Vitasoy and China’s Soft Drink Market
The melamine scandal in 2013 was a big catalyst for the growth of Vitasoy in southern China, as people started to question the quality of dairy products, resulting in soymilk gaining in popularity. In eastern China, its lemon tea series was the star of the show. Since then, the company has been focusing its efforts on promoting these two flagship products – and selling them in packs of six. Indeed, six-pack soymilk sets now represent 40-50% of Vitasoy’s revenue.
The company also focused on channels where competition was relatively less intense, such as schools and restaurants, while also leveraging e-commerce platforms. Bolstered by its strong revenue and brand recognition, Vitasoy made some key changes too, with decision-making now sitting at the Hong Kong headquarters. The company also appointed a new CEO in 2015, who has been introducing more unified strategies and approaches. For example, business units including supply chain management, marketing and quality control have been set up for China as a whole.
Online sales volumes, however, tell a slightly different story, but there are two main reasons for this. Firstly, only three or four e-commerce platforms can afford to manage drinks which are heavy and involve delivery. Secondly, online customer acquisitions have almost been completed. Offline channels, on the other hand, are a “blue ocean” field.
The Interview also considered whether the high retail prices of Vitasoy soymilk and lemon tea will make expanding in lower-tier channels more challenging. Consumers are increasingly buying healthy, great-tasting products, and are more willing to spend money, the specialist said. “The market is going through a consumption upgrade rather than product upgrade.”
Vitasoy has set its sights on high-end soymilk products in recent years, launching Vitasoy Health Plus and sugar-free lemon tea and brown rice tea, which have proven to be popular in Japan and are now taking off in mainland China.
To access all the human insights from Third Bridge’s Vitasoy & China’s Soft Drink Market Interview, click below to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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