Summary of Key Points
This year, the overall sales volume in the beverage market has declined, but the trends have been uneven. A few established products, such as sugar-free tea, leading carbonated beverages (like Coca-Cola), and packaged water, have managed to resist the downturn or even see growth, while bubble water, health-promoting waters, and new products from smaller brands have seen a significant decline. The industry has shifted from a phase of widespread category expansion to one where top brands are competing for existing market shares. Consumers are less willing to experiment with new products and prefer well-known brands, leading to intensified price wars. It has become harder to launch successful new products, and the focus has shifted from creating new categories to securing existing market share.
1. The beverage market as a whole is cooling down, but some categories are still hot
The beverage industry faced significant pressure this year: NiuRuituo data shows that beverage sales decreased by 2.9% in the first quarter of 2026, and the second-quarter figures are even more pessimistic, with most categories showing declines. However, a few categories have bucked the trend:
- Sugar-free ready-to-drink tea has seen the strongest growth, with a year-on-year increase of 16.1% (for example, Dongfang Shuye has been very popular).
- Leading carbonated beverages (such as Coca-Cola) and packaged water (with stable demand) as well as electrolyte waters (like Nongfu Spring and Alien) have also managed to remain resilient.
- In contrast, bubble water (down 20%), health-promoting waters (down 20.1%), and juices (down 14.84%) have experienced significant declines.
This indicates that growth is becoming more concentrated, with only established products or mature categories being able to maintain their position, while it is difficult for smaller categories and new products to gain a share of the market.
2. Consumers are becoming more conservative: they no longer try new products casually and prefer familiar brands
Why is growth so concentrated? Because consumers are more cautious with their spending:
- Overall demand for beverages is weak, and promotions have become the norm (discounts are everywhere), making it costly to experiment with new products.
- People prefer to invest in established brands that they trust; these brands have a solid reputation, and distributors and supermarkets are willing to give them prominent display space (for example, some stores in Shanxi featured Coca-Cola with World Cup-themed promotions).
- Smaller brands' new products receive little interest from consumers; they struggle even to get on the shelves, let alone sell.
3. The price war is intensifying, and smaller brands are struggling to survive
How fierce is the price war in the beverage industry?
- Electrolyte waters like Nongfu Spring and Yuanqi Forest Alien are sold for 5 yuan each, with promotions such as open-container lotteries, leaving smaller brands with no profit margin.
- Discounts are common in supermarkets, e-commerce, and instant retail (such as delivery services), forcing even leading brands to lower their prices.
- As a result, consumers will choose larger brands at the same price, leaving smaller brands either to cut prices and lose money or to withdraw from the market (for example, many small sugar-free tea brands have disappeared this year).
4. It's becoming harder for new products to become successful
The strategy of creating new concepts no longer works as effectively as before:
- The number of new products has decreased significantly; there were only 49 new health-promoting water products in the second quarter, compared to 134 last year.
- Concepts are being repeated: larger brands copy each other's formulas and packaging, leaving consumers unable to distinguish between them (for example, both vitamin waters and health-promoting waters claim to be healthy, but with little actual difference).
- Market trends are unstable: health-promoting waters were popular in first-tier cities but not in second- and third-tier cities, where consumers prefer sugar-free tea or sports drinks.
- Ready-to-drink beverages are gaining traction; low-priced ice lattes and lemon water, which are similar in price to bottled beverages, are more appealing to young people for commuting and afternoon snacks (for example, Luckin's 9.9 yuan ice latte is more cost-effective than bottled options).
5. The industry logic has changed: from expanding the market to competing for existing shares
In the past, the beverage industry focused on growing the overall market; a new concept (like sugar-free tea) would allow all brands to benefit. Now, the market is shrinking, and brands must compete for the remaining share:
- Growth depends on leveraging resources; for example, Nongfu Spring's growth in carbonated beverages in Shanxi was due to World Cup marketing and targeted promotions, not natural category expansion.
- Brands no longer focus on creating new categories but instead target specific segments of the market (such as selling bulk packs of Coca-Cola or bottled water in second- and third-tier cities to meet online purchasing trends).
- In the future, only those brands that can maintain consumer trust, control costs, and secure distribution channels will be able to survive in the existing market.
In conclusion
This year's beverage market does not lack opportunities, but the era of easy growth is over. To thrive, brands must either rely on the reputation of established brands, invest heavily in marketing and distribution, or focus on niche segments. It has become increasingly difficult for new products to achieve sudden success.