China Juice Market Analysis

He Jiang

1. General facts about China 2012Population:1,336,718,015 (July 2011 est.)

Age structure:0-14 years: 17.6% (male 126,634,384/female 108,463,142) 15-64 years: 73.6% (male 505,326,577/female 477,953,883) 65 years and over: 8.9% (male 56,823,028/female 61,517,001) (2011 est.)

Median age:total: 35.5 years male: 34.9 years female: 36.2 years (2011 est.)

Religions: Daoist (Taoist), Buddhist, Christian 3%-4%, Muslim 1%-2% note: officially atheist (2002 est.)

Languages: Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect) Yue (Cantonese), Wu (Shanghainese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka dialects, minority languages (see Ethnic groups entry) note: Mongolian is official in Nei Mongol, Uighur is official in Xinjiang Uygur, and Tibetan is official in Xizang (Tibet)

Source: Irish chamber of commerce in China.

2. Economic Facts about China:

GDP (purchasing power parity): US$9.872 trillion (2010 est.)

GDP global rank: #3 (behind the European Union and the U.S.)

GDP, real growth rate: 10.3% (2010 est.)

GDP, per capita: US$7,400, ranks #127 (2010)

GDP - composition by sector: agriculture: 10.2% industry: 46.9% services: 43% (2010 est.)

Labor force: 819.5 million (2010 est.), #1 global ranking

Currency: Yuan, also referred to as the Renminbi (RMB)Monetary unit: 1 Renminbi (yuan) (Y) = 10 jiao = 100 fen;

Source: Irish chamber of commerce in China.

3. Market overview:

Rapid growth of juice industry: China’s fruit juice market has witness rapid growth of more than a decade. The market generated total sales of US$3.5bn in 2010, representing a compound annual growth rate (CAGR) of 7.6% for the period spanning 2006 to 2010.

The consumption of juice per capita is relatively low in China: The consumption of juice per capita in China is 0.7 liter. It is particularly low when compared with the developed countries: 1/40 of the average level in west Europe, 1/20 of the average level in America, and 1/6 of the average. Juice industry still has enormous growth potential with the development of the living standard and health awareness.

Diluted juice dominates the market: The china marketing research shows that, in the Chinese juice beverage market, the market share of 100% juice is only 5%-6%, while the most shares are held by diluted juice beverages (juice content no more than 25%). This is mainly due to the purchase capacity and consumption ideas of consumers.

Fruit drink sales proved the most lucrative for the Chinese juices market : Fruit juice (0-29% juice) generating total revenues of $1.7 billion, equivalent to 48.4% of the market's overall value.

Huiyuan Juice Group leads China's juice market: Huiyuan Juice Group has 19.9% volume share, followed by Tingyi (Cayman Islands) Holding Corp with a 14.4% share of the market. The Coca-Cola Co. takes a close third place with a 14.3% share.

4. Market Value:

- The Chinese juice market grew by 8% in 2010 to reach a value of $3,475.8 million.- The compound annual growth rate of the market in the period 2006–10 was 7.6%.

China juice market value

5. Market volume:

-The Chinese juice market grew by 5.4% in 2010 to reach a volume of 4,754.9 million liters.- The compound annual growth rate of the market in the period 2006–10 was 5.8%.

China juice market volume

China juice market share (2010)

6. Market share:

-China Huiyuan Juice Group Limited is the leading player in the Chinese juices market, generating a 19.9% share of the market's volume.

-Ting Hsin International Group saw its share off-trade volume sales rise by almost one percent point to 14.4% in 2010, which was the largest share increase in the fruit/vegetable juice category.

- Coco-Cola China Ltd, with its brands Minute Maid and Qoo, has a volume share of close to 14.3% in 2010.

7. Competition groups：The competitions among Chinese fruit juice drink enterprises are growing more fierce. Three major competing groups are:

First, the Taiwan-funded enterprises, such as Uni President , Master Kong who have had succeed with the package creation and taste.

