The market for commercial beverages in China realized decisive gains in the last decade, reports the first study of that gigantic market published by Beverage Marketing Corporation, the leading information and consulting resource for the worldwide beverage industry.

The Multiple Beverage Market in China, 2000 edition, opens with an overview of the market as a whole, followed by a detailed analysis of each of the major beverage categories. "With the development of China's economy and the improvement of Chinese people's living standard," it declares, "consumption of commercial liquid beverages grew quickly throughout the 1990s, and the makeup of the typical beverage menu has changed significantly."

The specification of commercial beverages relates to the fact, noted in the study, that more than 90% of the fluid the Chinese people drink is still non-commercial water. However, average annual per capita consumption of commercial beverages has been increasing steadily, passing 64 liters, or nearly 17 gallons, in 1999, it reports, and total volume of these beverages exceeded 800 million hectoliters, equal to more than 21 billion gallons.

Nine beverages studied; tea holds long lead

The new report surveys nine commercial beverage categories - beer, bottled water, carbonated soft drinks, distilled spirits, coffee, fruit and vegetable beverages, milk, tea and wine. The report includes figures through 1999 on volume and dollar sales and per capita consumption of each. It also features information and interpretation of historic factors in the Chinese beverage picture, manufacturing and distribution facilities, domestic and overseas participants in the market, and projections reaching five years into the future.

Tea, the classic Chinese beverage, traditionally and overwhelmingly marketed in loose form and consumed hot, represents more than 40% of total market volume. With more than 2,500 tea processing companies active, production of loose tea in 1998 came to some 665,000 metric tons, of which approximately one-third was exported. Per capita tea consumption in 1999 was 27.5 liters (7.25 gallons). Tea bags, diet and instant teas add up to only about 1% percent of the market, it discloses, but packaged ready-to-drink tea, a concept imported from abroad, is gaining favor, with more than 100 brands currently on the market.

China on track to pass U.S. in beer volume

Beer is in second place, accounting for more than one quarter of all 1999 commercial beverage volume and passing, for the first time, the milestone of 200 million hectoliters (5.3 billion gallons). In its projections, the report predicts that "by 2004, China will consume more beer than the U.S., which currently stands as the leading beer market."

With both domestic and imported beers growing rapidly, intake in China advanced from an average of six liters per person in 1990 to 16.14 liters in 1999. These figures are further broken down in the report into urban and rural consumers, the former numbering approximately 300 million and their 960 million rural countrymen. In urban areas, per capita beer consumption last year averaged 35 liters, in rural districts the average was 13 liters, indicating, "the large potential of the Chinese market," especially when viewed in relation to per capita consumption in other countries. For example, average intake stands five times larger in the U.S. and 10 times greater in the Czech Republic.

Third, and growing fast, is the carbonated soft drink (CSD) category, which almost doubled in five years to volume of 87 million hectoliters (2.3 billion gallons) in 1999. Sales equaled $1.2 billion. The one category dominated by overseas companies, signally Coca-Cola and PepsiCo, the CSD market is witnessing a revival of domestic production, pushed out by overseas brands a decade ago but now beginning to achieve significant market share.

Bottled water, still a relatively small factor in the country, has nevertheless achieved double-digit growth over a number of years, reaching between 5% and 6% of total commercial beverage volume. More than 1,500 firms are now in the market, the report estimates, and the larger ones are expected to command increasing market share and dominance.

Distilled spirits constitute the largest dollar-sales category, amounting to some $5 billion, despite a drop in the last two years following a severe counterfeit product problem resulting in deaths and injuries. Overwhelmingly domestic in origin, Chinese distilled spirits are expected to continue a slow decline from a high point of 74 million hectoliters (more than 2 billion gallons) in 1996.

Among the other commercial beverages, milk in fluid form (replacing powdered milk, the prior standard) is growing with significant government support; wine and fruit and vegetable beverages are showing positive advances. Coffee (primarily imported instant) remains marginal.

Overall, Beverage Marketing projects that the total commercial beverage market in China will grow to 1.5 billion hectares (40 billion gallons) by 2004. In U.S. dollar terms, it will enlarge from the current figure of $18.8 billion to $27.4 billion, reflecting a surge of more than 80 percent in per capita consumption of commercial beverages.

The new report on the Chinese market is one of 27 intensive studies of major markets and issues in the global beverage industry published annually by the New York-based Beverage Marketing Corporation. All are available as printed volumes and in electronic form, via both CD-ROMs and online. Complete tables of contents and other details may be obtained from the company's Web site: www.beveragemarketing.com.