Summary of Key Findings
This summer, the beverage market did not experience the expected peak sales season, with second-quarter sales declining by 11.8% year-over-year. The main reasons are the combined impact of abnormal weather (late onset of summer, heavy rainfall, and low temperatures) and shifts in consumer trends (towards healthier and more rational consumption). This has led to a structural adjustment in the market: traditional high-sugar beverages (such as carbonated drinks, juices, and Chinese health waters) have seen declines, while sugar-free teas and ready-to-drink coffees have experienced growth. The industry's growth logic has shifted from focusing on volume to emphasizing quality and higher added value, with markets becoming more concentrated around large brands, health-oriented products, and new retail channels, resulting in increased differentiation.
Detailed Analysis
1. Unfavorable Weather Conditions Dampen Sales Momentum
The primary reason for the decline in beverage sales this summer is the unpredictable weather.
- Data Support: May saw the highest average precipitation nationwide in nearly a decade (70.9 millimeters, a 16.3% increase from usual), with a late start to summer and lower temperatures, leading to reduced demand for cold drinks.
- Consumer Feedback: Employees at Beijing's Lawson convenience stores reported easier replenishment needs, while supermarket owners in Shandong noted weaker sales compared to previous years. Some owner-staffed convenience stores even had to replace their old freezers with new ones during the peak season, only to find that the increased electricity costs became a burden.
- Industry Impact: Beverage sales in the second quarter fell by 11.8%, with offline channels (supermarkets, convenience stores, etc.) being hit harder (a 10.1% decline), particularly for traditional summer drinks like soda and iced black tea.
2. Health-Conscious Consumption Becomes the Norm
Consumers are becoming more aware of their sugar intake, driving a shift in market preferences.
- Category Differentiation: Carbonated drinks (such as cola) have remained relatively stable, while protein drinks and juices have seen declines. In contrast, sugar-free teas (16.1% growth), ready-to-drink coffees (0.35% growth), sports drinks, and electrolyte waters have continued to perform well. Yuanqi Forest's vitamin water saw a 128% increase, and its "Good Zai Si" series of Chinese health waters grew by 36%. Health attributes are now key drivers of sales.
- Market Trends: By 2025, sugar-free/low-sugar non-water beverages are expected to account for 30% of the market, with production decreasing from 188 million tons to 179 million tons, yet revenue is projected to increase by 17.4%. This indicates that consumers are willing to pay more for healthier options.
- Competitive Pressure: Ready-to-make tea drinks (such as milk tea) and coffee are competing with traditional bottled beverages, with younger consumers preferring freshly prepared, personalized products, further squeezing the market for bottled drinks.
3. Shift in Growth Logic: From Volume to Quality
The beverage industry is no longer focusing on selling more products; instead, it aims to offer higher-quality alternatives.
- Business Transformation: Industry executives point out that recent growth has come from a shift towards more expensive, health-oriented products rather than simply selling larger volumes.
- Company Examples: Coconut Tree Group launched the "Qing Shang" health brand in 2022, with online sales exceeding 3.3 billion yuan in 2025, surpassing its traditional beverage business. Yuanqi Forest's high-growth categories are all functional health products.
- Industry Trend: Despite declining production, revenue is increasing, indicating that the era of low-profit, high-volume sales is over. The future lies in precisely meeting consumer health needs.
4. Increased Market Differentiation: Leading Brands and Health-Oriented Products Take the Lead
The market is undergoing a consolidation, with resources flowing towards companies with competitive advantages.
- Concentration Trends: According to Zhu Danpeng, vice president of the Guangdong Food Safety Association, the market is moving in three directions:
1. Large brands with strong R&D and distribution capabilities;
2. New retail channels (online, convenience stores, etc.);
3. Health-related products (weight management, nutrition).
- Challenges for Small Players: Many small businesses, including those in the convenience store sector, are struggling due to the lack of resources to adapt to these trends.
- Future Outlook: Only companies capable of developing innovative health-focused products (e.g., containing electrolytes, vitamins, plant-based ingredients) will thrive in this competitive landscape. This requires strong R&D and supply chain capabilities.
Conclusion
The decline in the beverage market this summer is not accidental but a result of both weather and changing consumer trends. In the future, the industry will no longer be about who can produce the most; it will be about who best understands and meets consumers' health needs. Health-oriented products, higher added value, and market concentration will become the long-term trends. For consumers, this means more sugar-free options on store shelves and a gradual reduction in traditional high-sugar beverages. Companies will need to invest heavily in R&D and distribution to remain competitive.