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soft drink market in China

Bubbles, AI, and health-awareness: driving forces in the soft drinks industry in China

The soft drinks industry in China is extremely popular. As of August 2023, it generated a revenue of more than USD 37.2 billion (RMB 266.8 billion) and it’s projected to reach more than USD 41 billion (RMB 294.1 billion) at the end of the year. The market is also characterized by a very high production which reached more than 86 billion litres in 2022. Therefore, the sector represents a valid opportunity for foreign and local brands willing to enter this market.

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Foreign soft drinks players take most of the cake in the Chinese market

Coca-Cola is one of the biggest leaders in the soft drinks market. In 2022, the brand generated a revenue of more than USD 43 billion (RMB 308.4 billion). In 2021, the American company was also one of the biggest productor, contributing to the market with more than 16 billion liters of Coca-Cola. The brand is followed by Tingyi Holding Corp, a Chinese company founded in 1992 in Shanghai which specializes in selling instant noodles and beverages, whose revenue accounted for almost USD 11 billion (RMB 78.7 billion). Tingyi Holding operates in the soft drinks market through its affiliate, Master Kong (康师傅控股有限公司), which is specialized in bottled-water, tea, and energy drinks. As of 2023, Tingyi experienced significant growth in the beverage sector, with a notable year-on-year increase of 9.5%. Another leading player in the soft drinks market in China is Pepsi, with a reported revenue of nearly USD 5 billion (RMB 35.8 billion) in the whole Asia-Pacific region.

Red Bull prevails amid copyright challenges, secures top spot in China’s energy drink industry

The energy drink sector represents another big segment in the soft drinks industry in China, boasting a revenue of more than USD 7.6 billion (RMB 54.5 billion) in 2021. This market category is completely dominated by Red Bull, accounting for more than 53% of the market share in 2022.

In the latest years, the company invested over RMB 3 billion (RMB 21.5 billion) to build new production plants in China, such as the Nanning (Guanxi Province) production base, inaugurated in July of 2023. Despite the dominance of Red Bull in China, the Austrian company was involved in a trademark controversy with its joint-venture partner in China, the Thailand-based T.C. Pharmaceutical Industries (TCP). However, the situation was resolved in 2022, when China’s Supreme Court officially ruled that Red Bull emerged as the only entity with the right to make and sell the drink in China.  

Healthy soft drinks are the new frontier of Chinese beverage consumption

Being the 2nd largest market worldwide, the consumption of soft drinks in China is very high. In August 2023, the average soft drinks consumption of a Chinese person was around 11 liters. Gen Z and Millennials are the main consumers of soft drinks in China, accounting for roughly 60% of the total customers at the end of 2022. However, the increasing consumption of sugary non-alcoholic beverages is raising health concerns. Consequently, China’s growing preference for healthier beverage options is evident, with revenue from zero-sugar beverages witnessing a remarkable rise. In particular, the market of sugarless tea drinks is witnessing a fast rise, generating around USD 724 million (RMB 5.2 billion) in 2023, with a year-on-year increase of almost 60%. Furthermore, consumers are also more aware about the artificial flavors present in many carbonated drinks. As a result, they actively seek beverages with natural ingredients, prioritizing options like real fruit juice and milk.

The water and juice market in China are booming due to rising health awareness

The demand for healthier beverages has also boosted the sales of bottled water and juice. In 2022, the bottled water market generated a revenue of more than USD 65 billion (RMB 466.2 billion), and the market is expected to grow annually by almost 7%. Founded in Hangzhou in 1996, Nongfu Spring (农夫山泉) is one of the main bottled-water companies in China, whose market share accounted for 9% in 2022. Holding its lead in the market, the company recorded impressive revenue that same year, generating more than RMB 33.2 billion (USD 4.5 billion).

