文|Foodaily每日食品 Carol He
How hot is the sugar-free tea market?
According to incomplete statistics from Foodaily, dozens of new sugar-free tea products have been launched in the past six months alone. Yuanqi Forest launched a large-capacity "Golden Gui Pu'er" tea, Master Kong launched sugar-free jasmine green tea, and Otter launched a hand-poured "Osmanthus Oolong" sugar-free tea... In addition to traditional tea brands, players in other beverage tracks have also entered the sugar-free tea market strongly: Dongpeng Special Drink has laid out new oolong tea, Yili has listed Yike Huoquan freshly brewed tea, and Tsingtao Beer has launched new Youhuojia barley tea.
Image source: Yuanqi Forest, Master Kong, Otter Ton Ton flagship store
Behind the flocking layout of brands is a huge opportunity for the rapid growth of sugar-free tea. According to data from Euromonitor and Yiou think tank, the growth rate of China's sugar-free tea drinks far exceeds that of other tea beverage tracks, while sugary tea drinks are growing at a low speed, the sugar-free tea market will maintain a growth rate of 7.9% in 2022 and is expected to reach a compound annual growth rate of 10.2% from 2022 to 2027. In the next few years, China's tea market will enter a period of rapid growth of sugar-free tea drinks.
However, compared with other Asia-Pacific countries that also have a long history of tea drinking, especially the Japanese and South Korean markets, the domestic sugar-free tea market is far from saturated. In 2022, domestic sugar-free tea drinks accounted for 7.7% of the ready-to-drink tea beverage market, and it is expected to rise to 18.2% in 2025, while Japan has reached 85.2% in 2022.
As players pour into the sugar-free tea track one after another, the competition of sugar-free tea products has gradually expanded from general health and reduced tea flavor to more specific tea varieties, processes and tastes. With the continuous development and upgrading of consumer demand, the category will inevitably undergo fission, and more personalized and high-end forms will be derived from the basic form, which is the universal law of the food industry and even the consumer goods industry, and there is no exception in the sugar-free tea industry.
At a time when the domestic sugar-free tea competition pattern has not yet stabilized, if enterprises want to stand out, they need to jump out of the siege of specific product concepts and look for opportunities to tap and create new categories from different levels of consumer demand. Accurate insight into the direction of category fission may allow enterprises to win first-mover advantages and formulate more accurate product development strategies.
Japan's decades of industrial development practice have repeatedly confirmed that category fission is the best opportunity to give birth to leading brands and explosive products. Therefore, Foodaily hopes to provide new ideas for the future development of domestic enterprises by studying the fission law of sugar-free tea.
On December 13, 2023, Foodaily Daily Food held a series of activities in Foshan, "FoodailyFBIC Enters the Industrial Belt", taking Japan as an example to discuss the path of the fission of sugar-free tea categories, as well as the excellent brands and excellent products born in the fission process.
Looking back at the development process of the category, what is the appearance of the sugar-free tea market?Tracing the differentiation path of sugar-free tea in Japan during the period of rapid development, what enlightenment can be obtained for the development and innovation of domestic brands?
Directory:
1. Scanning of the domestic sugar-free tea beverage market: the pattern has not yet stabilized, and comrades still need to work hard
2. Highly similar market background: The evolution of sugar-free tea in Japan has high reference value
3. Culture, Scene, Functionality... Dismantling the four dimensions of the fission of Japan's sugar-free tea category
01 Domestic sugar-free tea beverage market scanning: the pattern has not yet stabilized, and comrades still need to work hard
1. After 20 years of growth, it is gradually getting better, and the three forces jointly promote the accelerated development of sugar-free tea
In 2004, Japan's Suntory oolong tea entered the Chinese market, which opened the prelude to the development of domestic sugar-free tea categories. Subsequently, Uni-President and Coca-Cola successively launched "Tea King" and "Original Leaf" tea, but due to the limitations of consumers' health and sugar-free consciousness have not yet fully awakened, the two have withdrawn from the market.
After Nongfu Spring launched "Oriental Leaves" in 2011, the public gradually cultivated consumption habits, and sugar-free tea gradually broke the niche and entered the public eye.
Image source: Foodaily Daily Food Collation, Source: Yiou Think Tank, Analysys Analysis
In 2017, Yuanqi Forest launched "Burning Tea", which solves the problem of choosing healthy tea drinks and sweet experience by using erythritol compound sugar substitute solutions. Subsequently, Coca-Cola launched the "Chun Tea House", Vita "Sugar-free Tea", and let the tea launch "Alpine Tea"...
