What is the development prospect of the domestic beverage market?

--Foreseeing 2023: "China's Soft Drinks Industry Panorama 2023" (with Market Status, Competitive Landscape and Development Trends, etc.)

Major Listed Companies in Soft Drinks Industry: Chengde Lulu (000848.SZ); Quan Yangquan (600189.SH); Weiwei (600300.SH); Peopeo (603711.SH); Yangyuan Beverage (603156.SH); Juneyao Health (605388.SH); Lizi Yuan (605337.SH); Joyful Home (300997.SZ); Dongpeng Beverage ( 605499.SH); Master Kong Holdings (00322.HK); Nongfusanquan (09633.HK); Uni-President Enterprises China (00220.HK); China Foods (00506.HK); Tibet Water Resources (01115.HK), etc.

This article's core data: China's Soft Drink Industry Policy Situation;Supply and Demand Situation and Price Index of China's Soft Drinks Industry;Regional Competition of China's Soft Drinks Enterprises

Industry Overview

1. Definitions

According to the industry standard "Classification and Codes of Goods for the Distribution Industry" issued by the Ministry of Commerce in 2017 --Soft Drinks" (SBT 11207-2017), soft

drink refers to natural or artificially prepared beverages with an alcohol content of less than 0.5% (mass ratio).

The main raw materials of soft drinks are drinking water or mineral water, fruit juices, vegetable juices or extracts of roots, stems, leaves, flowers and fruits of plants, some of which contain food additives such as sweeteners, acidulants, flavors, fragrances, food colorings, emulsifiers, foaming agents, stabilizers and preservatives, etc. The basic chemical composition of soft drinks is water, carbohydrates, and flavoring substances, and some of them also contain vitamins and minerals.

2. Industry Chain Analysis: Raw Material Supply and Packaging, Soft Drinks Manufacturing and Soft Drinks Distribution

The upstream link of the soft drinks industry chain is the raw material supply and packaging link, and the supply of raw materials is mainly to provide the agricultural and by-products and food additives necessary for the manufacture of beverages. Food additives include sweeteners, trace elements, acesulfame, food flavors, food coloring, etc. The midstream link of the soft drink industry chain is soft drink manufacturing. According to the different types of soft drinks, soft drinks can be roughly divided into bottled (canned) drinking water, carbonated beverages, fruit juices, tea drinks, etc. The downstream link of the industry chain is distribution, which includes vegetables, fruits and dairy products. The downstream link of the industry chain is the circulation link, and the main sales channels are traditional channels, modern channels, food and beverage channels and e-commerce channels.

China's soft drink industry, after more than 40 years of development, has formed a product system with a wide range of products and a huge number of brands. Divided into product attribute categories, China's soft drink industry can be divided into a variety of market segments as follows. Different products have their own unique attributes and meet the special needs of various groups of people. Men and women, young and old, always have their favorite products and brands.

Industry development history: local brands continue to grow

The domestic soft drink market started in 1978 when Coca-Cola entered China, and has gone through many stages, such as the start-up phase, the growth phase, and the high-growth period, with the market scale expanding and categories widening, and is now one of the world's largest soft drink markets. During the development of the soft drink industry, local soft drink companies, such as Nongfusanquan, Master Kong, Yibao, etc., have continued to grow, and have gradually gained the ability to compete with the big international brands, firmly occupying the core position of China's soft drink market.

Industry Policy Background: Strengthening Beverage Safety Supervision

Since 2017, the State Council, the National Development and Reform Commission, the Ministry of Industry and Information Technology and other departments have issued policies to support and regulate the development of the soft drink industry, which involves the reduction of waste of beverage packaging materials, the strengthening of beverage safety supervision, and optimization of the beverage product mix

Industry Development Status

1, supply: soft drink production rebounded to the high point of the last ten years

With the rapid growth of China's economy and the continuous improvement of urban and rural consumer's income level and consumption ability, the consumption demand of soft drinks has always been in a relatively rapid growth stage. growth stage. After experiencing a number of industrial waves of carbonated beverages, bottled water, tea beverages, fruit juice, herbal tea, milk beverages, etc., the development of China's soft drink industry has also stepped into the "new normal" stage.

Drinks belong to the mass consumption of basic commodities, the industry has a rigid demand characteristics. But in the past two years, with the manufacturing industry "to capacity" continue to promote the spread, beverage production is declining. On the other hand, with the health of China's residents to pay attention to the degree of continuous improvement, carbonated drinks market demand has gradually declined, and carbonated beverages as a soft drink industry scale of the main product categories, the carbonated beverage industry decline has led to a decline in the overall output of the soft drink industry.

National Bureau of Statistics data show that in 2010-2021, China's soft drink product output showed a growth trend, but the overall fluctuation of the growth rate declined.2017-2018, China's soft drink production decline, to 2019 has recovered, in 2019 China's soft drink production was 178 million tons, an increase of 13.29%; 2020 by the epidemic. Soft drink production was 163 million tons; in 2021 China's soft drink production rebounded to 183 million tons, an increase of 12% year-on-year, back to the same level as in 2016, the high point of the last decade.

2, demand: the new normal of the epidemic, soft drinks demand rebound

China as the world's second largest soft drinks market, second only to the United States, in recent years, the demand for soft drinks continues to grow. According to Euromonitor, China's soft drink sales rose year-on-year from 2010-2021, although the growth rate slowed down. 2020 soft drink sales slumped by 3.4% during the outbreak, when most stores were closed and people were unable to meet and celebrate with family and friends due to home seclusion and a ban on social gatherings; in 2021 China's soft drink sales stood at 88.305 billion liters, a a year-on-year increase of 4.3%.

