In-Depth Analysis of the FMCG Industry Amid Master Kong's Beverage Business Decline and Food Delivery Disruption

I have now collected sufficient information and present to you a systematic and comprehensive analysis report.

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According to the H1 2025 financial report released by Master Kong Holdings (0322.HK), the company recorded operating revenue

(RMB), a year-on-year decrease of 2.7%, marking its first mid-term revenue decline since 2021 [0][1]. The specific performance is as follows:

Business Segment	Revenue (RMB 100 million)	YoY Change	Proportion
Beverage Business	263.59	-2.6%	65.7%
Instant Noodle Business	134.65	-2.5%	33.6%
Other Businesses	2.68	-16.7%	0.7%

In terms of net profit, the company’s attributable net profit reached

, a year-on-year increase of 20.5%, showing a typical “profit growth without revenue growth” trend [0][2]. This is mainly due to the improvement in gross profit margin achieved through product price hikes and cost optimization—the overall gross profit margin increased by 1.9 percentage points year-on-year to 34.5%, while the gross profit margin of the beverage business rose by 2.5 percentage points year-on-year to 37.7% [3].

As Master Kong’s largest business segment, the decline of the beverage business has attracted particular attention. In H1 2025, the revenue of the beverage business decreased by approximately

, with various sub-categories showing varying degrees of contraction [1][2]:

• Tea Beverages
  : Revenue of 10.67 billion yuan, down 6.3% year-on-year
• Fruit Juices
  : Revenue of 2.956 billion yuan, down 13.0% year-on-year
• Packaged Water
  : Revenue of 2.377 billion yuan, down 6.0% year-on-year
• Carbonated and Other Beverages
  : Revenue of 10.256 billion yuan, up 6.3% year-on-year (the only growing category)

Tea beverages, Master Kong’s traditional strong category (mainly including Ice Black Tea, Green Tea, Jasmine Honey Tea, etc.), saw the most significant decline, reflecting the ongoing structural transformation in the ready-to-drink tea market.

Master Kong is “contracting” its distribution network in terms of channel scale. In H1 2025, the number of the company’s distributors stood at

, a decrease of from the end of 2024; the number of direct retailers was 219,124, a decrease of 1,499 from the end of 2024 [1][2]. This marks consecutive years of decline in the number of distributors—from the end of 2021 to H1 2025, the number of distributors dropped from 80,726 to 63,806, a decrease of 21%.

This change not only reflects the company’s strategy of proactively optimizing inefficient terminals, but also reflects the shrinking trend of traditional channels under the impact of emerging consumption scenarios.

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In 2025, China’s food delivery market witnessed an unprecedented “price war”. From rounds of subsidy battles among the three major platforms JD, Meituan, and Ele.me, to the issuance of large-value coupons such as “RMB 21 off RMB 25” and “0-yuan purchase”, instant retail orders exceeded 120 million on the night of the event, with tea beverage orders accounting for over 60% [4][5].

This price war has dealt a disruptive blow to traditional bottled beverages:

Dimension of Impact	Specific Performance
Consumption Scenario Substitution	Freshly-brewed beverages delivered within 30 minutes have largely replaced offline purchase scenarios for bottled beverages
Superimposed Price Advantage	Food delivery subsidies make RMB 2-5 freshly-brewed beverages more attractive, with a high overlap with the price range of Master Kong’s mid-to-low-end products
Freshness Experience	Freshly-brewed beverages offer customized options such as sweetness, ice level, and ingredients, with far superior freshness in taste compared to standardized bottled products

According to Nielsen data, from July to September 2025, the sales of the entire beverage market declined year-on-year for three consecutive months, with the full-channel growth rate dropping to -9% in September and the offline channel growth rate falling to -10.4%. Nielsen pointed out, “With the support of subsidies from the food delivery war, freshly-brewed beverages have further seized ‘stomach share’” [6].

The scale of China’s new tea beverage market continues to expand. According to iiMedia Research data, the market size reached

in 2024, a year-on-year increase of 6.4% [5]. As of April 2025, the total number of new tea beverage stores nationwide has exceeded [6].

Leading new tea beverage companies delivered strong performance in H1 2025:

Enterprise	Revenue (RMB 100 million)	Net Profit (RMB 100 million)	YoY Growth Rate
Mixue Group	148.75	27.18	Net Profit +20.5%
Bawangchaji	67.25	13.07	Revenue +6.78%
Guming	~60	~10	Net Profit +121.5%
Chabaidao	25	3.33	Net Profit +39.5%

Relying on the dual advantages of “high cost performance + freshly-brewed experience”, these brands are diverting a large share of consumption scenarios from traditional bottled beverages. The proportion of food delivery orders for Mixue Group has increased to

, fully capturing the traffic dividend from platforms [5].

The rise of food delivery platforms is fundamentally changing the channel logic of FMCG. The long-channel model relied on by traditional FMCG enterprises—“manufacturer → distributor → wholesaler → retailer → consumer”—is being overturned by the short-channel model of “platform + instant delivery” [6].

