CICC: Penetration rate of freshly made tea beverages continues to increase, with controllable competition intensity in the short to medium term.

Zhongjin released a research report stating that the future of ready-to-drink tea beverages still has the potential to maintain double-digit growth. Innovations in product categories on the supply side and penetration through all channels, along with increased frequency of consumption and extended consumption scenarios on the demand side, are the main drivers. The penetration rate of ready-to-drink tea beverages in the fluid intake market is still increasing. Under the disruption caused by the takeaway industry, the sector will focus on refined operations, without changing the trend towards increased concentration and the dominance of stronger players. Competition among top brands may face some pressure in certain areas, but differences in product and brand positioning, location selection, and types still offer certain attributes of differentiation, making competition intensity controllable in the short to medium term. Key points from Zhongjin include: Continuous expansion of supply and demand in the ready-to-drink tea beverage sector, with increasing penetration in the fluid intake market The research firm believes that ready-to-drink tea beverages are likely to maintain double-digit growth in the future, with innovations in product categories, penetration through all channels, increased consumption frequency, and extended consumption scenarios driving this growth. There is still room for improvement in the penetration rate of ready-to-drink beverages in the overall fluid intake market (currently only 1.6% vs. 19% for the US/Europe/Japan respectively) due to factors such as affordability under price adjustments, increased accessibility due to category exposure enhancements, fresh production, and frequent new product launches. Additionally, top companies in the ready-to-drink beverage sector still have a gap in GMV compared to bottled beverages (TOP4 companies each have around 30-70 billion RMB vs. 700-1000 billion RMB for bottled beverages). Despite the disruption caused by the takeaway industry, the trend towards increased industry concentration and the dominance of stronger players remains unchanged Competition in the sector has remained intense for 23 years, but with the normalization of industry growth rates and the strengthening of internal capabilities of top companies, the industry has gradually transitioned from a period of diverse growth and decline to a more stable concentration of market share among top players. The research firm expects that industry concentration will continue to increase in the future (CR4 in the ready-to-drink beverage sector is currently around 34% compared to 50-80% in overseas markets). In 2025, industry stores generally experience "increased revenue without increased profits" due to the takeaway industry wars. In 2026, the sector is expected to focus on refined operations with minimal risks of large-scale price wars. The firm is optimistic about certain top brands achieving better performance than the industry average in existing stores, as well as realizing the opening of new stores with certainty, while smaller brands and individual stores may face continued trends of closure due to weaker overall operational capabilities. Regarding competition among top brands, the research firm believes that some areas may face certain competitive pressures, but differences in product and brand positioning, location selection, and types still offer certain attributes of differentiation, making competition intensity manageable in the short to medium term. Risk The slowdown in takeaway orders leading to lower than expected growth in existing stores, increased competition, and excessive reliance on takeout services squeezing profit margins.