Sugar-sweetened carbonated beverages are on their way out.

Banzhuo Consumption, Chen Biting

2026 is a pivotal year for the reshaping of China's beverage industry landscape. Sugar-free beverages continue to seize core display positions in supermarket and convenience store coolers. This summer, sugar-sweetened carbonated drinks, which have long dominated the market, are losing their shine.

With the widespread awakening of health awareness across the population and sugar control becoming a consensus among consumers, coupled with the iteration of new-generation consumer preferences and the diversion of channel resources, the decline of the sugar-sweetened carbonated drink market has become inevitable.

Consequently, major beverage giants are shifting their business focus, increasing investments in the healthy beverage track, and attempting to find new growth curves amidst the sugar-free wave.

Sugar-Sweetened Carbonated Drinks: Sales Shrinking

A bottle of cola costing 3 yuan offers 2.5 yuan worth of satisfaction in just the first sip. This instant peak of gratification has been the daily routine for consumers during the summer for many years.

However, since the beginning of this year, this consumer enthusiasm has suddenly faded.

During this summer's peak beverage season, the product display layout in supermarkets and convenience stores has changed drastically—sugar-sweetened carbonated drinks are pushed to the sidelines, replaced by sugar-free beverages.

While reports in some media claiming a 60% plunge in sales of sugar-sweetened carbonated drinks may be slightly exaggerated, the fact that the market is cooling down is undeniable.

Last weekend, our visit to some convenience stores in central Wuhan revealed that even when promotional prices for a certain brand of sugar-sweetened carbonated drinks dropped as low as 5 yuan for two bottles, few people were interested.

The weakness in this category has actually shown signs earlier. Coca-Cola disclosed in its 2025 financial report that its global case volume experienced its first zero-growth in nearly 10 years.

Revenue data from Coca-Cola's two core bottlers in China also signal slowing growth.

China Foods (00506.HK), authorized by Coca-Cola to prepare, package, distribute, and sell Coca-Cola products in 19 provincial-level administrative regions in China, reported revenue from its soda business of 16.373 billion yuan and 16.684 billion yuan for fiscal years 2024 and 2025, respectively, with year-on-year growth rates declining from 2.5% to 1.90%.

Swire Beverages (00019.HK) reported mainland China beverage revenues of 25.010 billion HKD and 25.234 billion HKD in 2024 and 2025, respectively, with year-on-year growth rates dropping from 2.06% to -0.92%, indicating significantly insufficient growth momentum for traditional sugar-sweetened beverages.

Entering 2026, the downturn in the sugar-sweetened carbonated market has further intensified, particularly showing dismal performance in the second quarter, the traditional peak season for beverages.

Data from Mashangying shows that in Q2 2026, sales of the soda category in offline retail channels declined by 12.23% year-on-year, with samples primarily consisting of sugar-sweetened carbonated drinks.

Euromonitor's H1 2026 industry data presents a polarization: overall domestic carbonated beverage sales rose by 4.3% year-on-year, with all incremental volume contributed by sugar-free products, while sugar-sweetened products continued to shrink.

From January to June this year, the proportion of sugar-free carbonated beverages in total carbonated beverage sales reached 41.2%, an increase of over 7 percentage points compared to two years ago.

Terminal sales pressure is gradually transmitting upstream. Data from Xinxiaoxiao's offline survey shows that during this summer's peak season, the inventory turnover cycle for distributors of sugar-sweetened carbonated drinks increased from the usual 30 days to 60-90 days, highlighting prominent issues with inventory backlog across all channels.

The Long-Term Evolution of the De-Sugarization Wave

Sugar-sweetened carbonated drinks did not suddenly face coldness; rather, it is the inevitable result of years of continuous de-sugarization iteration in the beverage market.

When the de-sugarization trend began, leading beverage brands 率先 used industrial sweeteners like aspartame and acesulfame potassium to replace white sugar, launching sugar-free products in an attempt to balance sweet taste with sugar reduction needs.