Accounting for around 30% share of China’s total imports of bottled water in 2022, France was the biggest contributor, shipping a substantial volume of premium water, such as Evian and Perrier. Rising health awareness among Chinese consumers has also boosted the demand for fruit juice, especially if marked with the “100% fruit” etiquette. In 2022, the juice market vaunted a revenue of almost USD 6 billion (RMB 43 billion), with an expected year-on-year growth of around 5.8%.

From AI to sustainability: the new soft drink trends in China

At the end of 2023, Coca-Cola was the pioneer of a revolution in the soft drinks market in China. In September 2023, the American company teamed up with the Beijing bakery Holiland to launch a new flavor for its famous beverage. The new drink, called “Coca-Cola Y3000”, was aimed to envisioning how their iconic beverage might taste in the future. To bring this concept to life, the company employed Artificial Intelligence, resulting in a chocolate-flavored, zero-sugar iteration of Coca-Cola. The drink achieved lots of success in China, and the official hashtag of the campaign #未来 3000 年畅想无界限# (#UnlimitedDreamsForTheNext3000Years) reached more than 180 million views on the platform.

soft drinks market in China: Coca-Cola x Holiland
Source: Weibo, The chocolate-flavored Coca-Cola in collaboration with Holiland

Many important Chinese influencers became the spokespersons of the new soft drink flavor. As an example, the Weibo star and KOL Yang Yang (杨洋), who has more than 56 million subscribers on the platform, posted many videos promoting the new drink and comparing it with the classic Coca-Cola flavor.

Pepsi’s marketing strategy in China embraces sustainability and community values

In September 2023, Pepsi launched the “Walk with blue” project to highlight the company’s concerns about sustainability. The initiative consisted in involving Chinese consumers into recycling Pepsi’s empty bottles, which are already 100% made by using recycled plastic. The company also opened a station in Guangzhou where consumers can put the bottles and get the chance to win several prizes. The initiative generated a lot of curiosity among Chinese people. As of December 2023, the official hashtag of the campaign, “Walk with blue” ( #与蓝同行#), garnered almost 11 million views on Weibo.

Source: Weibo, Pepsi Co. recycling point in Guangzhou

In the latest years, Pepsi also took part in community projects and initiatives concerning the Chinese society. In 2020, the American beverage company teamed up with the Chinese newspaper “China People’s Daily” to launch the campaign “everyday heroes”. The initiative consisted in launching a series of limited-edition Pepsi cans to commemorate all the workers which endeavoured their best efforts to counter the spread of the pandemic. The new series was made up by four cans showing different workers, such as a shop assistant, a delivery guy, a doctor and a construction worker, together with some abstracts taken from the journal’s many reports during the Covid-19 pandemic. After its great success in China, in July 2021, the American supermarket chain Walmart also teamed up with Pepsi Co. to launch its own version in the US.

Source: Communication Arts, Pepsi x China People’s Daily‘s “everyday heroes” coke

The soft drinks industry in China is flourishing like never before

  • Projecting to reach more than USD 40 billion at the end of 2023, the soft drinks market in China represents a tempting opportunity for both local and foreign brands willing to tap into this sector.
  • Coca-Cola dominates the soft drinks industry in China, despite the competition coming both from other western players, such as Pepsi, and domestic producers like Master Kong.
  • Despite some trademark controversies with its Thailand-based partner T.C. Pharmaceutical, Red Bull is the undisputed leader of the energy drink market in China.
  • Heightened health awareness amid concerns over sugary non-alcoholic beverage consumption is steering young consumers towards healthier drink choices, popularizing “0 sugar, 0 fat, 0 calories” drinks.
  • The bottled water market and the fresh juice market are also gaining popularity following the rise in health concerns by Chinese consumers.
  • In 2023, Coca-Cola partnered with Holiland, utilizing AI to create new flavors, showcasing the ongoing trend of technology in the soft drinks market.
  • Pepsi’s initiatives like “walk with blue” and “everyday heroes” mirror the industry’s shift toward sustainability and social responsibility in the soft drinks sector.