Image source: Photo by Blue Whale News reporter
Blue Whale News, July 2 (Reporter Zhang Jinglun) Recently, Dayao announced the launch of 3 new oolong series through the WeChat public account, namely Jingui Oolong, Bailan Oolong, and Oolong Tea, emphasizing 0 sugar, 0 fat, and 0 energy in the formula, and the products belong to its tea drink sub-brand "Zha Yuanxiang".
The "east wind" of sugar-free tea is blowing strongly, and all beverage companies are accelerating the launch of new products, and 2024 is also evaluated by people in the beverage industry as the year of the "Thousand Tea War". Dayao, which has always taken big soda as its core feature, has a chance of winning this cross-border "sugar-free tea"?
Dayao cross-border sugar-free tea
Tianyancha APP shows that "Cha Yuanxiang" is a brand registered by Dayao Guest Beverage Co., Ltd. in 2021, which is not the first time Dayao has enabled this brand, in 2022, Cha Yuanxiang juice bubble tea has been sold by Dayao in e-commerce channels.
Judging from the poster copy released by Dayao this time, these new oolong series products continue the "brand gene" of Dayao - positioning "catering tea", or will take advantage of Dayao's catering channels. In this regard, Dayao replied to Blue Whale News that the three new products are mainly sold in catering channels. "It can not only consolidate the advantages of the channel, but also make the new products quickly put on the table through the accumulation of catering channels, so that more consumers around the world can experience our new products. ”
Zhang Chenkai, managing director of CIC Insight Consulting, told Blue Whale News that at present, RTD soft drinks in the catering channel are still dominated by carbonated drinks and fruit juices, and tea drinks are mostly herbal tea and sugary tea. Given that diet tea caters to consumers' pursuit of healthy drinks, and can also provide a fresh taste, which can be paired with a variety of foods and add diversity to the dining experience, sugar-free tea is expected to occupy a more important position in the future catering culture.
The Blue Whale News reporter found that on e-commerce platforms such as Tmall, the new products of the Dayao Oolong series have not yet been officially put on the shelves. In this regard, Dayao said that the product will be unveiled on the e-commerce platform in early July, and will be customized personalized promotion information and preferential activities for target consumers on the e-commerce platform through big data analysis to meet the personalized needs of consumers.
It is reported that the retail price of Cha Yuanxiang's terminal is 4-5 yuan, which is in the same price band as old players such as Itoyuan, Oriental Leaves, and Suntory. So, as a cross-border novice, can Da Kiln make sugar-free tea?
Dayao may not have any advantages in making sugar-free tea in terms of brand, but it has a strong sales system. Guan Mengying, a consulting analyst at Sullivan Greater China, said that Dayao's existing broad sales channels and mature marketing network are its significant advantages in entering the sugar-free tea market. By seamlessly connecting these resources from the soda business to sugar-free tea products, Dayao can quickly penetrate into the target consumer group while maintaining brand influence.
In addition, with the increasing public health awareness, the sugar-free beverage market, especially sugar-free tea drinks, is in a state of high demand but the supply still needs to be abundant. The timely launch of sugar-free tea products by Dayao is just the right time to fill the gap in the market and meet the needs of consumers who are looking for healthy drinks but are unwilling to compromise on taste.
Thousand Tea Wars
Behind the entry of Dayao into sugar-free tea is the continuous rapid development of the entire sugar-free tea market.
NielsenIQ data shows that in 2023, the market size of sugar-free beverages will reach 24.1 billion yuan, of which sugar-free ready-to-drink tea will account for 49%, and the volume will increase by 110% year-on-year, which is higher than the overall growth rate of the beverage industry and the growth rate of the ready-to-drink tea category in which it is located.
In addition, according to the data of Win Now, in April ~ May 2024, the growth momentum of the sugar-free ready-to-drink tea category is still strong, and the overall sales will increase by 14.26% year-on-year in April ~ May 2023. In terms of market share, the market share of sugar-free ready-to-drink tea in the overall beverage category increased by 26.17% year-on-year, exceeding the sales growth rate of more than 10% in the same period.
In addition to Nongfu Spring's tea business, which has achieved significant improvement far beyond other categories, Master Kong Holdings and Uni-President China's tea business have also increased by 6.96% and 9% respectively.
The leading beverage companies are also intensively new. Since the beginning of this year, Master Kong has continuously launched new sugar-free jasmine tea, sugar-free and low-sugar oolong tea; Dongpeng Beverage has launched two new flavors: "Pu'er Tea" and "Jasmine Tea"; Nestlé Tea Extracts launched its first sugar-free teas, "Narcissus Oolong" and "Jasmine Tea"; For the first time, Wahaha laid out the sugar-free tea drink track, and launched four flavors of tea drinks: jasmine tea, Zhengshan Xiaozhong, Dahongpao and green orange Pu'er.
In addition to traditional brands such as Oriental Leaves, Suntory, and Itoyuan, there are also "new power" brands such as Yuanqi Forest, Fruit Ripe, Hey Tea, and Golden Dust Tea.
However, a convenience store owner in Beijing's Chaoyang District told the Blue Whale News reporter that it is still the Oriental Tree that sells the best leaves. "If the product is not promoted and distributed, it will be difficult to attract people to buy it, and sugar-free tea like Wahaha and Master Kong will not sell well."
