New report series from Canadean on theWorld's most dynamic soft drinks market

Packaged water is stealing the limelight- and share of throat - in China's burgeoning soft drinks market. At overfour billion litres it is now half the size of the carbonates market, and it couldeventually become the number one soft drinks category if current growth rates continue,according to a new series of reports on China from Canadean Ltd, leading internationalbeverage research analysts.

Packaged Water Surges Ahead InChina's Soft Drinks Boom
Consumption (Indexed Growth) 1989 - 1999F

The reports, which cover seven soft drinkscategories on a national level, and carbonates, water and juice/nectars for five keycities, show that this trend is particularly strong in the more sophisticated cities ofBeijing and Guangzhou. Research was carried out in collaboration with Asia MarketIntelligence, Hong Kong.

Packaged Water vs Carbonates 1989-1999F :Guangzhou and Beijing

% Share of 3 Categories*

Guangzhou

Beijing

 

1989

1999F

1989

1999F

Packaged Water

17

47

12

22

Carbonates

81

51

88

69

         

*Packaged water, carbonates, juice & nectars
Source: Canadean

One of the key factors behind this trend isthe increasing health-consciousness of Chinese consumers. As personal incomes rise and theconsumer is able to choose from a wider range of beverages, he or she is increasinglylikely to select a drink which is perceived to be healthy. Packaged water is the largestsector to benefit, but other "healthy" or nutritious beverages such as juicesand even iced tea are also taking off. Indeed, juices now tend to be the favoured drink onspecial occasions such as banquets or in restaurants, whilst a 50cl PET bottle of water isthe latest fashion item in large cities such as Beijing.

However, this is no passing fad. As EmilyNeill, Canadean's Director of Business Development says. "Canadean analysisshows that the Chinese preference for purer beverages is also reflected in the carbonatesmarket, where the number one flavour is lemon-lime - clear is better, it seems. In amarket swamped by a huge number of poor quality imitations and counterfeits, it ispreferable to be able to see what you are drinking."

It is no wonder then that Coca-Cola andPepsi, number one and two in China's soft drinks market according to Canadean'sranking, are broadening their portfolios outside the carbonates sector. Coca-Cola haslaunched its Tianyudi water and still drinks, and Pepsi's recent acquisition ofTropicana gives it one of the most interesting prospects in the juice market.

Canadean's reports together profile 43soft drinks companies in China, both international and domestic. Some of the mostinteresting success stories belong to local operations, and indeed, outside the carbonatessector, it is Chinese brands that hold sway. In the iced tea sector, for example, overhalf of the market belongs to Xurisheng - a township enterprise which produces icedtea concentrate and then ships it to contract bottlers. Wahaha, the top selling waterbrand, has received a boost from a 51% investment by Danone, and has more than doubled itssales over the last two years.

The China Soft Drinks Report Series 1999includes reports on: the National market; Shanghai, Beijing, Guangzhou, Wuhan and Chengdu. For further information, please contact Canadean's Soft Drinks Marketing Departmenton tel: +44 (0)1256 394224, fax: +44 (0)1256 394201 or email: sales@canadean.com