Earlier this year, CBNData released the Tmall Food Industry Trend Analysis Report jointly with Tmall food, in which consumer purchasing preference trends towards “low sugar” and “sugar free” in the non-alcoholic beverage sector and the food sector were highlighted.

According to the report, "eating healthily" is driving consumer purchasing preference, and low sugar has become the focus of attention. The post-1990 and post-1995 generations have become the main consumer group, and the post-1995 generation surpassed other age groups to become largest consumers of low-sugar products in 2018^[1].

Then what opportunities are there in China’s beverage market and how can we meet the demands of its most important consumer group?

Home-grown sugar-free soda drink Yuanqisenlin 

As a newly established domestic beverage brand (founded in 2016), Yuanqisenlin, also nicknamed “a healthier coke”, has gained considerable traction through a strong presence on Wechat, Weibo, Red, Tik Tok and other platforms and has become a big hit among young people.

Its impressive and personalized package design and good taste, have made it an ace amongst domestic sugar-free beverage brands, helping it achieve a sales volume exceeding 200 million yuan in 2018^[2]. Its main buyers are those born after 1990 and 1995^[3].

One of the main reasons why Yuanqisenlin is excelling in China’s sugar-free beverage market is that the taste of its products have been greatly improved by using the sugar alcohol erythritol, which has a sweetness similar to sugar but is not utilized by the body in the way sugar is.  At the same time, its branding and positioning in the market convey the message of "sugar-free life", which coincides with people's pursuit of a healthier life in China today.

Sprite Fiber+ and Coke No Sugar

Carbonated drinks, which have long been regarded as unhealthy beverages, are also being transformed to be "sugar-free" to cope with falling sales^[4] as consumers become more health-conscious.

According to public information, since 2013, Coca-Cola's revenue scale has entered a period of stagnation and its performance has continued to decline for nearly 16 quarters (4 years). It even posted a $3.66 billion loss in the fourth quarter of 2017^[5].

However, the Coca Cola company has been addressing trends towards healthier lifestyles as evidenced by the development of Sprite Fiber+ and Coke+ Fiber in China in 2017 and 2018. This has translated to an 8% increase in sales of its no-calorie soda drinks in 2018^[6].

Dilraba, a popular star with a good figure, is the spokesperson of Sprite Fiber+. The product uses aspartame sweetener as its sugar substitute and is fortified with insoluble fiber and labelled with nutrient content claims which showcase its 0 calorie advantage and a nutrient content comparison claim which compare its fiber content to that of 2 apples.  

Takeaway milk tea drinks

Milk tea drink shops are ubiquitous across Chinese cities, either inside shopping malls, or outside the university campus......Walking down the street, one can always see long queues in front of a milk tea shop and young people with milk tea drinks in their hands. There is also a flourishing takeaway business.

According to a report released by Chinese takeaway app giant Meituan, only 7% of users choose full or extra sugar when they order milk tea drinks, and the number of users choosing sugar-free, little sugar and low sugar was 13 times higher than the number of users choosing full sugar or extra sugar. Sugar-free is the No.1 choice of buyers when ordering milk tea drink online^[7].

The prevailing preference for “low sugar” or “sugar free” in the milk tea sector came as somewhat of a shock to analysts many or which held the belief that younger people would choose a sweeter sensory experience and attach little importance to health concerns.

The increased importance of a “healthy diet” in the lives of China’s Gen Z and Gen Y demographics, has already piqued the interest of large multinationals. Starbucks has introduced products with sugar substitutes or less sugar, and emerging domestic brands like HEYTEA are now offering low-calorie stevia options. Given that Gen Z consumers are expected to contribute 40% of overall consumption by 2020 it’s important that multinationals pay close attention to their rapidly evolving preferences.

Sugar-free yogurt

The yogurt segment has also jumped on the sugar-free bandwagon and a large number of sugar free or low sugar products have hit the market recently, such as the no added sugar yogurt Simple Love, Rushi plain yogurt from Brightdairy, LePur' FIT fat-free yogurt, and CLASSY KISS’s YO KEEP sugar-free yogurt, etc.

Clean label and a short ingredient list are major strengths of these products, which only use raw milk and lactobacillus. Although the taste is not so good as the common ones with sugar and other ingredients, they are regarded as an ideal meal replacement by people who are seeking weight loss and improved body composition.

New beverages rolled out in 2019

The national campaign^[8] launched to reduce sugar consumption earlier this year has been a catalyst for a huge number of new low sugar/low calorie products developed and launched in China’s market.

The Coca-Cola company rolled out its tea drink using Yunnan Pu-erh Tea as the main ingredient.
Taiwan based food company Uni-President launched two flavored sugar-free tea drinks with simple ingredients including water, tea, vitamin C,etc. They are aimed at modern sedentary office workers.
C’estbon also introduced a sugar-free original tea beverage in April. The drink is available in oolong tea and black tea flavors, featuring zero sugar, zero fat and zero carbohydrate, and fortified with additional dietary fiber.
Wantwant Group rolled out its new product series Fix Body, which are all "low carb" foods, low in sugar and calories, tasty and fortified with key nutrients. One of the drinks is a zero-calorie sugar-free coffee which is touted to help refresh and rid the body of toxins.
Likewise, Nongfu Spring launched a new series of RTD(READY-TO-DRINK) coffee, focusing on sugar free or low sugar, no flavor, and no preservatives. There are three products available now, including low-sugar latte, sugar-free latte and sugar-free black coffee.
Chinese dairy giant Yili launched a kind of low-sugar drink developed from milk. The new product is targeted at young people aged 18-24 years old. College students, single people and young white collars are the main target consumers.
Chinese people pay more attention to health, nutrition and safety, and product development has been significantly influenced by these trends. According to a research report on the market status of global sugar-free tea beverage industry in 2018 released by Newsijie Industrial Research Center, the demand for sugar-free tea beverage products in China in 2017 was 3.727 million tons, and the demand is expected to reach 10.858 million tons by 2021^[9].

As young consumers, now the most important drivers of consumption in China, become more health-conscious, are more aware of nutrition and health-related topics and more actively engaged in sports and fitness, industry stakeholders should be locked and loaded to size up the situation and satisfy new demands.

Disclaimer: all images used are from the internet.