---
title: "Yakult: Can't Win the Race, Can't Afford to Stay Idle"
description: "Yakult, known for its laid-back approach, is now feeling the pressure. Within just one year, it launched a 500 billion low-sugar 'Little Gold Bottle' and its first fruit-flavored (peach) product, and even printed scenic spots from various Chinese provinces on its packaging. These moves suggest the company is anxious about its performance, as its daily sales in China dropped 23% year-on-year to 2.53 million bottles by September 2023, down from a peak of 7.609 million."
author: "陈静"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2024-07-20"
language: "en"
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# Yakult: Can't Win the Race, Can't Afford to Stay Idle

> Yakult, known for its laid-back approach, is now feeling the pressure. Within just one year, it launched a 500 billion low-sugar 'Little Gold Bottle' and its first fruit-flavored (peach) product, and even printed scenic spots from various Chinese provinces on its packaging. These moves suggest the company is anxious about its performance, as its daily sales in China dropped 23% year-on-year to 2.53 million bottles by September 2023, down from a peak of 7.609 million.

Yakult, known for its laid-back approach, is now feeling the pressure. Within just one year, it launched a 500 billion low-sugar 'Little Gold Bottle' and its first fruit-flavored (peach) product, and even printed scenic spots from various Chinese provinces on its packaging. (Image source: Yakult)

**The accelerated pace of new product launches and marketing tactics clearly doesn't match Yakult's traditionally steady and low-key 'temperament.'** After all, since entering the Chinese market in 2002, it took fourteen years for Yakult to introduce the low-sugar 'Little Blue Bottle.' These measures are likely related to its performance 'anxiety.' Data shows that as of September 2023, Yakult's daily sales in China fell 23% year-on-year to 2.53 million bottles, while at its peak, daily sales reached 7.609 million bottles. In early 2023, Yakult attempted to reverse the decline by raising prices, increasing the prices of its two lactic acid bacteria beverages sold across China by 8.7%-14.3%, but with little effect. In early 2024, according to the Nikkei, Yakult's Shanghai subsidiary laid off 800 employees, about 20% of its workforce. After price hikes and layoffs, the burden of stimulating sales ultimately fell on 'new products.' In my view, from being synonymous with 'probiotic drinks' to now facing consumers' 'non-choice' or 'fewer choices,' Yakult may not have lost to competitors in similar products, but rather 'sent away' its own era. There are roughly two reasons behind this: first, its 'health filter' has been shattered; second, misjudgment of the market and strategic decision-making errors led to missed opportunities for growth.

**Adherence or Innovation**
**The 'Contradictory' Yakult**
Relying on 'one product, one package, one market,' Yakult once had strong category mindshare and brand recognition, which was also its source of confidence. On Facebook, 68,000 Filipino consumers jointly requested that Yakult launch a 1L product, and even local TV stations supported the call, but Yakult remained unmoved. In response, Yakult officially explained that the 100ml small bottle packaging ensures consumers can finish it in one go, avoiding bacterial growth or secondary contamination from incomplete consumption, while also ensuring the count of active lactic acid bacteria. **Yakult's extreme pursuit of product philosophy has, to some extent, limited its pace with the times.** When there was no large-bottle solution for probiotic drinks, Mengniu took the opportunity to launch 340ml Youyi C. Data shows that in 2023, Youyi C ranked fourth in the lactic acid bacteria beverage single-product list with a 3.58% market share, closely following Yakult. **The 'single-product success' logic is more suitable for a 'tailwind game.' Now, facing the 'headwind game' of declining sales and market changes, especially with latecomers catching up, Yakult has to innovate.** However, Yakult's current innovation only revolves around 'big single products' with ingredient tweaks, launching 'sub-versions' of its big products, which not only fails to give consumers freshness but also causes confusion about the 'big product' identity. For example, the 'Little Gold Bottle' launched in 2023 is based on the low-sugar Little Blue Bottle, increasing the live bacteria count to 500 billion and adding nutrients like high dietary fiber, high calcium, high vitamin D, and high vitamin E. This year's peach-flavored 'Little Pink Bottle' is based on the original 'Little Red Bottle,' incorporating peach flavor and adding 1.1 mg of iron. (Image source: Yakult)

