Analysis of Channel Shortcomings Exposed by the Decline in Market Share of Suntory Oolong Tea in China

According to the latest market data and industry research reports, the market share of Suntory Oolong Tea in China’s sugar-free tea market dropped sharply from 21.12% in 2024 to 12.04%, and the downward trend continued in 2025 [1]. This decline deeply exposes its multiple shortcomings in channel layout.

Suntory has long been highly dependent on Japanese-style convenience store channels such as 7-11, Lawson, and FamilyMart, forming a layout centered on first- and second-tier cities [1]. This channel exclusivity allowed Japanese brands to benefit during the expansion period, but gradually evolved into a ‘self-binding’ channel trap [2].

When Japanese-style beverages entered the Chinese market, it coincided with the rapid development period of the urban convenience store industry. Relying on the natural connection with Japanese-style convenience stores, Suntory quickly occupied the prime display positions in convenience store refrigerators [2]. However, this ‘convenience store dependency’ made it focus resources on the convenience store system in first-tier cities, ignoring the expansion of other channels, and believing that ‘keeping convenience stores means keeping the market’ [2].

Currently, China’s sugar-free tea market has entered the stock competition stage, and Suntory’s shortcomings in channel sinking are becoming an unavoidable weakness [1]. For instant consumer products like beverages, more than 80% of sales are concentrated in offline channels, among which grocery stores have become the core channel with a 33.8% share [1].

In contrast, Suntory still relies heavily on convenience stores and large supermarkets, failing to effectively sink into the broader low-tier city markets [1]. Its channels are mainly concentrated in first- and second-tier cities, with fewer than 500,000 outlets, while local brand Nongfu Spring has more than 3 million terminal coverage outlets [2].

Local brands such as Nongfu Spring and Dongpeng Special Drink have launched a ‘freezer hegemony’ war, seizing prime display positions through ‘exclusivity agreements’ by providing free smart connected freezers to terminal stores such as mom-and-pop shops, supermarkets, and restaurants [2]. When local brands use the combination of ‘freezer subsidies + channel sinking’ to seize terminals, Japanese brands appear powerless in channel transformation [2].

Suntory lacks the ‘county-township-village’ three-level distribution system built by local brands [2]. Giants like Nongfu Spring have achieved true channel sinking by penetrating third- and fourth-tier cities and rural markets [2]. Even in the East China market where Suntory has an advantage, it faces challenges from emerging local brands such as Guozishule (Fruit Ripe) and Chaxiaokai (Tea Small Open) — these local brands achieved considerable growth in 2024, with Guozishule’s market share increasing by more than 850% year-on-year [1].

Although Suntory has realized the necessity of channel adjustment and redivided its sales regions in 2024, the South China region was further subdivided according to market characteristics, with special sales regions set up in Guangdong, Fujian and other places [1]. However, catching up at the channel level requires time and resource investment, which is exactly the practical constraint Suntory faces in the Chinese market [1].

The standardized channel management model of Japanese brands cannot adapt to the complex channel stratification of the Chinese market at all [2]. Currently, the convenience store channel has changed from a traffic entrance to a growth ceiling, while local brands have long begun to layout the ‘omnichannel’ strategy [2].

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, the continuous decline in the market share of Suntory Oolong Tea essentially reflects a serious mismatch between its channel strategy and the market development stage. At the critical period when China’s sugar-free tea market is shifting from incremental competition to stock competition, the lack of channel breadth and depth has become the core bottleneck restricting Suntory’s development. If it cannot break through the constraints of the ‘convenience store comfort zone’ and build an omnichannel coverage network, its market position may be further marginalized.

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[1] 36Kr - “Profits of ‘Domestic Products’ Misidentified by 84% of Chinese Plummet, the Chinese Halo of Japanese Beverage Giants is Fading” (https://m.36kr.com/p/3613383587508741)

[2] Sina Finance - “Japanese Beverages Trapped in the ‘Comfort Zone’: How Did They Miss the Chinese Beverage Market?” (https://finance.sina.com.cn/jjxw/2025-12-09/doc-inhaeqei1553886.shtml)