With boosted awareness of health, global consumers have reached a consensus on “less sugar intake”. Particularly, post-pandemic age sees consumers pay more attention to healthy diets, especially in China. From regulatory perspective, numerous countries have carried out policies and measures to reduce sugar content, calling for lower intake of sugar.

Under this circumstance, sugar free tea beverages featuring zero fat and calories are welcomed by China’s consumers.

Market Size

China's sugar free tea beverage market has gained a strong momentum in recent years. According to a report by ASKCI Industrial Research Institute, the market value soared form 4.1 billion in 2019 to 8.6 billion yuan in 2023, with a compound annual growth rate (CAGR) of 20.35%. Analysts from the research company forecast the market would reach 9.7 billion yuan in 2024.

Competitive Landscape

1. More players are on the rise

In China, sugar free tea products have been springing up since 2018. Before that, early entrants like Coca-Cola and Nestle, had encountered a lukewarm reception and feedback for sugar free tea products. With a broader trend toward health-conscious consumption, established drink brands and other competitors have jumped on the bandwagon of sugar free tea.

Currently, the majority of sugar free market share is concentrated in leading sugar free tea beverage brands, Oriental Leaf and Suntory. According to data from Winner Network, Oriental Leaf ranked at the top of the market share with more than 69% presence in the first half year (H1) of 2024. As an early player, the Japanese brand Suntory ranked second.

However, the market share of the two leading brands slid about 3% year on year in H1 of 2024, which reflects that other entrants are on the march. Master Kong elevated itself to the third largest brand with a 12.32% growth rate and 3.88% market share during this period. Ripe Fruit, Uni-President and Kai Tea, ranked top 4, 6, and 7, have experienced a considerable increase. Kai Tea, as an impressive example which targets young people, rolled out a series of “original tea tastes” with high-quality tea as raw materials, and achieved a 363.8% growth rate in H1 of 2024. The new brands differentiate themselves by innovative marketing to pull more young consumers. As they capitalize on the power of online channels to earn remunerative revenues, it is possible for them to make a breakthrough in the market.

Market Share and Growth Rate of Sugar Free Tea Beverages in H1 of 2024

Data Source: Winwin Network

2. Consumption Analysis

According to the data from EO Intelligence, in terms of consumption frequency, 76.5% consumers buy sugar free tea every week and 32.7% more than 3 times a week. When it comes to distribution channels, offline channels are the major way.

This health-focused beverage is principally priced at 4 to 7 yuan per bottle, which is acceptable to more than 70% customers. Imported tea beverages usually retail at 7 yuan or over, including Ayataka and Kirin etc. For price below 4 yuan, 12.2% consumers accept the price range.

The data also shows that people aged 18 to 30 years old are prime consumers, making up 70.8%. The reason may be the diverse flavour and convenience of sugar free tea beverages compared to brewed tea, which makes them welcomed by young people.

Most consumers purchase the beverages owing to zero sugar drinks without burden on the body. Zero sugar, refreshment and no additives serve as the main concerns for consumers. In addition, they prefer a tantalizing scent and sweet finish. Therefore, beverage companies are expected to alleviate the bitter and astringent taste of their products. According to the White Paper Report on China’s Sugar Free Tea Beverage Industry in 2023, the West Lake Longjin Tea and Tieguanyin are the most sought-after tea varieties.

Industry Trend

1. Sugar free tea beverage gradually outperforms its counterpart containing sugar.

Sugar free tea beverages have experienced a long-term development vicissitude where the beverage shifted from a stagnant sector towards a buoyant one. Since 2018, the sector has been enjoying an impressive escalation and gradually penetrating the market space of sugary tea drinks. EO Intelligence estimated that the sugar free tea would represent the major driving force of the RTD market.

2. Sugar free tea beverage gains more types of consumers and diversified consumption scenarios.

Loyal consumers regularly buy beverages without sugar for sugar control, hydrating after fitness and meals, losing weight, outdoor activities and stocking. The beverages are more craved for refreshing themselves and countering spiciness or grease for people during certain scenarios such as enjoying hot-pot, working overtime and preparing for exams.

Sugar free tea beverages which are aligned with the new needs of temporary consumers, are targeting more consumer groups with long-term needs and in multiple scenarios. Challenges to exploring more marketing scenarios and distribution channels are ahead of beverage brands.

3. "Refreshing taste without much bitterness and astringency" serves as the motivation to hook consumers.

It is necessary to develop different flavors based on distinct needs. A refreshing taste without much bitterness makes it possible for more new consumers to give the drinks a shot. The taste constitutes a core strategy to expand target consumers and will be a direction for upgrading the sugar free tea beverage.

4. High-quality raw materials and advanced production techniques underpin the re-purchase rate.

With consumers more keen on healthy drinks, they take more factors into consideration, like the quality of raw materials, the production technique and the ingredients list. As such, the demands further advance the production upgrade. Enterprises are supposed to use top-notch raw materials, adopt more refined production techniques, and make more authentic and fresh flavour. For example, Chinese renowned original tea, like Spring Spiral, Da Hong Pao, Buddaha Hand and so on, can be put into the sugar free tea beverage to attract consumers and invigorate the market.