Zhongtai Securities: The competitive pattern of sugar-free tea is gradually becoming clear, industry leaders are concentrated in parallel with rational innovation

Zhitong Finance App learned that under the dual drive of increasing consumer health awareness and long-term brand cultivation, the share of the sugar-free instant tea market has risen steadily. As of September 2025, the share of sugar-free tea has risen from 31.66% in January 2024 to 35.12%. Hunan, Hubei, Beijing, Shanghai and other provinces and cities are approaching the market share of sugar-containing tea. Among them, Hunan unsweetened tea accounts for 48.54%, and the gap with sugar-containing tea is only 2.92%. As the competitive pattern of the sugar-free tea circuit gradually becomes clear, market concentration will continue to be concentrated on leading brands. Through the advance layout of their own brand+product side, leading brands will accelerate the harvest of market share after channel expansion.

The main views of Zhongtai Securities are as follows:

Brand stickiness has increased, and the industry has shown rational competition

In 2025, the sugar-free tea industry ushered in a critical transformation period. Driven by the continuous increase in consumer health awareness and long-term brand cultivation, the share of the sugar-free tea market has risen steadily. As of September 2025, the share of sugar-free tea has risen from 31.66% in January 2024 to 35.12%. Hunan, Hubei, Beijing, Shanghai and other provinces and cities are approaching the market share of sugar-free tea. Among them, Hunan sugar-free tea accounts for 48.54%, and the gap with sugar-containing tea is only 2.92%.

The year-on-year growth rate of unsweetened tea sales during the peak beverage season of 2025 (April-September) slowed significantly compared to 2024. The growth rate in July alone was close to the same period last year, indicating that the industry has moved from a period of incremental explosion to a stock game stage. The mentality of consumers to try early has weakened, and brand stickiness continues to increase, becoming a core characteristic of the industry.

The price system showed a positive trend of adjustment. In 2023-2025, the average price of sugar-free tea will rise from 5.1 yuan/pcs to 5.6 yuan/pcs. The core driving force is the increase in the penetration rate of large packaged products, and consumer acceptance of large-size products is growing at the same time as consumption. In terms of the average price of 100 ml, 2023-2024 was affected by the price war, and the decline narrowed markedly in 2025. Furthermore, the price reduction was mainly due to a shift to product structure optimization rather than vicious competition. The price war stage in the industry basically ended, and the price level stabilized.

Competitive landscape optimization: head concentration and rational innovation go hand in hand

In 2025, competition in the sugar-free tea industry returned to rational order, and market share concentrated at the top of the market at an accelerated pace. As of June 2025, the share of Nongfu Spring increased by 10.94 pcts to 79.36% year on year, ranking first in the industry; Suntory's share decreased by 6.96 pcts year on year. In the second tier, only a few brands such as unified, ripe fruit, and tea increased their share.

Consumption scene+channel+culture binding to achieve product expansion

(1) Product specifications are adapted to various scenarios. Consumer demand for sugar-free tea has moved from simply quenching thirst to satisfying emotional values. The industry is rapidly getting rid of its dependence on a single 500ml specification, and large packaging has become the core gripper for market expansion: for household, camping and other group consumption scenarios, large bottles meet the needs with the convenience of sharing; for fixed scenarios such as offices, etc., the repurchase rate of large bottles has reached 60%, and the 1.5L package can cover more than 8 hours of use. The ability to cover all scenarios is gradually becoming a key determinant of the industry's voice.

(2) Taste and culture expand the consumer base. In 2023, the share of sugar-free tea consumers under the age of 30 was over 70%, and there is plenty of room for expansion in the market for people aged 30 and over. The brand broke through crowd restrictions through a dual path: first, taste optimization, and the use of technical upgrades and ingredient upgrades to launch region-limited products, such as Oriental Leaf's “Chrysanthemum Pu'er” in Guangdong to adapt to local food culture; second, cultural binding. Oriental Leaves combines “tangerine peel white tea” with traditional health culture, strengthens consumer education through platforms such as Xiaohongshu and Douyin, and promotes the upgrading of products from “functional drinks” to “cultural symbols”.

(3) Channel operation ranges from extensive to intensive cultivation. As an instant consumer product, more than 80% of sales are concentrated in offline channels. Among them, grocery stores account for 33.8% as the core channel. Although snack shops/member stores account for only 4.5%, the growth rate is as high as 44%. The brand bid farewell to the extensive retail model and switched to intensive digital cultivation: Dongpeng, Oriental Leaf, etc. allowed terminal stores to participate in benefit distribution and receive sales commissions and data contribution rewards through the “One Yuan Enjoy” model. At the same time, through data collection and analysis, the brand realized product flow monitoring, inventory management, and new product development and prediction, and channel operation efficiency improved markedly.

Investment advice

Zhongtai Securities believes that as the competitive pattern on the sugar-free tea circuit gradually becomes clear, market concentration will continue to be concentrated on leading brands. Through the advance layout of their own brand+product side, leading brands will accelerate the harvest of market share after channel expansion. Considering the continuous fragmentation of the future consumption scenario of sugar-free tea and the continuous increase in consumer demand for product taste, leading brands are expected to continue to lead the way in industry changes with a perfect product matrix and rapid market response capabilities. It is recommended to actively pay attention to leading companies in the industry such as Nongfu Spring (09633).

Risk Alerts

Macroeconomic fluctuations, increased industry competition, terminal demand falls short of expectations, channel transformation progress falls short of expectations, new product promotion results fall short of expectations, raw material prices fluctuate, and food safety risks.