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E-commerce channels, as one of the significant sales avenues for the ready-to-drink (RTD) tea industry, have been constantly innovating and changing, providing more choices and conveniences for RTD tea brands and consumers. The advantages of e-commerce channels lie in their ability to cover a wider range of consumers, offer a richer array of products and services, reduce costs and risks, and increase efficiency and effectiveness. The challenge of e-commerce channels lies in the need to cope with more intense competition and more complex environments, meet higher quality and faster speed, and build stronger brands to gain more loyal users.

This paper aims to analyze the hot track and dynamic evolution of RTD tea market from the perspective of e-commerce, as well as the opportunities and challenges of e-commerce channels, and provide some references and suggestions for ready-to-drink tea brands and consumers.

01 Brand Competition: The Rise of Sugar-Free Tea, Disrupting the Traditional Layout

 From the brand perspective, the RTD tea market in e-commerce channels has undergone significant changes in recent years. Sugar-free tea brands like Nongfu Spring and Suntory, with their healthy, refreshing, and low-calorie features, have quickly won consumer favor, becoming market leaders. According to Sandalwood Advisors data, as of the third quarter of 2023, Nongfu Spring and Suntory held a combined e-commerce market share of over 40%, the only two brands with continuously increasing shares since 2021. In contrast, traditional sugary tea brands like Vitasoy, Master Kong, and Uni-President,still holding a market share with their classic black tea products, are under significant pressure.

Nongfu Spring and Suntory's remarkable achievements in e-commerce channels are mainly due to their constant product innovation and category expansion, aligning with changing consumer needs. Nongfu Spring launched the Oriental Leaf series in 2011, promoting "true tea, no additives" and setting a benchmark for sugar-free pure tea. The series includes flavors like Citrus Puer, Jasmine Tea, Oolong Tea, and Black Tea, with Citrus Puer and Jasmine Tea becoming e-commerce blockbusters, with sales of more than 100 million yuan and 110 million yuan respectively, ranking the top two instant tea lists. In 2021, Nongfu Spring introduced an upgraded version, the Oriental Leaf Gold Edition, enhancing the brand image and profit with higher quality and prices. Suntory's core product, the sugar-free Oolong Tea, appeals to health-conscious consumers with its "no sugar, no calories, no additives" selling points. Its sales in e-commerce channels exceeded 150 million yuan, making it the hero product of Suntory and a leader in sugar-free tea drinks. In 2020, Suntory also launched Jasmine Oolong Tea, a unique combination of jasmine fragrance and oolong taste, opening a new market space and generating over 50 million yuan in sales, ranking sixth in the RTD tea list.

02 Product Innovation: Diverse Flavors, Different Specifications, Meeting Individual Consumer Needs

 From a product perspective, the RTD tea market in e-commerce channels is characterized by diversification, differentiation, and innovation. Brands are constantly launching new flavors, specifications, and packaging to meet individual consumer needs. According to Sandalwood Advisors data, among the top ten products in terms of sales in e-commerce channels, eight sugar-free teas from Nongfu Spring and Suntory emerged, including three billion-yuan SKUs, reflecting a consumer preference for reducing sugar intake driven by health concerns. In terms of flavors, consumers favor Oolong Tea and Jasmine Tea. Suntory Sugar-free oolong Tea is not only a champion but also a hero of the brand, with its Oolong Tea series accounting for over 65% of the brand's total sales. Among the top ten RTD tea SKUs, sugar-free teas generally have larger unit weights and product specifications than sugary teas, mostly in bottle form. With packaging sizes of 900 ml or even 1250 ml, these large-capacity products cater to consumers' demand for high value-for-money, opening a new battlefield in the RTD tea market.

In the top ten RTD tea SKUs in terms of sales, two sugary products performed well. Master Kong Ice Black Tea, once the "national drink," has recently seen a surge in topicality with its alternative naming. Vitasoy Lemon Tea, with its "real tea + real lemon" health marketing and strong brand backing, maintains strong competitiveness. Although sugar-free and sugary tea drinks together form a diversified RTD tea market, the health-driven sugar-free tea drinks have become the choice of more consumers. The key to breaking through lies in innovation, and timely understanding of consumer focus and taste trends is essential. Continuous monitoring of e-commerce data can reveal opportunities for innovation.

03 Consumer Insights: Increased Health Consciousness, Enhanced Purchasing Power

From the consumer perspective, the RTD tea market in e-commerce channels reflects an increase in health consciousness, enhanced purchasing power, and improved brand loyalty. Research shows that the consumer group for sugar-free tea drinks mainly consists of young white-collar workers aged 25-40. They have a high level of health awareness and prefer sugar-free, additive-free, and low-calorie tea drinks to meet their taste and nutritional needs. This consumer group also has higher purchasing power, with an average spending per order higher than that of sugary tea drink consumers, and they are more willing to pay a higher price for high-quality products. Sandalwood Zitan's data on the top five RTD tea brands shows that the spending on sugar-free tea drinks is three times that of sugary tea drinks.

Rumors suggest that Master Kong's tea and juice series will see a retail price increase; will e-commerce channels follow suit? With the rapid development of platforms like Douyin and Pinduoduo, what new opportunities do they offer for tea beverage companies? How can emerging tea drink brands carve out their path and break through amidst strong competition? The RTD tea market in e-commerce channels is a dynamic and changing market, with brands continuously innovating and competing to meet consumer needs and preferences. If you want to learn more about the RTD tea market in e-commerce channels, please contact us.