With the full recovery of national health awareness, the sugar-free tea category has ushered in rapid growth. According to the "2023 China Sugar-free Tea Industry White Paper", sugar-free tea has become a key driving point for the growth of the beverage market.
Image source: "2023 China Sugar-free Tea Industry White Paper" Yiou Think Tank
At present, the domestic sugar-free tea market roughly presents a three-way competition pattern of traditional brands, cutting-edge brands and cross-border brands. Traditional brands such as Oriental Leaf and Suntory still occupy the main market share, and cutting-edge brands such as Yuanqi Forest and Rangcha have entered the game strongly, with many cross-border players, but few players have successfully broken through.
Image source: The official website of the above-mentioned brand's Tmall flagship store
2. Quality and taste have become the mainstream direction of current competition
When Foodaily researched sugar-free tea products, it was found that the selling points of the current mainstream sugar-free tea products mainly revolve around two aspects: tea quality and tea taste.
In terms of quality, many products focus on the concepts of sweetness, pure fragrance, high-quality original tea extraction, refreshing taste, and no additives, emphasizing the differences in tea varieties and tastes.
For example, the large-capacity Jingui Pu'er Tea launched by Yuanqi Forest is brewed with 100% original leaves using Jingui and Pu'er ripe tea, which has a refreshing taste and can be used as a daily ration for water. The hand-punched osmanthus oolong tea launched by Otter tons is made of Guilin golden cinnamon and Fujian Baiya Qilan, presenting a warm and mellow flavor.
In terms of taste, some teas use sugar substitutes to provide sweetness. In addition to the common oolong tea, green tea, jasmine tea, etc., more flavors such as Longjing tea, mulberry tea, Pu'er tea, and red bean barley tea have begun to emerge.
Yuanqi Forest launched red bean barley water, red dates and wolfberry water, let tea launch alpine Pu'er tea, tea and water talk about new jasmine tea and so on.
Image source: Genki Forest, Let Tea, Tea and Water Say
02 With a highly similar market background, what is the reference significance of the fission trajectory of sugar-free tea in Japan?
Comparing China in 2020 with Japan in 1990, there are high similarities in demographic structure, economic characteristics, and consumption performance.
According to the data of the United Nations Population Department and the Huajin Securities Research Institute, in terms of overall distribution, the population structure of China and Japan is highly similar. As the main consumer group of the new generation (15-35 years old), China and Japan are similar in terms of total proportion, and the distribution of the population over 60 years old is also very similar.
In terms of consumption behavior, before the bursting of the economic bubble, Japan advocated hedonism and personalized consumption, and the luxury market developed rapidly, but after the bursting of the economic bubble, consumption became more rational, and light luxury and cost-effective consumption became the mainstream. Similarly, before 2021, domestic consumption upgrading was a major trend, and international luxury brands accelerated the sinking of domestic channels, but in the post-epidemic era, the overall upgrade trend that lasted for several years began to diverge, with cost-effective, mass merchandising, and discounts becoming consumption keywords.
Information source: Compiled by Pacific Securities Research Institute
The high degree of overlap in the socio-economic development of the two is also reflected in the development and evolution of the sugar-free tea category in Japan.
Image credit: Foodaily Daily Food Organizer
Domestic sugar-free tea entered a period of rapid development after 2017, and Japan also entered a period of rapid development in the early 90s.
Foodaily believes that the concept of national consumption, sales channels and technological innovation have become the three main reasons for the rapid rise of sugar-free tea.
First of all, fast-paced and rational consumption prompts people to value the convenience and health attributes of products, and the characteristics of sugar-free tea are highly compatible with it. Secondly, the development of sugar-free tea also benefited from the rapid growth of convenience stores and vending machines. Taking vending machines as an example, the number of them increased from 440,000 in 1990 to 600,000 in 2000. In addition to changes in environmental factors, the brand's technology and packaging breakthroughs in optimizing the tea experience and expanding the drinking scene have also greatly driven the development and innovation of the sugar-free tea category.
During the ten-year period of rapid growth from 1990 to 2000, the CAGR of the Japanese tea market was about 10%, of which the proportion of sugar-free tea increased to 30%, while soft drinks accounted for only 2.7% in the same period. During this period, Itoen became the leader of the green tea category through the early layout of canned oolong tea and PET bottled green tea, and Itoen and Suntory won the first place in the oolong tea category market through the differentiated marketing of "authentic Chinese tea", and then Coca-Cola Ayataka and Kirin also successively increased the layout of the sugar-free tea track, and successfully seized a place in the sugar-free tea market by virtue of the creation of different sub-categories.