Because of the added nutrients, Yakult's new products are often more expensive. On JD.com's Yakult self-operated flagship store, the prices of Little Red Bottle, Little Blue Bottle, and Little Gold Bottle (unit: 100ml×5 bottles) increase sequentially: 12.8 yuan, 13.8 yuan, and 16.8 yuan. Consumers perceive Yakult's product innovation more as a 'disguised' price increase. In fact, Yakult has its own understanding of 'innovation.' Jin Hirano, Chairman and General Manager of Yakult (China) Investment Co., Ltd., believes that providing too many different products 'may confuse consumers about product positioning, and their perception of Yakult may not be as clear.' **It is evident that Yakult prefers to make small iterative steps within its 'comfort zone,' but such 'simple' innovation is unlikely to impress consumers and may also cause brand 'internal friction.'** Relevant data confirms this: from 2022 to 2023, the combined market share of Little Red Bottle and Little Blue Bottle fell by 3.14%, while Little Gold Bottle only added 1.16% market share. Clearly, new products and price hikes have failed to compensate for the decline in Yakult's market share. (Image source: MaxWin)

**In my view, Yakult's strategy of making minor adjustments to its big single product can only maintain its existing customer base and is unlikely to bring more market growth. Moreover, price increases for new products may also affect the repurchase willingness of price-sensitive consumers.** Notably, although Yakult is cautious in innovating its probiotic drinks, it has made bold attempts in drug development, cosmetics, and professional baseball teams, but these diversification efforts have yielded little. Yakult Group's 2023 revenue data shows that the food segment remains dominant, accounting for over 90% of revenue, while other businesses account for less than 10%. Yakult's current dilemma is: **it lacks the innovative strength to launch a 'next-generation' big product, and its diversification is difficult to synergize strategically with its main business.** Having been comfortable in the 'single-product success' logic, Yakult's innovation drive is clearly insufficient.

**Behind the Shattered 'Health Filter'**
Besides the classic 'Little Red Bottle,' what truly propelled Yakult to great heights was its deep association with the concept of 'health.' 'Health' runs through Yakult's development and is its foundation. Yakult was originally created to address intestinal diseases among Japanese people, after Minoru Shirota cultivated the 'Lactobacillus casei Shirota strain' and turned it into a beverage sold as a 'health product.' In 2002, Yakult officially entered the Chinese market and, through advertising, offline activities, and the 'Yakult Lady' sales model, popularized the concept that 'probiotics are beneficial for gut health,' making Yakult synonymous with 'probiotic drinks' and a guardian of gut health. However, in recent years, **Yakult's 'health concept' has been frequently questioned by the public.** Taking the classic original Little Red Bottle as an example, its main ingredients are water, white sugar, skimmed milk powder, glucose, and active lactic acid bacteria, with carbohydrate content as high as 5.7g/100ml. According to the current Shanghai beverage grading pilot policy, Yakult Little Red Bottle is classified as D-grade, the least recommended. (Image source: Shanghai beverage grading policy pilot)

Some researchers say that generally, carbohydrate content exceeding 5g/100ml indicates high sugar content; from the ingredient list, it is essentially sugar water and not recommended for excessive consumption. Additionally, the 'skimmed milk powder' content in Yakult is low, failing to guarantee nutrition, and the specific components of the flavoring are not disclosed, possibly synthetic. Furthermore, **discussions that probiotics are a 'tax on intelligence' are also rampant.** Multiple studies have shown that probiotics have no effect on gut health. Eran Elinav, an immunologist at the Weizmann Institute of Science in Israel, published a paper in a top academic journal stating that experiments inside the human gut revealed that probiotics are highly dependent on the individual and not everyone benefits. Similarly, Rao Yi, President of Capital Medical University, stated that all probiotics promoted nationwide are fake drugs, arguing that no research has proven probiotics are beneficial to humans, and some research results are contradictory or ambiguous, making it difficult to conclude the effectiveness and safety of probiotics. The doubts raised by many authoritative figures and scientific reports have gradually pulled Yakult off its 'pedestal.' It's not just Yakult that has lost its filter; the sales situation of the probiotic and lactic acid bacteria beverage industry in China is also not optimistic. Since 2022, this beverage category has shown a trend of declining average price and market share. However, it is worth noting that in response to the health pain points of the category, many players have actively proposed new solutions. For example, Anmuxi has solved the technical problem of maintaining live bacteria counts in long-shelf-life products at room temperature through iterative aseptic post-addition technology; Mengniu has cultivated multiple proprietary probiotic strains, including Lactobacillus paracasei PC-01, to improve probiotic survival rates. Yet, Yakult, the former 'category king' that frequently launches new products, has still not provided an iterative strategy that excites the industry. This once again proves that Yakult's new products are not innovation-driven but are a survival move with the hidden intention of 'price increases' to maintain performance prosperity.

