The beverage industry is entering an era of intense R&D competition, with Genki Forest investing 200 million to establish a research and development pilot plant.

Ask AI · How can Nongfu Spring’s Xianning base reshape the competitive landscape in the beverage market?

After a barbaric growth phase driven by “channels first” and competition for traffic, China’s beverage industry is now standing at a new transformation crossroads. When consumers begin scrutinizing ingredient lists with magnifying glasses, when “0 sugar, 0 calories” changes from a selling point to a standard feature, plain marketing innovation can no longer build a moat.

On March 30, at the Nongfu Spring Creation Camp 2044 event, the Nongfu Spring Xianning Innovation Institute was officially unveiled. Positioned as a one-stop R&D innovation testing base, it was built with a RMB 200 million investment by Nongfu Spring. The brand said that once the project is put into use, it will mark the full implementation of Nongfu Spring’s R&D strategy with a “two-core drive of Beijing + Xianning.” And behind it, a competition for “R&D discourse power” in the beverage industry is quietly getting underway.

From**“marketing in-fighting”**** to****“R&D breakthroughs”**

The logic of competition in the beverage market is changing

China’s soft drinks market has long broken through the trillion-yuan scale. According to Zhongyuan Securities’ research and predictions, the soft drinks market is expected to reach RMB 1.46 trillion by 2026, representing a year-on-year growth of about 8%. However, behind the numbers of growth lie structural dilemmas that are hard to avoid. At a recent China Sugar and Wine Fair, Luo Qi, Chief Operating Officer of NielsenIQ China, pointed out that China’s consumer market is undergoing a switch in growth momentum. Consumers show clear segmentation, and product success requires building a three-in-one value pyramid of “quality—health/convenience—experience” to respond to consumers’ diverse needs.

Meanwhile, emerging niche tracks are rising rapidly. The market size of the medicine-and-food homology sector has already exceeded RMB 370 billion, and the valuation across the full industrial chain is over RMB 2 trillion. From sugar-free tea to functional beverages, from electrolyte water to wellness drinks—behind each niche track is a stringent test of R&D capability.

Against this backdrop, the competitive dimensions in the beverage industry are undergoing profound changes. When leading companies are directing resources toward the R&D end one after another, plain marketing in-fighting is making way for a competition in R&D capability.

On March 30, the Central China Healthy Beverage R&D Center located in Xianning, Hubei, officially began operations. This project, jointly built by Xianning High-tech Industrial Development Co., Ltd. and Nongfu Spring, has a total investment of RMB 200 million, with a Phase I construction area of nearly 20,000 square meters. It is understood that the base has rolled out the only beverage new product public service laboratory nationwide for Nongfu Spring, equipped with more than 200 advanced laboratory instruments and detection equipment such as high-performance liquid chromatography, atomic absorption spectrometry instruments, and more; it can simultaneously accommodate more than 100 R&D personnel to carry out experiments. The base also includes a beverage pilot testing base, where the monthly capacity of the high-speed bottled production lines can reach 500,000 cartons, meeting pilot production needs across all categories and all process types.

Nongfu Spring’s founder Tang Binshen said on site, “One of the challenges we’ve faced over all these years in making beverages is that we’ve always wanted to explore many processes and make many attempts. The Xianning Innovation Institute has been built according to our ideals—according to our future plans—into a laboratory line built to face the future.”

From product innovation to industry enablement

How does R&Dreshape beverage competition？

When Nongfu Spring invests RMB 200 million to lay down its presence in Xianning, the R&D race in the beverage industry has already been fully under way. Judging from the financial report data just released, multiple leading beverage companies are accelerating the building of their product matrices and technical barriers.

Fengshou Mountain Spring’s 2025 financial report shows that, thanks to its diversified product structure, its income sources have diversified. Revenue from packaged drinking water products grew 17.3% year over year. Its tea beverage products recorded revenue of RMB 21.596 billion. Revenue from functional beverages and juice beverages increased by 16.8% and 26.7%, respectively.

Dapeng Beverage, on the other hand, achieved breakthroughs thanks to its “1+6” multi-category strategy. In 2025, Dapeng Special Drink successfully entered the lineup of 15 billion-scale major single product category. “Dapeng Buping Le” achieved revenue of RMB 3.274 billion, up 118.99% year over year, and its revenue share rose to 15.70%.

Uni-President Enterprises China also achieved innovation in its beverages business. In 2025, its tea and milk tea categories generated revenue of RMB 8.802 billion and RMB 6.48 billion, respectively, while “other categories” revenue reached RMB 849 million, up 29.3% year over year, becoming the fastest-growing segment.

Nongfu Spring has also built its own product matrix. It currently has product lines such as sparkling water, iced tea, and Hao Zizi. In this Creation Camp, the new products brought by more than ten product managers at Nongfu Spring include iterative products from established product lines such as sparkling water, Alien electrolyte water, iced tea, and Hao Zizi, as well as new products such as cooling tea, cola beer, prebiotic qi beverages, Shanzha San Junzi, and Dan Zhen coarse grain milk.

From the layouts of these leading companies, it can be seen that the era of a single breakout hit is being replaced by a matrix-based layout of “stabilizing performance with major single products and expanding through innovative products.” This also explains why more and more companies are increasing R&D investment: their ability to explore new categories and the speed at which new products are iterated are becoming important reasons for determining whether enterprises can continue to grow in ongoing stock-based competition.

In the industry’s view, China’s beverage industry is at a key turning point, moving from the “breakout-hit era” toward the “R&D era.” As multiple industry experts said at the China Sugar and Wine Fair, companies should move from “competing on price” to “competing on innovation, competing on quality, and competing on ingredients,” so as to meet the needs of tiered consumption with diversified value.

Written and reported by: Nandu · Bay Finance and Society reporter Wang Jingjuan