China's Functional Drink Market Growing At 23.9 Percent

Friday, March 31st, 2017 | 1072 Views

The functional drinks market turnover reached US$8.79 billion in 2015, increasing significantly from US$3.73 billion in 2011.

The market grew at a compound annual growth rate (CAGR) of 23.9 percent, surpassing the growth rate of the soft drink industry during the same period, according to a report by Research and Markets. In China, the competition in the functional drink industry is less pronounced when compared to soft drink varieties.

The aggregate market share of the top five functional drink manufacturers in China was about 63.5 percent of the total with a high market concentration rate, of which the market share of Red Bull and Danone Mizone was over half of the total in 2015.

Functional beverages are classified into nutrimental beverages, sport drinks, and drinks that contain healthy benefits. The categorisation is done after adjusting the composition and content of natural nutrients for certain nutritional needs in regulating body functions instead of only treating diseases. Functional beverages aid in anti-fatigue and serve as an energy supplement to consumers.

The biggest group of consumers of functional drinks are young people who are looking for energy-providing drinks—children, students and office workers. Males consume more functional drinks than females due to their different lifestyles, which includes sports and staying up late. Females were found to have a preference for soft drinks such as fruit juice, vegetable protein beverages or bottled water as they engaged in fewer physical activities.

The beverage industry in China is growing due to rising consumer health awareness. Popular beverages include those with added vitamin and taurine; and consumers are willing to pay for the higher price tag. Therefore, opportunities exist for new functional drink manufacturers in segment varieties and regional markets.

The annual average consumption of functional drinks was less than three litres per capita in China, much lesser than the global average of global of seven litres. This translates to ample opportunity for functional drink manufacturers to tap on the market. The beverage manufacturers would need to raise awareness on the health benefits of functional drinks for the market to expand.

The study forecast that the CAGR of the functional drinks market will surpass 15 percent, and might even reach 20 percent in China from 2016 to 2021.