**What Are the Constraints?**
It is not difficult to see that after more than twenty years in China, Yakult is still confined to the lactic acid bacteria segment. Besides changes in the industry trend, its own decision-making errors have also constrained its development. **First, hardware production capacity did not keep up, missing market growth opportunities.** In fact, as early as 2010, Yakult's sales in China ranked fourth globally, but due to its cautious sales strategy, it only laid out in a few first-tier and coastal cities. Although under pressure from major retailers, Yakult began to accelerate its layout in inland markets, its production capacity was always limited, and the corresponding cold chain system was not updated in a timely manner. (Image source: Yakult)

It was not until recent years that Yakult began to accelerate the construction of more production bases and improve its domestic supply chain system, attempting to expand to third-tier cities and lower-tier markets, but this pace is clearly too slow. Now that consumers have more choices, whether consumers in third- and fourth-tier cities will pay for the 'foreign brand' Yakult is a question mark. **Second, poor management of terminal sales channels has led to market chaos, undermining its high-end brand image.** Currently, Yakult's sales channels mainly rely on international chains and local large supermarket chains and hypermarkets. In terms of pricing, Yakult's current prices are: convenience stores > supermarkets > bulk snack stores. For example, the price of Yakult Little Red Bottle in Japanese convenience stores in Shanghai is 14-15 yuan, while Lianhua Supermarket sells it for only 12-13 yuan. In lower-tier markets, Yakult actively embraces bulk snack stores. For instance, for the offline launch of the Little Pink Bottle, Yakult chose to collaborate with Mrs. Lao Da, offering co-branded gift bags and free exquisite glass cups. Additionally, during membership days, consumers can participate in in-store discount activities. As prices in chain convenience stores rise, while frequent promotions and discounts occur in lower-tier markets, Yakult's price control ability is average, and over time, this will threaten the entire price system. Moreover, Yakult's failure to properly handle inactivated and expired products can also harm the brand. Yakult's products are mainly 'live bacteria type lactic acid bacteria,' which have strict requirements for temperature and shelf life. However, due to poor management of terminal sales channels, news of inactivated and expired products flowing into milk tea shops or being accidentally consumed by consumers is common. For example, in June 2022, when law enforcement officers from the Hai'an Market Supervision Bureau in Jiangsu inspected a milk tea shop, they found it using Yakult products that had expired four months ago for beverage production. (Image source: Hai'an Release)

Furthermore, Yakult's marketing tactics are insufficient, failing to seize the growth opportunities of private domain traffic. Yakult itself carries 'private domain genes,' as exemplified by its home delivery model 'Yakult Lady,' but currently, the sales ratio brought by Yakult Lady in the Chinese market is only 10%, far lower than in Japan. While Luckin Coffee conducts extensive brand promotion and user interaction through social media, online ads, and mobile apps, Yakult's WeChat mini-program only launched in May this year, and as it stands, its product prices and delivery methods are no different from its Tmall official flagship store, making it difficult to deepen private domain traffic. (Left: Yakult WeChat mall; Right: Yakult Tmall official store)

In summary, although Yakult entered the Chinese market early enough and should have had more opportunities to expand, its overconfidence in its classic big product led to insufficient market judgment. Especially under the consumer preferences for extreme cost-performance and health needs, Yakult no longer has the conditions to stay idle. If it does not turn inward, Yakult may become the next 'tears of the times.'

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