Second, the local famous enterprises, including China Huiyuan Juice Group Limited, Hangzhou Wahaha Group Co., Ltd.

Third, the multi-national enterprises, such as Coca Cola, and PEPSICO., Inc etc.

Master Kong Huiyuan

8. Market segmentations:

 Generally speaking, the juice beverage market can be divided into two parts:- 100% fruit juice (juice concentrate reduction) - Diluted fruit juice

By the flavor of the juice:- Huge varieties of juice in China- Orange, coconut, pineapple, and litchi juice in southern areas- Apple, grape and pear juice in northern areas

By the price of the juice, they can be roughly divided into three categories: - High price/high quality: - Target markets are high income groups and people who are on diet - They look at the product itself rather than the price and packaging - 100% natural juice

-Fair price/fair quality: - Housewives purchase juice for their family needs - They need their juice to be healthy, high in vitamin and good for their families

-Low price/low quality: - Most of them are young and teenagers - They prefer attractive packaging - Some of them start to consider to drink something healthy which is beneficial to their own bodies

Generally, there are two kinds:

- The traditional commodity distribution channels : - Shopping malls, supermarkets and other independent retailers - Currently most of the products go through this channel - For people’s daily consumption - High sale volume

- The others are specific channels: - Hotels, restaurants, high-end clubs - The target consumer groups are high-income groups - Juice are mostly imported goods - These juice are almost 100% natural fruit juice - Low sale volume

9. Distribution channels:

10. Regional consumption analysis:

The regional differences among Juice beverage markets are huge - The consumer groups are mainly concentrated in Guangdong, Hainan, Fujian and Zhejiang and the other southeast coastal provinces. - Inland provinces such as Anhui, Hunan, and Sichuan are less in volume.

-Big cities are the main consumption areas, reasons are:

- The average literacy level of the city residents is higher. - They are more likely to try new items/brands. - They have sufficient understanding of the nutrition facts of juice. - They have high health consciousness.

11. Main types of marketing:

A. Advertising (a) TV advertisements (b) Online advertising - Advertisement on the websites - Interactive social network websites (eg. renren.com &weibo.com which are popular in China) - Corporate with online games (eg. buy juice, get game token for free) (c) Coupons on newspapers, magazines (d) Corporate with other food companies - Eg. buy juice, get coupons for potato chips B. Sales promotions (a) Bundle product sale (b) Lottery activities - Set lotteries on the bottle caps (c) Free gifts attach to the products

a. Gender

67%

33%

Gender

FemaleMale

- More females than males. (65.1% vs. 34.9%)-E.g. Success of Uni president - Target market is females - The slogan is “More vitamin C, more beautiful” - Emphasis the beauty functions of juice

12. Consumer behavior analysis

b. Age

21%

39%

20%

11% 8%

Age structure

Under 1818-2526-3536-4545 and above

- Consumer between 18-25 years represent largest segment of 39.25%.- The consumption volume negatively related to consumer ages.- 80s-90s marked a new period of health consciousness and they are excited to accept new things.

48%

43%

6%2%1%

Purchasing Places

Convenience storeSupermarketVending machinesHotelsWholesale market

c. Purchasing places:

- Convenience stores, supermarkets close to the homes are the main places for the daily consumption of fruit juice. - The convenience store is the first choice, accounts for 47.93%. - The consumption volume for hotels and restaurants is smaller, only 2%. - Wholesale markets are not prosperous because they are far from the residential areas, consumers would like to buy juice somewhere convenient.

39%

18%

26%

17%

Packaging

Plastic bottleAluminum cansTetra packGlass bottle

d. Packaging:

- The plastic packaging is the major choice of consumers up to 39.02%, followed by tetra pack, accounts for 25.61%. - Cans, glass bottles are less popular. - Consumers like to buy convenient and ready-to-drink packaging.

