Chinese functional beverage market growing by 29%

By Jennifer Phang

- Last updated on GMT

Related tags: Coca-cola

China's functional beverage market growing
China's functional beverage market growing
Impressive growth in the Chinese functional beverage market looks set to continue as some national experts predict China to become the largest functional beverage market in 2012.

Functional drinks that aim to regulate body functions, quench thirst, strengthen immunity and provide positive health effects are gaining traction in China today, according to a new report by CI Consulting in China.

Since 2008, the overall functional beverage growth rate in China stands at 29% and is expected to intensify with rapid industry developments.

In fact, an official at the China Food Industry Association told FoodNavigator-Asia that China is predicted to become the largest functional beverage market in 2012.

There are three main reasons for such claims. Firstly, the current per capita consumption of functional beverages in China stands at 0.5kg per year compared to the average of 7kg per capita in the world – leading to huge untapped potential in the functional beverage market.

Secondly, plans for the standardisation of industry standards for functional beverages in China are attracting consumers and lastly, the popularity of functional drinks has spread from the city to the rural areas.

However, for functional beverage companies to enjoy fruits of labour, they need to overcome certain challenges

Critical mass

Mr Siran Zhou, a food analyst from CI Consulting, told FoodNavigator-Asia that functional beverages companies needed to expand the market concentration to create a critical mass instead of just focusing on one segment, like sports people.

He suggested that these companies expand on the product marketing strategy to attract more consumers.

This can be easily overcome with the introduction of new products that are more appealing in tastes as well as in functions. Zhou added that launching new functional drinks would definitely expand the market.

In the past, after the penetration of JianLiBao health drinks in 2000, and Thailand’s RedBull in 2003, local functional products were stagnant with the battle for functional beverages eventually falling into the hands of both International bottlers, Coca Cola and Pepsi Cola. However the sudden popularity of Chinese herbal tea, “WongLoKut” in 2005 helped to revive the local functional beverage companies.

Thirdly, functional beverages companies need to demystify that functional beverages are only to be consumed during certain occasions, as in sports activities. Product managers and authorities need to make a concerted effort to allay that perception.

The lack of product homogeneity in functional drinks in China is also hindering the growth of the market, said Zhou.

There is a need to improve the classifications of functional beverages in China for the market size to grow.

According to CI Consulting “2011-2015 Chinese functional beverage market, investment analysis and forecast report”​, 68% are sports and energy drinks, 25% are nutrients-fortified drinks and others make up the rest.

This indicates that functional beverages are used only for specifi purposes but not for everyday enjoyment. The way forward, said Zhou, would be to re-classify their functional drinks so that they would not be associated with activities or occasions.

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