Market research: Market of soft drink in China
Coca-Cola and Pepsi leaded the market of soft drink in China
Market of soft drink in China is rapidly expanding since Coca Cola re-entered the market in 1979 and became one of the major soft drink producer along with other domestic and foreign companies. Its presence and fast enlargement led to the other firms entering the soft drink market and investing in new plants and R&D. Thus in 1993 PepsiCo entered the market in China and consequently invested US$2.5 billion to expand its rage of snacks and beverage. The main strategy, which both Coca Cola and PepsiCo looking to increase market shares, was purchasing or co-operating with bottling plants.
Fierce competition between foreign and local brands on market of soft drink in China
Nowadays the market of soft drinks is growing fast in China with many producers including both Chinese and foreign. Thus the major home producers such as Nongfushanquan, Wahaha, Huiyuan and others need to compete with foreign brands such as Coca Cola, PepsiCo, Red Bull and others. These domestic and foreign producers share most of the Chinese beverage market thus allowing little space to the potential newcomers. Market research show that the presence and dominance of foreign producers in market of soft drink in China is apparent: PepsiCo currently has 8 farms and 6 plants and it continues investing in R&D to suit their Chinese customers. As a result, due to fast growing Chinese soft drink market, international producers become dependent on the sales generated there. In turn, China’s demand for foreign soft drinks is significantly increasing: along with Honk Kong, Chinese intake of European food and beverages grew by 48% in 2012 and 45% in 2013, which represents the highest growth of any other export destination.
Spectacular trends for energy drink and iced coffee in China
As the recent market researches show, the demand pattern of soft drinks in China is changing over time. The Chinese beverage market experienced a decline in volumes in 2012 being the result of downsizing of production in 2011. However, major brands are now starting to upsize thus backing production volumes to the previous level. Carbonated drink production declined by 3% in 2012 due to weak sales by PepsiCo and Wahaha and rose only by 5% in 2013. On the contrary, energy drink segment experienced significant growth of 34.7% in 2012 and 45% in 2013, which was primarily driven by Red Bull and Wahaha though Red Bull keeps leading position. Similarly, iced and RTD coffee market was experiencing two digit growth in 2012 and further 40% expansion in 2013, where the main players are foreign producers: Nestlé and Uni-President. Juice market was stable and growing at constant pace of 17% in both years. Nectar market experienced significant growth increase being single digit in 2012, but tending upwards to 16% in 2013. Sport drink market in China showed strong growth in both 2012 and 2013 being on average 18.55% per year.
As mentioned above, soft drink market in China is highly mixed. Both foreign and domestic producers play leading role. Due to competition, which clearly exists in the market, more and more firms invest in R&D and new plants to expand production and suit specific customer tastes. Soft drink market in China is growing fast for the last few decades although the slowdown was observed during last few years. Nevertheless, various market segments reacted differently: sport drinks were growing in popularity while tea and carbonated drinks were not in high demand.
See also: market research in Hangzhou