Note: Sales statistics include retail services and food and beverage services.

3, price: energy drinks and ready-to-drink coffee average price is the highest

From the price comparison of the major key brands of soft drinks, it can be seen that packaged drinking water, as the lowest-cost soft drinks, the average price of the lowest of several types of soft drinks is only 2.41 yuan / liter; to Red Bull as the representative of the energy drinks and Nescafé coffee as the representative of ready-to-drink coffee prices are the highest, average price of 2.41 yuan / liter respectively; Red Bull represented by energy drinks and Nescafé coffee prices are highest, average price of 2.41 yuan / liter respectively. Coffee has the highest price, with an average price of 20.60 yuan/liter and 19.78 yuan/liter respectively; Asian specialty drinks ranked third, with an average price of nearly 10 yuan/liter, which is on the high side of soft drinks.

Note: Prices are from Tmall Supermarket August 2022 prices, not regular retail prices; average price = Tmall price / (quantity * specification), for reference only.

4, import and export: soft drinks import and export scale rebounded sharply in 2021

According to the data of China's General Administration of Customs, the export amount of China's soft drinks continued to rise in 2017-2021. 2020 by the impact of the epidemic, the growth rate of China's soft drinks exports fell to the lowest, followed by a rapid rebound in the growth rate in 2021 to 9.2%, and the annual soft drink export amounted to 22.581 billion yuan in 2021.In the first half of 2022, the export scale of China's soft drink industry amounted to 10.838 billion yuan, a year-on-year growth of 12.2%.

In 2017-2021, the amount of China's soft drink imports continued to grow, with a fluctuating growth rate. in 2020, affected by the epidemic, the growth rate of soft drink imports reached a nearly five-year low of only 7.2%, and then rebounded sharply to 17.3% in 2021, and the amount of soft drink imports in the whole year of 2021 amounted to 12.961 billion yuan. in the first half of 2022, the Chinese soft drink imports amounted to 6.078 billion yuan, a year-on-year decline of 3.2%.

According to the import and export data of China's soft drink industry in 2017-2021, China's soft drink industry is mainly export-oriented, but the trend of soft drink imports is on the rise, and the trade surplus of China's soft drink industry dropped from 11.706 billion yuan in 2017 to 9.621 billion yuan in 2021, which shows that there is an increase in China's demand for soft drinks, and at the same time, there is an increase in demand for multi-category The demand for soft drinks has increased, and the recognition of foreign brands has increased. China's soft drink industry is gradually diversifying, and foreign manufacturers are also aiming at China's huge market, have layout. More foreign soft drink brands will enter China in the future, and China's total soft drink imports will continue to rise.

However, the year-on-year change in the trade surplus shows a fluctuating and decreasing trend. Chinese soft drink manufacturers will continue to develop new products and improve the quality of soft drinks to gain consumer recognition.

Industry Competition Pattern

1. Regional Competition: Soft Drinks Enterprises are Mainly Distributed in Guangdong Province

According to the China Enterprise Database, Enterprise Cat, as of late August 2022, China's soft drinks enterprises are mainly distributed in Guangdong Province. As of late August 2022, there were 4,746 related soft drink enterprises in Guangdong***, 2,378 in Jilin, and 2,137 in Shandong.

2. Enterprise Competition: Master Kong Holdings, Nongfusanquan, and Uni-President Enterprises China are the first echelon

In the process of rapid development, China's soft drink industry has seen its overall scale and brand influence climb. The soft drink industry can be divided into three competitive echelons based on the business revenue of enterprises in 2021. Among them, the enterprises with operating revenues greater than 20 billion yuan are Master Kong Holdings, Nongfusanquan, and Uni-President China; enterprises with operating revenues between 3-20 billion yuan are China Foods, Dongpeng Beverages, Nourish Yuan Beverages, Vivo, and Xiangpoupou; and the rest of the enterprises have operating revenues of less than 3 billion yuan.

Industry Development Prospects and Trend Forecasts

1. Industry Development Trend: Soft Drinks Products are Developing Towards Innovation, Health, and High-end

China's Soft Drinks Industry, Driven by Consumers' Individualized Demands and Diversification of Marketing Means and Channels. The life cycle of soft drink products has become significantly shorter, and more new products and new categories will appear; as consumers pay more attention to health, sugar-reduced, less sugar and even sugar-free soft drinks are becoming more and more popular. In addition, from the point of view of marketing methods, variety implantation, cross-border marketing, creative interaction and other marketing methods and live with goods and other new network marketing mode will become more and more companies and brands to choose.

2, market size forecast: it is expected that China's soft drink market will exceed 800 billion yuan in 2027

2021 by the recurring impact of the epidemic, the global soft drink market suffered a blow to the food and beverage industry closed down, the majority of supermarkets, stores are restricted, the global market size of soft drinks has dropped significantly. China reacted promptly to the disaster and quickly resumed its economic operations, and the soft drinks market recovered rapidly. Although the soft drinks market is still declining in 2021, in the short term there will be a rebound in the domestic soft drinks market as the epidemic is brought under control. Meanwhile, consumers' consumption habits and demand shifts are driving the diversification of soft drinks, domestic soft drink sales are rising, and more and more consumers are choosing to consume soft drinks. In the long run, China's soft drink industry will continue to maintain a growth trend. Foresight predicts that by 2027, the market size of China's soft drink industry will exceed 800 billion yuan, reaching 810.5 billion yuan.

The above data refer to the Analysis Report on Production, Sales, Demand and Investment Forecast of China's Soft Drink Industry by Foresight Industry Research Institute.