Coca-Cola launched Zero Coke in the Chinese market as early as 2008; Pepsi followed suit, launching Diet Coke in 2011, marking the beginning of the layout for sugar-free colas by these two carbonated beverage giants.

However, sugar-free products at this stage did not leverage the mainstream market; sugar-sweetened sodas still dominated, and the market structure did not undergo substantial change.

The true turning point for the industry occurred in 2016. The National Health and Family Planning Commission released the "Dietary Guidelines for Chinese Residents," clarifying sugar control standards and recommending that residents consume no more than 50 grams of added sugar per day, ideally controlled within 25 grams, laying the policy foundation for the development of sugar-free beverages.

Genki Forest was established in 2016, precisely entering the sugar-free niche track. Four years later, Genki Forest Sparkling Water successfully broke out, using erythritol to replace white sugar. Not only did it replicate the taste of carbonated soda, but it also promoted the widespread popularization of natural sweetener technology in China, becoming a key watershed in the development of sugar-free beverages.

The expansion of sugar-free categories is not limited to the carbonated track; unsweetened teas like Oriental Leaf have risen rapidly, opening up new growth tracks and continuously diverting consumer groups.

The fundamental shift in consumer group concepts is the most important reason for the shrinkage of the sugar-sweetened soda market.

Nielsen data shows that among the mainstream consumer group aged 18 to 35 in China, over 68% prioritize checking for 0-sugar and low-sugar labels.

Post-80s and post-90s generations, driven by health management needs, actively give up or reduce consumption of sugar-sweetened carbonated products; Post-00s and Gen Z prefer healthy products like unsweetened tea and unsweetened soda from their initial choices.

Category and channel impacts further exacerbate the shrinkage of the sugar-sweetened carbonated market.

On one hand, freshly made tea drinks are sinking rapidly into lower-tier markets, offering flexible sugar options, continuously diverting traffic from bottled beverages.

On the other hand, supermarkets and convenience stores adjust display resources based on product sales velocity, continuously compressing cooler and shelf space for sugar-sweetened carbonated products, yielding prime display areas to faster-moving products, making sales of sugar-sweetened carbonated drinks even harder.

As one declines, another rises, and the scale of sugar-free products remains steadily growing. According to iiMedia data, the domestic sugar-free beverage market size reached 61.56 billion yuan in 2025, and is expected to exceed 81.5 billion yuan by 2028.

Structural Transformation Begins

In the first half of 2026, summer arrived late in many parts of China, and there was abundant rainfall during the plum rain season. The 阶段性 average temperature was lower than in previous years, directly affecting cold drink consumption.

Of course, this is only a temporary impact. More importantly, considering health, against the backdrop of overall tightening consumption, users will prioritize cutting expenditures on high-sugar and sugar-sweetened products.

Facing the long-term trend of 持续 declining demand for sugar-sweetened carbonated drinks, major leading beverage enterprises have clarified their transformation direction: relying on classic soda products to defend their base, while comprehensively restructuring their product matrix, increasing investment in healthy categories such as sugar-free carbonated drinks, electrolyte water, and functional beverages, to hedge against the risk of declining traditional carbonated beverage businesses.

In the first half of 2026, Coca-Cola and Pepsi concentrated on launching multiple innovative healthy products. In Q1, Coca-Cola refreshed its lineup with prebiotic soda, Sprite launched a Sprite + Tea crossover product, and Pure Life brand launched PH9.0 electrolyte soda water, among others. In July, Pepsi followed suit with the launch of prebiotic cola, reshaping the health value of carbonated beverages.

Observing these two beverage giants, their product layout logic is highly unified: by optimizing product structure and expanding diversified functional new products, they precisely match the current mainstream demands for consumption upgrade and healthy sugar control, mining new growth curves amidst the sugar-free industry wave.