Socio-economic development, coupled with beverage giants and cutting-edge consumer demand, has made the Japanese sugar-free tea market develop steadily since 2000, and create a series of classic products that have been prosperous for a long time. The product form, flavor and taste, drinking appeal and experience of sugar-free tea have also undergone several generations of changes, forming a trajectory of upgrading and fission.
03 Culture, Scene, and Functional ...... Dismantling the four dimensions of the fission of Japan's sugar-free tea category
After analyzing the development process of Japan's sugar-free tea market, Foodaily believes that advanced experience, scene expansion, cultural cognition and function mining are important dimensions of Japan's sugar-free tea category. The current domestic sugar-free tea competition is mainly at the level of taste and quality. The development of the fission of Japan's sugar-free tea category has a reference experience for domestic sugar-free tea brands to explore new growth opportunities.
Image credit: Foodaily Daily Food Production
1. Advanced experience: use technology and packaging to optimize the details of the tea experience
Improving the sensory quality of tea drinks is closely related to the specific tea drinking habits of the moment, so that consumers' tea drinking experience is easier to perceive. With the help of breakthroughs in technology and packaging, the tea experience is upgraded.
Itoen is a typical case of using technological innovation to promote the fission of green tea categories.
To make tea leaves into ready-to-drink tea that can be stored for a long time, it is necessary to overcome the problems of oxidation, discoloration and taste change of tea soup. In 1985, Itoen succeeded in creating the industry's first ready-to-drink tea product by flushing nitrogen to remove oxygen from the container by flushing nitrogen before filling and capping using the "T-N Blow" process. In 1990, Itoen also relied on the patented Natural Clear production method to filter the tea leaves through a natural microfilter to preserve the aroma and clear tea broth.
Image source: Itoen official website
It is worth mentioning that in order to ensure that the taste of tea is close to that of teapot brewing, Itoen's tea-making production line will imitate the tea extraction machine of a teapot, and the process conditions will adjust the tea extraction time, temperature and other parameters according to the environmental characteristics of the day.
When it comes to packaging design, Itoen also pays great attention to detail. We have also designed a "fresh-keeping bottle" to reduce the effects of light. On the shoulder of the bottle, 70 cut-outs are designed to scatter light, preventing the shoulder that cannot be wrapped by the label from being affected by sunlight.
图片来源：《Turtle Pond Haiku Selected for Japanese Tea Bottle》
In addition to conventional canned and bottled tea, Itoen's Oi Ocha's product matrix also includes a variety of differentiated packaging formats such as tea bags, tea sticks, tea powder, and tea bag variety, providing a very diverse range of drinking options.
图片来源：伊藤园OiOcha
In addition to Itoen, Kirin and Ayataka have also created new sugar-free tea categories with the help of the details of different tea drinking experiences. Starting from the pain point of improving the bitter taste of green tea, Kirin uses Gyokuro and Guancha tea leaves, which contain a lot of theanine, and adds raw tea leaf extract, to create a raw tea category.
2. Scene expansion: Penetrate people's lives from multiple time dimensions
(1) Extend the long time line and extend the drinkable scene from the four seasons of the year
During the cold winter months, the concept of hot drinks becomes popular. In the early days, tea was brewed with hot water, but most of the hot drinks in China were limited to freshly made drinks, and few prepackaged drinks would take the initiative to occupy the consumption mind of warm drinks and hot drinks.
But in Japanese convenience stores, shelves for warm drinks are very common. In 2000, Itoen introduced PET bottles that could be heated in a microwave oven, and the five-layer special structure of the packaging prevented oxygen from entering the bottle when it was heated.
图片来源：伊藤园OiOcha
In 2018, Itoen introduced a green tea product that can be frozen, and in 2018, it was possible to maintain a refreshing taste and proper astringency even after melting, and the packaging bottle would not be deformed.
Image source: desertcart.vu
(2) Focus on everyday details and capture specific lifestyles
In the post-pandemic era, the home scene has developed rapidly. With a warm aroma reminiscent of home and fireworks, Japanese hojicha and brown rice tea are even more popular.
