Source | Zhengdian Consumption Compared to most categories, tea beverages have indeed been a 'evergreen.' However, with the fully competitive landscape of the tea beverage market over the past two years, the entire category has quickly entered a mature phase and shows signs of premature 'decline.' According to data released by offline retail tracking agency Ma Shang Ying, the entire ready-to-drink (RTD) tea category saw negative year-on-year sales growth for two consecutive months in February and March this year. Even excluding January and February, which were affected by the Chinese New Year shift, March's year-on-year growth for RTD tea remained negative. Among them, sweetened tea saw a year-on-year decline of 7%, while unsweetened tea declined 5%. Image source: Ma Shang Ying Intelligence Station Notably, compared to 2023 when unsweetened tea grew exponentially every month, this year has been an 'unfavorable start' for the unsweetened tea category. Is the entire category about to 'flash' into a 'decline phase'? Not necessarily. From Full-Blown Explosion to Low-Speed Growth According to a Nielsen report, in 2023, the RTD tea category officially surpassed carbonated beverages to become the largest category by sales share in China's beverage industry. Among them, unsweetened tea was a standout, with a year-on-year growth rate of 110%, significantly higher than the overall beverage industry's 6% and RTD tea's 19%. This aligns with the timeline of China's unsweetened tea category moving from cultivation to explosion. Starting with Nongfu Spring's launch of 'Oriental Leaf' in 2011, the domestic unsweetened tea market underwent at least a decade of cultivation before truly exploding in 2023. But within less than two years, the entire tea beverage market has plunged into fierce competition dubbed the 'thousand-tea war.' Data shows that in 2022, 93 new unsweetened tea SKUs were launched nationwide, rising to 157 in 2023. Beyond Nongfu Spring, established players and new entrants alike—including Master Kong, Uni-President, Suntory, Coca-Cola, Wahaha, Vitasoy, Dydo, Dongpeng Beverage, Nestlé, Genki Forest, Guozishule, Cha Xiaokai, and Rang Cha—have all joined the fray. Based on the performance of leading companies, unsweetened tea has become a key growth engine for various tea beverage portfolios. According to corporate financial reports, from 2022 to 2024, Master Kong's tea beverage revenue was RMB 19.035 billion, RMB 20.059 billion, and RMB 21.7 billion, with year-on-year growth rates of 5.81%, 6.96%, and 8.2%, respectively. Nongfu Spring's tea beverage revenue was RMB 6.906 billion, RMB 12.659 billion, and RMB 16.745 billion, with growth rates of 50.8%, 83.3%, and 32.3%. Uni-President's tea beverage revenue was RMB 6.957 billion, RMB 7.58 billion, and RMB 8.575 billion, with growth rates of 10.9%, 9%, and 13.1%. Although none have disclosed specific performance for unsweetened tea products, Nielsen data shows that Oriental Leaf's annual growth rate exceeded 100% in 2023, with a compound annual growth rate of over 90% over the past three years. From January to June 2024, Oriental Leaf's sales grew over 90% year-on-year. Beyond these 'veteran powerhouses,' emerging brands like Guozishule and Cha Xiaokai have also performed well. Recently, there have been rumors that the emerging unsweetened tea brand 'Guozishule' achieved nearly RMB 1 billion in revenue in 2023 and is expected to exceed RMB 2 billion in 2024. In response, Guozishule told Jiemian News: 'No comment.' Image source: @Cha Xiaokai Meanwhile, the parent company of 'Cha Xiaokai,' Shenzhen Aisidi Co., Ltd. (hereafter 'Aisidi'), mentioned in its 2024 financial report that during the reporting period, its self-owned brands, including the new-style tea beverage brands 'Cha Xiaokai' and 'Yue Xiaokai,' achieved year-on-year sales growth of over 125% through continuous innovation in categories and SKUs. In its 2023 report, Aisidi stated that 'Cha Xiaokai' covered over 150,000 sales outlets, with annual sales exceeding RMB 100 million. Based on this, Cha Xiaokai's 2024 revenue is estimated to be between RMB 200-300 million. However, since 2024, the growth rate of the entire RTD tea category has begun to slow. Specifically, the unsweetened tea category only saw sales growth exceeding 100% in January and February 2024, after which it slowed markedly, turning negative by March this year. Meanwhile, compared to unsweetened RTD tea, sweetened RTD tea has performed even more poorly: from March 2024 to March 2025, it saw year-on-year growth in only three months, flat in one month, and negative growth in nine months. 