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Healthy drinks make inroads into country's beverage market

By WANG ZHUOQIONG | China Daily | Updated: 2025-05-22 10:02
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Baristas work at a Starbucks Reserve Roastery in Jing'an district, Shanghai, on May 15. WANG GANG/FOR CHINA DAILY

In China, low-sugar tea beverages are rapidly gaining ground as health-conscious consumers drive a structural shift in the soft drinks market. In 2024, sales of low-sugar tea drinks grew by 41 percent year-on-year.

By 2029, these beverages are projected to account for around 30 percent of the country's total bottled tea market, according to data analytics company Euromonitor International. This surge reflects growing consumer demand for healthier, functional alternatives to traditional sugary drinks.

The momentum behind low and no-sugar drinks has made sugar-free ready-to-drink tea one of the strongest-performing categories in China.

Since 2023, RTD tea — bolstered by reduced-sugar and sugar-free variants — has overtaken carbonated soft drinks in off-trade volume sales, becoming the country's second-largest soft drinks category after bottled water.

This health-driven transformation is reshaping the broader market landscape. According to data from Euromonitor's Passport system, both off-trade volume and the prices of soft drinks in China were expected to maintain mid-single-digit growth in 2024.

However, the strongest growth is concentrated in reduced-sugar segments. In still RTD tea, reduced-sugar products are forecast to maintain strong double-digit increases in both volume and value.

The World Market for Soft Drinks 2025 report by Euromonitor highlights health as a defining force in global and local consumption behavior. In China, functional and scenario-specific beverages are also gaining traction. Sports and hydration drinks, especially those containing electrolytes, are seeing robust double-digit growth as they become closely associated with active lifestyles.

Competition between soft drink categories is intensifying as consumers shift away from traditional sugary beverages. The market has become increasingly innovation-driven, with brands differentiating through healthier formulations and targeted functionality. Sugar-free and low-sugar options are now standard offerings — raising the bar for differentiation.

"Sugar-free and low-sugar have already become homogenized product attributes in the market," said Harry Han, analyst for the food and drinks sector at Euromonitor International. "To stand out among the many sugar-free tea drinks in the future, manufacturers can consider adding the concept of health into actual products — for example, by incorporating traditional Chinese herbal ingredients — to better meet specific consumer needs."

The Asia-Pacific remains the largest regional market for retail soft drinks, with bottled water continuing to perform strongly. In China, rising health awareness and an expanding middle-income group are driving long-term growth, with local value-positioned brands performing particularly well in 2024.

Globally, the soft drinks market was projected to reach $1.1 trillion in sales in 2024, with China accounting for 691.4 billion yuan ($95.95 billion). From 2019 to 2024, global soft drink sales rose by 21 percent, driven by higher unit prices and growing demand for health-oriented products.

Digital and retail innovation is also reshaping sales channels. Retail e-commerce — which includes direct-to-consumer platforms and grocery delivery — still represents less than 6 percent of global soft drink sales by value. Yet, in major markets like China and the United States, it posted strong growth in 2024, despite growing affordability concerns.

Meanwhile, smart vending machines — enabled by digital payment infrastructure and urban mobility trends — are expanding across Southeast Asia. In China, soft drink vending sales rose 8 percent year-on-year in 2023. However, the rise of large-format club stores and affordability pressure in convenience channels are challenging traditional package strategies.

Howard Telford, head of soft drinks research at Euromonitor International, said: "The global soft drinks industry faces a strategic shift in 2025, with emerging markets driving volume, while mature markets focusing on functionality and premium health benefits to sustain growth."

As Chinese consumers become increasingly selective about what they drink, the next wave of growth in soft drinks will likely hinge on how well brands can develop innovations in direct-to-consumer channels, optimization of packaging and wellness segmentation.

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