Carbonated drinks are less popular, while other types of soft drinks are gaining ground
Among Chinese consumers (2025), tea drinks was the most frequently consumed beverage (32.9%), followed by fruit/vegetable juices (30.8%) and carbonated drinks (30.5%). The popularity of tea-based beverages and functional drinks reflects a shift in consumer demand, as people increasingly opt for health-conscious choices.
In 2025, Chinese soft drink market expanded at roughly 8% year-on-year. It was valued at approximately RMB 1.35 trillion. Meanwhile, the sector’s growth is projected to reach RMB 1.46 trillion by 2026. Behind this growth, the sector is undergoing changes: traditional carbonated soft drinks such as Coca-Cola are losing market share to sugar-free ready-to-drink teas; functional beverages and premium bottled water are reshaping consumer demand.
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Who are the main players in this sector in 2026?
On the one hand, the slowdown in growth of the two giants, Coca-Cola Company and Master Kong (康师傅), shows not only that consumers are turning away from their sugary drinks, but also that they are turning to alternatives that neither brand offers.
The Coca-Cola Company remains the most influential foreign brand in China. Yet its operations in China have encountered some difficulties. Although the 9.7% decline (in 2024) gave way to a more positive outcome (a 2.7% increase in sales volume in 2025), the example of other companies shows that it is not the entire sector that is suffering from a slowdown.
The same conclusion can be drawn for the Master Kong brand, which recorded its first annual revenue decline in nearly a decade in 2025, with total operating revenue down 1.96% year-on-year. Its core iced tea portfolio (冰红茶), which consists primarily of sugary products, lost market share to sugar-free competitors.
How Nongfu Spring and Genki Forest lead the health drink shift
On the other hand, taking Nongfu Spring (农夫山泉) and Genki Forest (元气森林) as examples, we are seeing double-digit growth.
Nongfu Spring saw a 22.5% increase in sales, driven overwhelmingly by its sugar-free tea brand Oriental Leaf (东方树叶).
Tea beverages surpassed packaged water and became Nongfu Spring’s largest revenue segment for the first time in H1 2025, generating RMB 10.09 billion in six months (19.7% year-on-year growth, and accounting for 39.4% of brand total revenue). By mid-2025, Nongfu Spring commanded 79.36% of the sugar-free RTD tea market.
Genki Forest (元气森林), the pioneer of “0 sugar, 0 fat, 0 calories” sparkling water, posted its third consecutive year of double-digit growth in 2025 (with revenue up 26% year-on-year). The brand now commands 15.6% of China’s health beverage market, leveraging a neo-Chinese herbal positioning.
Value is now shifting toward perceived health benefits. In other words, leadership in the Chinese drink sector is no longer determined by the size of distribution networks, but by the ability to make a credible and desirable health promise.
But what does this health-beverage sector, which has become so important, actually look like?
Health beverages are completely transforming the beverage sector in China
Between 2014 and 2025, the health beverage market grew from RMB 1.66 billion to RMB 420.8 billion. More broadly, consuming beverages considered healthy is no longer just a differentiator but a new market standard. The health beverage segment has effectively moved from a niche positioning to a mainstream category.
Non-carbonated soft drinks account for nearly four times as much of the market as carbonated soft drinks. The soft drink industry is therefore no longer dominated by sugar; on the contrary, it is an industry experiencing growth driven by the introduction of new products. This marks a structural inversion of the traditional soft drink hierarchy.
Sugar-free tea is a key component of this health beverage. It stands out due to the growth of this market. The market reached an estimated RMB 98.3 billion in 2025 (up 7.7% year-on-year) and is nearly as large as the carbonated drinks market. This sector is characterized above all by the dominance of Nongfu Spring, which leaves little room for other competitors. This advantage stems from the brand’s position as a pioneer in this field (launch of their tea line in 2011).
The rise of TCM-inspired functional beverages in China
However, health beverages cannot be reduced to tea alone. The functional beverage market in China reached RMB 166.5 billion (2024). This makes functional beverages nearly 70% larger than the sugar-free tea segment and almost 50% larger than carbonated drinks. It is, in fact, the second-largest health beverage category after packaged water. The segment was driven by ingredients such as birch sap, astragalus, honeysuckle, and other traditional Chinese medicine (TCM) botanicals. This reflects a resurgence in the popularity of traditional Chinese medicine.
Gut-health beverages, for example, alone reached RMB 938.5 million in online sales. The inclusion of TCM ingredients is a uniquely Chinese market phenomenon. Unlike Western functional beverages, which focus on synthetic vitamins or generic energy blends, Chinese products leverage culturally specific healthy frameworks. It is interesting to see how tradition has seamlessly blended with modernity. These products were primarily sold online. On Tmall, sales of these products grew by +259% (2024).
Trading up: China’s juice market goes premium
China’s juice market reached approximately RMB 156 billion in sales (2024). The high-end segment (pure juice and NFC) now accounting for 23% of total juice sales. This demonstrates consumers’ demand for minimally processed, additive-free options.
The juice market in China is changing, moving away from sugar and toward more innovative or premium beverages. The idea is to consume products that are perceived as high-quality. There has been a shift from quantity to quality. In practice, this means moving away from sugar-heavy beverages and toward a wider range of drinks that are lower in sugar and positioned as beneficial to health. This quantity-to-quality transition is an important structural change in the Chinese soft drink industry. It explains why revenue growth has decoupled from volume growth in many categories. Consumers are trading up, not just consuming more. This signals that price elasticity has changed. Premium products can now command higher margins without triggering demand destruction.
Chinese drinks are getting healthier and sugar-free
- There is a health-driven structural shift especially among younger consumers. The market is moving decisively away from traditional sugary carbonated drinks toward sugar-free teas, functional beverages, and premium bottled water.
- New market leaders are emerging and they are mainly local brands. While giants like Coca-Cola and Master Kong (Tingyi) face slowing growth or revenue declines, Nongfu Spring and Genki Forest are posting double-digit growth.
- Health beverages have gone mainstream especially through user-generated content. Once a niche category, the health beverage market reached RMB 420.8 billion in 2025.