'Category Decline' or 'Phase Contraction'? The unsweetened tea track has gone from full-blown explosion in 2023 to negative growth now in just two years. Is this a correction after high growth, or is the entire category entering a 'decline phase'? And what factors are causing the category market to contract? Image source: @Entertainment Xiaojian Zhan Junhao, a well-known strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, told this author: 'This year's negative year-on-year growth in tea beverage sales may be related to changes in the market environment. On one hand, consumption trends are diversifying, consumers have more choices, and freshly made tea beverage companies like Mixue Bingcheng are also diverting some of the tea beverage market. On the other hand, competition in the tea beverage market is fierce, with many brands entering, leading to severe product homogenization. Additionally, economic downturn has dampened consumption, triggering price wars and compressing profit margins.' First, we can rule out 'category decline.' According to data from China Business Intelligence Network, in 2023, China's per capita soft drink consumption (124.7 liters) remained far below developed markets such as the US (402.2 liters), Japan (195.7 liters), and Hong Kong (172.3 liters). As the largest sub-category in the domestic soft drink market, the tea beverage market has grown steadily since its inception in 1993, with an average growth rate exceeding 30% over more than three decades. Focusing on the unsweetened tea category, on one hand, although there are many players, the leaders Nongfu Spring and Suntory have long held over 80% market share, leaving limited room for other brands. With numerous brands, market share is further fragmented. On the other hand, while unsweetened tea has been the biggest beneficiary of the health trend, sugary drinks remain the 'mainstream' overall, and tea beverages are no exception. For instance, Nongfu Spring's tea beverage volume, which focuses on unsweetened tea, is smaller than Master Kong's, which focuses on sweetened tea. Image source: @Bai Cai In other words, in the first three months of this year, sales volume of tea beverages, especially unsweetened tea, did not decline; the decline in sales value growth was mainly due to continuously falling prices. Yan Li, CEO of 'Cha Xiaokai,' told this author: 'This year, the overall growth of unsweetened tea has been relatively slow. On one hand, leading brands have started 'one-yuan enjoyment' or similar promotions, intensifying category competition. On the other hand, the price war that originally occurred in modern trade channels has gradually spread to circulation channels through C-end activities like 'one-yuan enjoyment,' leading to lower market prices.' As Yan Li noted, in convenience store chains like FamilyMart and Lawson, and terminals like Hema, 'second bottle for 1 yuan' is almost the main promotional tactic. Beyond such promotional strategies, changes in product formats have further led to 'volume growth with price decline' in the category. Whether in supermarkets, convenience stores, or mom-and-pop shops, both sweetened and unsweetened teas are gradually getting 'bigger.' For example, a 500ml bottle of unsweetened tea might have cost RMB 5 or even 6 yuan, but with various discounts, it can now be as low as under RMB 3 per bottle, and some traffic-driving SKUs can be even cheaper. Moreover, more and more large-format products in 1L, 1.25L, or even 1.5L sizes may only cost RMB 5-10 per bottle. Image source: @Guozishule Unsweetened Tea But in Zhan Junhao's view: 'In the future, the tea beverage market still has development potential. Under the health consumption trend, sub-segments like unsweetened tea are growing significantly. If companies can seize opportunities, strengthen product innovation, improve quality, and meet consumers' personalized needs, they are expected to achieve a rebound in sales.' From the consumer perspective, no matter how the category market competes, lower prices are certainly good for consumers, as 'quality-price ratio' has become the mainstream consumption pursuit. However, for suppliers in traditional channels, pressure will increase, as lower total product prices naturally shrink the profit margins available to channel partners. One thing is certain: as the 'price war' continues, the entire category will accelerate the elimination of smaller brands with weak brand power and insufficient financial strength, further increasing industry concentration. Head players like Nongfu Spring, Master Kong, and Uni-President will benefit from this.