The “2021 Water and Drinking Innovation Trend Report” jointly released by the 21st Century Industry Research Institute and Jingdong Big Data Research Institute shows that in 2020, the water and drinking market will reach 673.76 billion yuan, with a five-year compound growth rate of 1.5%. By 2025, the market size is expected to reach 720.83 billion yuan, with a compound annual growth rate of 2.8%.
In addition, the rapid growth of online consumption, rigid demand is king, the continued differentiation of sub-categories, and the popularity of social media affecting users’ online purchases have become essential directions.
In the first half of 2021, residents’ national per capita disposable income was 17,642 yuan, a nominal increase of 12.6% year-on-year and an average increase of 7.4% in two years. Under the premise of consumption upgrading and increasing disposable income, new changes are taking place in various consumer segments, and the water and drinking industry is no exception.
According to Euromonitor data, in 2020, the water and drink market will reach 673.76 billion yuan, with a five-year compound growth rate of 1.5%. By 2025, the market size is expected to reach 720.83 billion yuan, with a compound annual growth rate of 2.8%.
Packaged water accounted for the largest market share, reaching 215.89 billion yuan, accounting for 32.0%; tea beverages ranked second, with a market share of 112.63 billion yuan, accounting for 16.7%; the milk beverage market was 100.21 billion yuan, accounting for 14.9%. The market share of carbonated drinks, juices, energy drinks, and sports drinks were 13%, 12.2%, 6.6%, and 1.7%, respectively.
The online sales rate is increasing in tandem with sales. Taking JD.com as an example, the sales volume of drinking water and beverages in the water and drinking market from 2018 to 2020 is increasing significantly. The sales volume of drinking water and beverages in 2019 increased by more than 200% year on year. In 2020, the year-on-year growth rate of beverage types reached 31%, and sales continued to grow steadily.
In terms of characteristics, among the current sub-categories of water drinks, the largest market is still the most rigidly needed packaged water. The main feature of this category is to meet the basic needs of the body, mainly natural water, purified water, and mineral water. At the same time, it is rigidity that determines the product life cycle. The packaged water that meets the basic needs of the body, and the functional drinks with some rigid needs (mainly coffee, energy drinks, carbonated drinks and herbal tea), the demand is relatively stable, the product life cycle is longer, and it is easier to breed large orders Products such as Red Bull, Nongfu Spring and Coca-Cola.
According to Euromonitor data, by 2020, a five-year compound growth rate of 8.5% for packaged water, a five-year compound growth rate of 9.2% for energy drinks, and 10.8% for coffee. The advantages of packaged water are consolidating, while energy drinks and coffee are catching up at full speed.
Overall, the characteristics of just needing to be king are apparent. The same is valid from the JD platform. According to JD.com’s big data, in the first half of 2021, packaged water, including mineral water, natural drinking water, and soda water, accounted for the top three in terms of sales volume of sub-categories. In the search volume of water and beverage keywords on JD.com in the first half of 2021, the top three keywords were mineral water, beverages and Nongfu Spring. It can be seen that water and beverage products with rigid demand attribute present an overwhelming advantage.
In particular, it should be noted that, as the “three giants” in the water and drinking industry, the market concentration of drinking natural water, mineral water and soda water is also higher. In the first half of 2021, the top three brands (CR3) accounted for the total sales volume. 15%, 14% and 12%, reflecting the trend of the strong.
The “2021 Water Drinking Innovation Trend Report” points out that the sub-categories of the water drinking track continue to differentiate.
Although packaged water is growing steadily, the taste-type beverage products (juice, tea beverage, milk beverage, etc.) that meet the rigid demand will usher in a change.
Its life cycle is short, and it will complete its life cycle in 2-3 years. Although the omnichannel still maintains a specific retail volume, products such as Wahaha Nutrition Express, Master Kong Iced Black Tea, Coca-Cola Minute Maid, and other products are trending downward or challenging to grow. According to Euromonitor data, the five-year compound growth rate of concentrated beverages fell 8.6%, the five-year compound growth rate of milk beverages fell 5.8%, the five-year compound growth rate of juice fell 2.5%, and the five-year compound growth rate of tea beverages fell 1.6%. The relatively short life cycle of new products also poses more challenges to the innovation capabilities of related categories.
From the price point of view, the various sub-categories continue to differentiate. According to JD.com’s big data, from the perspective of average order turnover, natural soda water is the most expensive in the first half of 2021, followed by sparkling water and mineral water, while lactic acid bacteria drinks and milk tea coffee drinks have lower prices.
As the main trace elements, ten thousand years of water age, no additives and other healthy ingredients, the high price of natural soda water reflects its added value of health to a certain extent. In terms of growth rate, herbal tea has the highest year-on-year price increase in the first half of this year, reaching 15%, followed by mineral water, carbonated drinks and soda water.
From the perspective of these sub-categories, the consumption upgrade trend is obvious. At the same time, the price increase of many water beverages, including ready-to-drink coffee, sour plum soup, natural drinking water, protein beverages, etc., remained between 1% and 4%. It can be seen that there is a clear ceiling in the consumption upgrade of a large number of categories in the water and drinking industry. Drinking natural water and purified water, which have become just-needed products, have stable prices, behind which is the lack of demand for further expansion. On the other hand, the average order turnover of natural soda dropped sharply by 44%. Still, it got a sales increase of 11842%. For head categories that focus on user-quality life elements such as health, price promotions in the correct range can boost sales.
The new trend lies in the popularity of social media, which affects users’ online purchases, but not all. At the same time, e-commerce is playing more and more value in mining users’ minds and providing brand marketing strategy packaging.
According to data from Feidi Technology, in the first half of this year, the most popular brands on social media were Nongfu Spring and Yangyuan Drinks, and Coca-Cola ranked second and third in turn. In addition, Wahhaha, Starbucks, Red Bull, Hey Tea, Wanglaoji, Dongpeng Special Drink and the Arctic Ocean ranked fourth to ten in order.
The degree of discussion on social media also affects users’ attention and purchases. According to JD.com’s big data, Nongfu Spring was the number one brand in search volume for water and beverage brands in the first half of this year. Coca-cola also ranked third, in line with the popularity of social media. Among the top ten brands on JD.com’s search volume, the brand matching rate of social media discussions reached 50%.
However, social media is not all that determines users’ online purchases. For example, Yangyuan, Starbucks, and Hey Tea are pretty popular on social media. Still, they have not squeezed into the top ten brand searches. This means that if brand owners want to achieve better closed-loop sales, they also need to work from multiple dimensions such as product innovation, various channels, and comprehensive marketing. Many cases also show that e-commerce platforms are enormously assisting industry upgrades.
Many brand companies have found that e-commerce platforms represented by JD.com can often have keen insight into user needs before brands. JD.com also integrates online and offline global marketing capabilities to help build the core competitiveness of water and drinking brands. In addition, JD’s fully open, intelligent, omnichannel network supply chain can improve the efficiency of the supply chain and improve the minds of users through full-link user operation solutions.
JD has spared no effort in multi-field and multi-industry insights and cultivating the interests and behaviours of Gen Z consumers. Especially in terms of reading young people and building IP culture, always maintain youthfulness. Over the years, JD.com has formed a complete IP ecosystem, gradually opening official IP authorized flagship stores, and has become increasingly close with brand owners.
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