria drink market: a battle among industry giants! Now, the era of lactic acid bacteria drinks has begun. Chinese consumers' dairy consumption is becoming increasingly mature, and lactic acid bacteria drinks are no longer just simple snacks but are increasingly playing a role in helping intestinal health. It is understood that the lactic acid bacteria drink market is divided into two categories: ambient lactic acid bacteria drinks and low-temperature lactic acid bacteria drinks. What is the current state of the lactic acid bacteria drink market? What is the future development potential? We have drawn the following main conclusions based on relevant data collection and market data analysis: 1. Market size In recent years, China's lactic acid bacteria drink market has maintained relatively rapid development. From 2015 to 2019, the lactic acid bacteria drink market maintained an average compound growth rate of 11.2%, reaching a market size of approximately 36.48 billion yuan in 2019. In the future, the lactic acid bacteria drink market will maintain sustained and stable development, with an expected scale of 38.93 billion yuan in 2020. ▲Data source: Euromonitor International, compiled by China Commercial Industry Research Institute Among them, the growth of the ambient lactic acid bacteria drink market is faster than the overall market; in 2015, the ambient lactic acid bacteria drink market in mainland China was only 7.72 billion yuan, reaching 14.88 billion yuan in 2019, and it is expected to continue increasing to 16.06 billion yuan by 2020. It can be seen that the ambient lactic acid bacteria drink market will always be larger than the low-temperature market. The root cause is that ambient lactic acid bacteria drinks are free from cold chain restrictions, with key markets in lower-tier cities and townships, which contribute 85% of sales, while low-temperature lactic acid bacteria drinks focus on upper-tier cities, with first- and second-tier cities accounting for 51% of sales. 2. Sales channels Due to different key markets, the sales channels for these two types of products also differ significantly. Ambient lactic acid bacteria drinks have over 60% of sales in traditional channels, while low-temperature lactic acid bacteria drinks have over 90% of sales in modern channels. However, whether ambient or low-temperature, both have seen relatively fast growth in convenience store channels in recent years. 3. Brand competition From the current market positioning of various brands, ambient lactic acid bacteria drinks are basically positioned in the mid-range market. Low-temperature lactic acid bacteria drinks have different positioning among brands, ranging from mid-range to high-end. But overall, the appeals of ambient lactic acid bacteria drink brands are quite consistent, namely '72-hour fermentation, 0 fat'. Currently, there are over 100 brands in the ambient lactic acid bacteria drink market, and competition is intensifying. Facing the Chinese market logic of multiple flavors, serialization, and full-scale development, Yakult's blockbuster strategy gives it an absolute advantage in market share. ▲Image source: Internet In the lactic acid bacteria drink market, Mengniu and Yili are Yakult's local competitors in China. In 2011, Mengniu launched the low-temperature lactic acid bacteria drink 'Youyi C', followed by Yili's 'Meiyitian', and Junlebao's 'Junchang'... The participation of Mengniu, Yili, and Junlebao stirred up this neglected market. Starting in 2014, companies like Wahaha, Meileduo, and Haocaitou launched 100ml ambient lactic acid bacteria products to join the war for the lactic acid bacteria drink market. From 2014 to 2015, brands including Black Bull, Crayon Shin-chan, Huahuaniu, Xiaoyang, and Korean and other first- and second-tier brands, as well as foreign brands, all took a share of the ambient lactic acid bacteria market. Whether ambient or low-temperature, these products are still in the growth stage, and the market has not yet moved toward monopoly, meaning there are opportunities for all brands to penetrate. 4. Product innovation With the improvement of people's living standards, the proportion of people who need to limit sugar intake, such as those with diabetes, hyperlipidemia, and hypertension, is increasing. To meet the probiotic needs of this group, Yakult launched a new product in the Chinese mainland market in January 2016: Yakult Low Sugar. At the same time, the rapidly growing post-85s and post-90s consumers are gradually becoming the mainstream of beverage consumption. Post-90s and post-00s alone account for about 50% of all beverage consumption. In addition to functional demands, these consumers are also attracted by more personalized needs. Yili's 'Meiyitian' selling point is the addition of Danish imported L.casei 431 strain, with live bacteria increasing from 30 billion to 60 billion per 100ml. Mengniu's 'Youyi C' selling point is the addition of Danish imported LC-37 strain, with 50 billion live bacteria per 100ml. Bright Dairy's 'Meiri Qianyi' selling point is the addition of Lactobacillus plantarum, with 100 billion live Lactobacillus plantarum ST-III per 250ml bottle... The main innovation directions of various brands focus on health, flavor, scenario, and convenience. Industry experts believe that the rapid growth of lactic acid bacteria drinks is due to changing consumer trends in beverage demand. More and more consumers are no longer seeking the basic functions of quenching thirst and good taste, but are turning to health and nutritional functional demands. -03- Lactic acid bacteria drinks 'deified': regulating the stomach or self-deception? In recent years, with the improvement of health awareness, more and more lactic acid bacteria drinks claiming health benefits have appeared on the market. Many people believe that regular consumption of lactic acid bacteria drinks helps balance intestinal flora and can improve constipation and indigestion to some extent. Various 'sugar-free' and '0 fat' lactic acid bacteria drinks are also sought after by many, and some even use lactic acid bacteria drinks to replace dairy products. At the same time, there is also a voice that lactic acid bacteria drinks are high in sugar and low in nutritional value, and long-term consumption actually increases the risk of obesity and other diseases. Are lactic acid bacteria drinks the same as dairy products? Is it more beneficial to health because they contain lactic acid bacteria and probiotics? From the composition and production process, lactic acid bacteria drinks generally add water, sugar, and food additives to create different flavors to the dairy product after lactic acid bacteria fermentation. General lactic acid bacteria drinks use cold chain processes to ensure the activity of the strains, so the resulting drinks usually need to be refrigerated. In terms of sugar content, those who are fond of lactic acid bacteria drinks often tout their 'sugar-free' and '0 fat' attributes. However, looking at the nutrition facts table, common lactic acid bacteria drinks contain about 15 grams of sugar per 100ml, which is much higher than cola (10g/100ml). ▲Image source: Yakult lactic acid bacteria drink nutrition facts table Furthermore, in terms of nutrition, the protein and calcium content in lactic acid bacteria drinks is relatively low, usually only one-third of that in milk and yogurt. Taking Yakult as an example, the nutrition facts show a protein content of only 1.2g/100g. Compared with lactic acid bacteria drinks, yogurt also contains probiotics, although the quantity is usually slightly lower, but because the protein and calcium content is higher, the overall nutritional value is higher than that of lactic acid bacteria drinks. Clearly, it is undeniable that lactic acid bacteria drinks like Yakult cannot replace dairy products. In summary, lactic acid bacteria drinks are indeed a good choice for regulating intestinal health, but one must not be superstitious about the health effects advertised. Additionally, when choosing lactic acid bacteria drinks on the market, consumers must carefully read the ingredient list to see if the lactic acid bacteria content is listed prominently, to help make wise and rational choices. Source: Blue Whale Hunshui (hunwatermedia) Author: Kitty