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Beverage plays turning big business in China

By WANG ZHUOQIONG | CHINA DAILY | Updated: 2020-07-28 09:37
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Visitors check out drinking water products during a beverage exhibition in Beijing. [Photo by Wang Qiong/For China Daily]

To emphasize this sector, the company will further build its leading premium mineral water brands around the world and invest in differentiated products under the Nestle Pure Life brand, such as functional water with health-enhancing ingredients, Nestle said.

Jason Yu, managing director of Kantar Worldpanel Greater China, said generally high-end bottled water is priced about five yuan (71 cents) per 500 milliliters and it is also defined by its water resources, quality and ingredients.

"In the COVID-19 era, consumers are more aware of health benefits and quality of life," Yu said.

"High-end water products also follow the market trend of low sugar and no sugar drinks in recent years."

He added that high-end water products-including functional water and carbonated water-meet evolving consumer demand.

However, the top water market, with the majority of business generated from outdoor catering, has been in recovery since the outbreak of the pandemic, Yu said.

This market segment requires long-term cultivation and even longer marketing and investment periods.

Another international water producer, Paris-based Danone, considers China a key strategic market.

"We reiterate our commitment to sustainable development in China and to operate under Danone's mission to bring health through food to as many people as possible. We are confident in the future of our imported water business in China, such as Evian and Volvic," the company said.

Ferrarelle, Italy's fourth-largest mineral water producer, said recently it struck a distribution deal with Danone to boost exports and increase awareness of its top brand overseas.

Under the agreement, Danone will distribute Ferrarelle's sparkling water in several countries. It is believed that Danone will eventually introduce Ferrarelle to the Chinese market.

According to the 2019 Tmall High-end Water Trend Report jointly released by Tmall and Nielsen Market Research, the growth in transactions of high-end water started to grow from July 2018.

According to Nielsen, the high-end water sector's market value in China stood at 4.6 billion yuan in 2012. Five years later, revenue stood at more than 10 billion yuan.

"The popularity of high-end water since 2018 has been a result of higher per capital incomes and enhanced awareness of healthier water among consumers," said Zhu Danpeng, a food and drink freelance analyst who also predicted strong performance in both sales and production boosted by high frequency of repeat customers and strong emerging customer numbers.

But, Zhu said, the market has been dominated by international brands despite the strong presence of local players in the water market in general.

Euromonitor International said bottled water in China will have a market value of 219.5 billion yuan by 2022. The figure for 2019 was 169.4 billion yuan.

The top bottled water brand in China's domestic market is local player Nongfu Spring, taking up 9.8 percent of the domestic market.

Next is C'est Bon of China Resources Holdings Co Ltd at 8.6 percent and Ganten of Shenzhen Ganten Industry Co Ltd at 8.3 percent.

Danone's Mizone is fourth at 4.6 percent and Master Kong of Ting Hsin International Group at 3.4 percent.

Amanda Zhang, in her early thirties, regularly buys bottled carbonated water from online retailers, or 24 bottles a week on average, both imported and local brands.

"My husband and I like the taste and health benefits," said Zhang. "The price of carbonated water is affordable and we want to invest in what we drink."

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