Conversations & Insights April 22, 2015

China’s Beverage Market: Challenge and Opportunity



Today, the market for fast-moving consumer goods in China looks less welcoming to outsiders than it did four years ago.

60 percent of foreign brands report declining market share and, challenged by the success of local players, The Coca-Cola Company and PepsiCo have seen their combined share of soft drink volume drop 4.6 percent since 2009.

Yet, Chinese shoppers report the highest willingness among global consumers to purchase online in 18 of 22 product categories.

In the Food & Beverage segment, purchase intent in China has jumped to 57 percent and to 34 percent in Alcoholic Drinks.

Online spending in the Food & Drink segment is expected to more than triple by 2019, to roughly $35 billion dollars.

Unique consumer behavior coupled with unfamiliar digital platforms complicates marketing investments in China. However there is opportunity for brands committed to understanding the digital ecosystem.

New and established platforms are vying for position across Chinese cities. Since its launch in 2012, Tmall Supermarket has consolidated items carried by multiple merchants into a unified storefront, forcing a new approach to logistics.

In May 2014, Amazon invested $20 million in online grocer Yummy77—the retail giant’s first investment in a Chinese company.

In January 2015, Yihaodian announced it had reached nearly 90 million registered users and doubled product selection to more than eight million SKUs.

Global Beverage brands will either prepare for these new modes of online disruption—or watch the opportunity in China shift to more agile local brands.

This study attempts to quantify the digital competence of 66 beverage brands across eight categories in the Chinese market.

Download the full study here:

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