Observing this characteristic, Itoen launched a freshly roasted aromatic version of hojicha and brown rice tea in 2021. Hojicha is roasted to the core to give off the sweet and fragrant aroma of hojicha, while brown rice cha is roasted in stages after removing the rice bran to further enhance the aroma of the rice.
图片来源：伊藤园Oi Ocha
Cold climates can cause a significant decrease in people's sensory sensitivity. In 2021, Itoen launched a winter-limited roasted tea, which uses the first batch of tea leaves of that year to be roasted for a long time to enhance the aroma and intensity.
At the same time, the product is packaged in dark red, which also presents a warm and happy atmosphere.
图片来源：伊藤园Oi Ocha
3. Cultural cognition: grasp cultural symbols and create unique characters with memory points
As the TOP1 of Japan's oolong tea category, the key factor in the success of Suntory oolong tea is that Suntory has created a cultural symbol with strong category awareness.
Previously, Japan's perception of oolong tea was an exotic tea from China. Suntory Oolong is positioned as "Authentic Oolong Tea from China" and has the words "Using Fujian Tea Leaves" printed on the packaging, which is strongly associated with the recognition of Chinese oolong tea by Japanese consumers.
Image source: Suntory
Suntory has also evolved with the times, adapting to the changes in Chinese trends and presenting different Chinese elements. The integration of Chinese cultural elements such as "Beijing Cross Talk", "Havoc in Heaven", "Chinese Dance", and "Chinese Kung Fu" into the advertisement further strengthened Suntory's perception as an authentic oolong tea brand.
Image source: Suntory
Suntory's Iemon Green Tea has also managed to break through in the green tea market, which Itoen firmly occupies, with its highly recognizable cultural symbols.
Japanese consumers consider local green tea to be the most authentic. In 2004, Suntory partnered with Fukujuen, a long-established brand in Kyoto with a history of more than 200 years that sells only tea, with the aim of selling "beautiful Kyoto" to consumers. With the brand name of Iemon, the founder of Fukujuen, the water used for tea brewing comes from Yamazaki, Kyoto, and the Japanese tea ceremony and tea culture are infiltrated into it.
Image source: Suntory Emon Gate
4. Functional mining: Correlation with current health pain points, and dig deep into the functional value of tea ingredients
Combined with the background of different times to highlight different value points, even the same product can show different charms.
Itoen launched Oi Ocha Koicha Rich Green Tea in 2004. Although the product was developed with the taste in mind, the Japanese consumer community at the time thought that this darker strong tea was often associated with a strong and bitter tea taste, so they refused to try it.
In 2019, Itoen updated the product label of this strong green tea with a functional claim, especially emphasizing that the catechins contained in the product have the function of reducing body fat. After updating the value point of the product, the sales of Oi Ocha Koicha strong green tea ushered in a surge, and it has become a product with a high repurchase rate for people of all ages.
图片来源：伊藤园Oi Ocha
After the 90s, Japan successively promulgated various regulations on functional health foods, providing greater autonomy and flexibility for brands to develop functional foods. In recent years, as the functional value of ingredients in tea drinks such as catechins and theanine has been explored, products closely related to current health pain points such as fat loss have also emerged.
In recent years, Itoen has successively launched products such as Oi Ocha Catechin Green Tea PET Bottles and Oi Ocha MATCHA SHOT. Among them, Oi Ocha MATCHA SHOT not only has a strong matcha flavor and taste, but also makes functional claims about its theanine and catechins.
图片来源：伊藤园Oi Ocha
04 Summary
In China and Japan, tea has always been a category with rich history and cultural accumulation. The diversity of raw materials, the diversity of tea-making technology, and the plasticity of drinking scenes all make tea innovation full of great imagination.
The general view is that China today is very similar to its neighbors 30 years ago. As a fast-moving consumer goods category that fully reflects the improvement of people's livelihood and the evolution of dietary concepts, the domestic sugar-free tea industry is also in the early stage of outbreak, and it will follow by leapfrog development.
Can the domestic sugar-free tea market seize the favorable opportunity of the rapid increase in consumer awareness and acceptance, and show a more mellow and long-lasting charm with the help of the health trend?
Resources:
1. "Under the eyes of strong enemies, where is the road to break the situation of sugar-free tea?"
2. Itoen official website
3. "Tea culture accumulation and sugar-free trend are coming, and the sugar-free tea blue ocean market is promising" Pacific Securities
4. "2023 White Paper on China's Sugar-free Tea Industry" Yiou Think Tank