STORES | Staff Reporter, China

Nontraditional tea products boost China's hot drinks sector

Hot tea category is projected to record a CAGR of 10.2%.

China's hot drinks sector is projected to grow from $30b (CNY204.4b) in 2019 to $48.6b (CNY326.7b) in 2024, as the growing exposure to nontraditional tea varieties is driving the demand for hot tea, according to GlobalData. This translates to a compound annual growth rate (CAGR) of 9.8%.

The report noted that the living standards have been changing, influencing the consumers’ buying behavior and driving them towards consuming green tea and other variants that resonate with their personal and lifestyle choices.

The sector growth will primarily be driven by hot tea category, which is projected to register the fastest value CAGR of 10.2% during 2019–2024. The category will be closely followed by hot coffee and other hot drinks categories, which are expected to record CAGRs of 8.4% and 7.2%, respectively, during the same period.

“With rising health concerns among the Chinese consumers, there is an upsurge in demand for healthy alternatives in beverages. With the burgeoning middle class placing healthy lifestyle as their major priority, abundant opportunities lie ahead for health-targeted hot drinks in the country,” said GlobalData's Consumer Analyst Anchal Bisht.

The hot tea category also accounted for the highest volume sales of 1,345.8 million kilogramme in 2019. However, the hot coffee category is projected to register the fastest volume growth at a CAGR of 11.5% during 2019–2024.

Data also revealed that each person in China spent an average of $21.4 in 2019, comparatively higher than the Asia-Pacific level of $19.8 but lower than the global level of $30.1 in the same year.

Convenience store was the most popular channel for the distribution of hot drinks in China, followed by hypermarkets and supermarkets. These two leading channels accounted for a combined value share of 68% in 2019, whilst on-trade transactions held 24.3% share in the same year.

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