Recipe for success based on traditional and healthy ingredients

Red bean and barley water products from China’s Keyang Beverage Co are displayed at a store in Beijing in June 2021. (Photo provided to China Daily)

Red and green beans have long been used as favored ingredients for snack fillings in East Asia.

Now, a company in Shandong province has found a way to use them as key ingredients for ready-to-drink Chinese-style herbal beverages.

Keyang Beverage Co, a leading supplier of toppings for many food brands in Asia, has seen its revenue soar 150% annually since 2020, driven by strong demand for sugar-free, fat-free and calorie-free beverages from health-conscious Chinese consumers.

In 2020, amid stagnant exports, Keyang founder and CEO Wang Zhonghe decided to develop the company’s own brand. Wang and his team launched beverages such as red bean water, Job’s tears water and green bean water.

The company has launched the first bottled water made from red beans and barley in China, claiming to retain the original flavor of the ingredients without any additives.

“We were among the first to translate this traditional wellness culture into modern, convenient formats,” Wang said at a food and beverage innovation forum in Shanghai last month. “We removed the starch and protein from the grains and water, making the beverages sugar-free, fat-free and calorie-free, while retaining the original taste and color of the ingredients.”

The product has a gemstone-like color and is rich in polyphenols, potassium, iron and other trace elements, Wang said.

The cereal flavored beverage market is booming and many companies are entering this sector.

According to Wang, the strength of the supply chain is one of Keyang’s strengths. As a leading domestic fillings producer, Keyang has been deeply involved in the bakery industry for 30 years. The company extracts raw red beans and mung beans without any additives for beverages and uses the rest in its filling products.

Jason Yu, Managing Director of Kantar Worldpanel China, said: “Categories with strong health credentials, such as ready-to-drink juices, ready-to-drink teas and sports and energy drinks, have seen growth both at home and abroad.

“The consumption of traditional Asian beverages such as herbal tea, barley water and corn silk tea has also seen a notable resurgence in domestic consumption scenarios.”

Yu said the growth rate of the packaged beverage industry is significantly higher than that of other major fast-moving consumer goods sectors.

According to Kantar Worldpanel China, the overall growth of packaged beverages was 10% in 2023. Although growth in the first quarter of 2024 was slower, it still recorded an increase of 8%.

Chinese wellness water, an instant herbal drink, is part of the Chinese philosophy of “wellness.” Common ingredients include red beans, barley, goji berries, red dates, mung beans, chrysanthemum, and barley, ingredients perceived as healthy and having both medicinal and dietary uses.

The latest report released by Qianzhan Industrial Research Institute showed that the market size of China’s wellness water will reach 450 million yuan ($61.9 million) in 2023, with an annual growth rate of over 350%.

More and more brands have entered a market whose compound annual growth rate is expected to exceed 88% in the next five years. The market size is expected to exceed 10 billion yuan by 2028.

According to NielsenIQ, the domestic sugar-free beverage industry generated 24.1 billion yuan in revenue in 2023, a year-on-year increase of 26%.

The “2023 White Paper on China’s Sugar-Free Tea Industry” revealed that online sales of sugar-free tea on Tmall and Taobao increased from 46.8 million yuan in 2018 to 447.3 million yuan in 2022, a growth of nearly 10 times over five years.

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