5%17%

45%

16%

17%

Income800 800-1000 1000-2500 2500-3500 above 3500

e. Income:- Middle class families with ¥1000-¥2500($156-$392) monthly income are the major buyers of juice, accounts for 45%- ¥2500-¥3500($392-$550) account for 16%

20%

55%

15%

5% 5%

Occupation

StudentsWhite collar workersBlue collar workersLaid-off workersOthers

f. Occupations:

- White collar workers and students account for the highest proportions- Office workers desire more juice than manual workers

Apple11%

Mango17%

Peach18%

Guava12%

Mixed fruit7%

Orange30%

Others4%

Flavor

g. Flavors: - Orange juice is still the dominant flavor. - More and more flavors and preferences launched in China. - Consumer preferences change very fast. - Mixed fruit juice is popular in recent years.

10%

49%

31%

11%

Reason to buy

Thirsty relieveTasteNutritionPackaging/Brands

h. Reason to buy:

- Good taste is the major reason for consumption. - Consumers do not care too much about the brands and packaging. - Consumers pay more attention to nutrition facts, as high as 30.51%. - Natural, nutritious and organic juice prove to have a great potential in China’s juice market.

13. New launch and trends:

1. With the successful launch of Shuirong C100 lemon by Nongfu spring Co Ltd in 2008, lemon flavor fruit drinks claiming to have high vitamin C content won popularity amongst consumers, and also attracted more market entries.

2. Among the different types of juice, low juice content juice drinks with up to 24% juice, is the most popular category.

3. Safety, nutrition and health-care are becoming consumers’ concerns in terms of daily food and drinks. Organic, natural and 100% fruit juice will become lucrative in the future development.

C100 lemon- Rich in VC-12% lemon juice

14. Market volume forecast

- In 2015, the Chinese juice market is forecast to have a volume of 5,998.6 million liters, an increase of 26.2% since 2010.-The compound annual growth rate of the market in the period 2010–15 is predicted to be 4.8%.

Market volume forecast

15. Market value forecast:

- In 2015, the Chinese juice market is forecast to have a value of $5,252.4 million, an increase of 51.1% since 2010.

- The compound annual growth rate of the market in the period 2010–15 is predicted to be 8.6%.

Market value forecast

16. Advantages and disadvantages:

Advantages:

Rapid growth of juice market: According to Datamonitor, the compound annual growth rate of the juice market in the period 2006–10 was 7.6% which is much more higher than the annual increase rate of the global juice market.

Huge potential: The consumption per capita is very 0.7 liter which is still far behind developed countries. Chinese people become stronger in terms of economic standard and are more inclined to choose the fruit juice drinks which are healthier, natural and also better in flavor.

Confidence in foreign brands: Counterfeit and shoddy products are massive in China, consumers are not confident about domestic manufactures. High quality products and the outstanding corporate image can be very attractive to Chinese consumers.  Disadvantages:

Competition: The huge potential market attract more and more enterprisers to enter. Competitions are growing more fierce.

Price: China is abundant in fruit resources, domestic manufacturers have advantages in raw materials, therefore their prices are lower.

Tariffs and freight cost: China’s tariffs on food are relatively high compared to other countries. In the meanwhile, juice are heavyweight products which increase the freight cost.

Consumer preferences change fast: There are huge varieties of juice in China and new products are launched every year. These new products and new ideas affects consumers’ preferences. Substitute: Pure water, tea drinks, fruit milk, other functional drinks are all substitutes for juice and they are generally cheaper in price. 

17. Recommendations:

Emphasis promotion and advertisingAdvertising and promotion are crucial. Nowadays, people have habits reading, searching on the websites, playing computer games and so on. It is necessary to pay more attention to the popular marketing methods (e.g. Social network websites).

Focus on build outstanding corporate imageIn China, it is necessary to build strong consumer confidence and differentiate our products from the counterfeit and shoddy ones.

Innovate regularly It is important to promote appropriate innovations according to market changes. For young people, they would like to look for something new and some exciting products. They trend to buy the ideas rather than the products.

Choose appropriate distribution channelThis can be facilitated in targeting specific consumer groups.