Guan Mengying believes that the thousand tea war has accelerated the reshuffle process of the sugar-free tea industry, and the market resources have gradually been concentrated in the head enterprises with brand influence, technological innovation capabilities and efficient supply chain management, resulting in an increase in industry concentration. In addition, the market is clearly fragmented, with brands with distinctive characteristics that can meet specific consumer needs more likely to stand out, while smaller brands that lack competitiveness face survival challenges. Although this process is accompanied by short-term market fluctuations, in the long run, it is conducive to building a more mature and stable and innovation-driven industry pattern.
Zhang Chenkai said that the active layout and promotion of many brands in the sugar-free tea track will help improve consumers' awareness and acceptance of sugar-free tea, further market education, and also promote enterprises to upgrade their processes and product innovation, and improve the product standards of the entire industry.
The price war begins
With the fierce competition on the track, promotion has become one of the "means" of brand competition. The Blue Whale News reporter found during the visit that "promotion" has become a common word for sugar-free tea shelf labels, and the price of many products has moved from 5~6 yuan/bottle to 3~4 yuan/bottle, and the price reduction is basically "1 yuan for the second bottle" and "half price for the second bottle".
In a 711 convenience store in Chaoyang District, 500 ml of Oriental Leaf Jasmine Tea, Green Tea and Oolong Tea, which can usually be bought for 5.5 yuan, are half price for the second bottle, equivalent to 4.125 yuan per bottle. The fruit is ripe Qingqing Longjing, Jingui Oolong, Jasmine Longjing, and Suntory Osmanthus Oolong are all 1 yuan for the second piece, which is equivalent to 3.25-3.5 yuan per bottle.
Image source: Photo by Blue Whale News reporter
According to the data of Instant Win, from April to May this year, the average price of the sugar-free ready-to-drink category was lower than the median price of the TOP15 SKUs (excluding products below 500 ml). The average price of 500ml alpine oolong, jasmine tea and osmanthus oolong under Rang Tea decreased by 14.62%, 14.03% and 11.48% respectively compared with the median price of the whole industry. The average price of 970ml Jasmine Flavor of Jasmine Longjing Tea under Fruit Ripe decreased by 9.53% compared with the median price of the whole business, and its Golden Cinnamon Oolong, Gardenia Oolong, and White Tea Cherry Blossom Flavor decreased by 7.50%, 6.86%, and 6.41% respectively.
The new domestic forces are resolute and resolute in reducing prices, and the intention of exchanging price for quantity is obvious.
In addition, the Blue Whale News reporter noticed that the introduction of large-scale packaging products, strengthening the cost-effective advantage, and being a "water substitute" for young people have become a more obvious industry trend.
Since the beginning of this year, Oriental Leaf's oolong tea and black oolong, Coca-Cola Chun Tea House's jasmine tea and Tieguanyin oolong tea, and Yuanqi Forest Burning Tea's green orange Pu'er and jasmine tea have all launched 900ml large bottle products.
According to the data, from April to May, in various formats, Nongfu Spring Oriental Leaf 900ml products have double-digit growth, while 500ml has declined to varying degrees.
In the publicity of many brands, the concept of "water replacement" can also be seen. In April last year, Master Kong launched pure extract zero sugar alpine oolong tea, proposing the concept of "water replacement", which means that this drink is sweet and quenches thirst and can be used as a substitute for drinking water. In addition, at the end of last year, Yuanqi Forest also said at the dealer conference that as water substitute drinks gradually become daily, consumers have begun to pay more and more attention to cost performance for water substitute drinks, and the company will upgrade and focus on the promotion of its water substitute drinks such as sugar-free tea and other products.
In addition, from the price point of view, sugar-free tea has been infinitely approaching high-quality bottled water. As mentioned above, most products use the method of "1 yuan for the second bottle" and "half price for the second bottle" to move closer to the price band of 3~4 yuan/bottle, which is comparable to the price of a bottle of high-quality bottled water.
Guan Mengying believes that with the improvement of consumption power in first- and second-tier cities, the user group of sugar-free tea has expanded from the original sugar control and fitness crowd to a wider range of pan-demand groups. For white-collar consumers in first- and second-tier cities, sugar-free tea is easy to obtain and tastes similar to flavored water, so it is gradually replacing daily drinking water. Although the price of sugar-free tea is higher than that of ordinary drinking water, considering the rapid development of Luckin Coffee, consumers in these cities are less price-sensitive to low-priced FMCG beverages, so sugar-free tea still has the potential to further replace bottled water.
However, some market participants believe that there is no need to worry about whether sugar-free tea will become a "water substitute". After the trend of sugar reduction and zero sugar, the opportunity based on sugar-free tea will be a functional attribute, which is precisely one of the directions that can be deeply explored in traditional Chinese tea.
In Guan Mengying's view, the core competition point of the sugar-free tea market in the future will focus on health quality, innovation and taste. "In the context of increasing consumer health awareness, products are not only limited to meeting the basic requirements of sugar-free and low-calorie, but also committed to the selection of tea raw materials, the refining of natural flavors and the application of innovative technologies. At the same time, combined with the pursuit of novel experiences by modern consumers, we continue to innovate. In addition, the domestic sugar-free tea market is in a stage of rapid growth, with new categories emerging in an endless stream, but a stable taste pattern has not yet been formed. By constantly innovating and introducing a variety of flavors, brands are not only able to meet the taste preferences of different consumers, but also to occupy an advantageous position in the fierce market competition. ”