This transformation has multiple impacts on traditional FMCG enterprises:

1. Terminal Interception Fails
   : Consumers purchase freshly-brewed tea when ordering food delivery, instead of making a special trip to convenience stores or supermarkets to buy bottled beverages
2. Ready-to-Drink Demand Is Diverted
   : The core consumption scenario for bottled beverages is “buy and drink immediately”, while food delivery platforms provide beverages alongside meal delivery, meeting demand in one stop
3. Increased Price Sensitivity
   : Subsidies from food delivery platforms have educated consumers about the cost performance of beverages, posing challenges to the pricing of traditional bottled beverages

As industry analysts have pointed out, in the face of “30-minute delivery” food delivery and “customized” new tea beverages, the convenience and cost-performance advantages of traditional FMCG are being redefined [6].

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While traditional sugar-sweetened beverages are under pressure, the sugar-free tea market has shown a counter-trend growth momentum. According to the “2024 China Food and Beverage Industry Outlook” released by Nielsen IQ, ready-to-drink tea has overtaken carbonated beverages to become the beverage category with the highest market share, accounting for

[7]. Among them, the volume of sugar-free tea beverages has doubled, outpacing the overall growth rate of the beverage industry.

However, this growth dividend is mainly captured exclusively by

(Oriental Leaf). According to the brand CT data of Mashangying, the market shares of the top 5 brands in the sugar-free ready-to-drink tea category from Q2 2024 to Q1 2025 are as follows [8][9]:

Rank	Brand/Group	Market Share	Remarks
1	Nongfu Spring (Oriental Leaf)	~75%	Dominant position
2	Suntory	~10%	Steadily in the second tier
3	Master Kong	<5%	Market share declining
4	Guozishule	-	Rapid growth
5	Uni-President	-	Slight increase

It can be seen that Master Kong’s competitiveness in the sugar-free tea track is obviously insufficient, with a huge gap compared to Nongfu Spring. Among the top 20 ready-to-drink tea products by brand share in H1 2025, Oriental Leaf accounts for 7 spots. Although Master Kong has maintained its basic market share relying on its traditional Ice Black Tea series, the share of some individual products has declined [9].

In the face of the sugar-free tea wave, Master Kong’s response strategy has been relatively slow. Although the company launched new sugar-free tea products in 2024, such as sugar-free Jasmine Tea and the high-end tea series “Heirs of Tea”, the brand image of Master Kong is still deeply tied to “classic and affordable” in consumers’ minds [6][10].

Industry analysts point out that the main consumers of the sugar-free tea market are

, who are sensitive to trends and less price-sensitive. However, Master Kong’s brand tone is inconsistent with the consumption characteristics of this group [6]. Emerging brands such as Genki Forest and Guozishule entered the market with the brand image of “disruptors of the traditional market” from the start, making it easier for them to gain recognition from young consumers.

In terms of product innovation, Master Kong’s strategy is more “following” rather than “leading”. In 2025, the company launched new products such as Ice Black Tea “Jelly Tea” (a cross-border fusion of jelly and Ice Black Tea), Cassia Seed and Barley Drink, and Wolfberry and Chrysanthemum Tea, but most of them are for full-category layout and lack a phenomenon-level hit product [6][10].

Starting from Q1 2024, Master Kong raised prices for its 1L bottled Ice Black Tea, Green Tea, Jasmine Honey Tea and other beverages, with terminal prices increasing from RMB 4 to RMB 4.5-5; classic barrel instant noodles also increased from RMB 4.5 to RMB 5 or even more expensive [1][2].

The price hike strategy has produced an obvious double-edged sword effect:

:

• Gross profit margin significantly improved: the gross profit margin of the beverage business increased from 35.2% to 37.7%
• Net profit growth: despite declining revenue, net profit increased by 20.5% year-on-year

:

• Sales further declined: price-sensitive consumers switched to competitors
• Market share loss: supermarket terminals reported that “Uni-President’s drinks next door only cost RMB 4”
• Brand image damaged: the topic “Master Kong raised prices” frequently appeared on social media

According to estimates, although the actual price increase is only RMB 0.5-1, the corresponding 11%-20% increase is sufficient to affect the purchasing behavior of some price-sensitive users, and also provides opportunities for “competitors” [1][2].

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Master Kong’s instant noodle business is also facing severe challenges. In H1 2025, the sales revenue of the instant noodle business decreased by 2.5% year-on-year to

[1][2]. In terms of product structure:

Product Type	Sales Revenue (RMB 100 million)	YoY Change
Cup Noodles	67.71	-1.3%
Premium Bag Noodles	50.92	-7.2%
Mid-Priced Bag Noodles	13.72	+8.0%
Crispy Noodles and Others	2.30	+14.5%

Premium bag noodles (targeting mid-to-high-end consumers) saw the largest decline of 7.2%, while mid-to-low-priced products maintained growth, reflecting consumers’ increasingly strong pursuit of cost performance.

From a long-term perspective, Master Kong’s instant noodle business has continued to decline from

in 2020 to 28.414 billion yuan in 2024, with another year-on-year decline in H1 2025. Its revenue share also dropped from 43.64% in 2020 to 35.2% in 2024 [6].

The competition faced by the instant noodle business comes from multiple dimensions:

1. Food Delivery Substitution Effect
   : According to multiple media reports, for every 1% increase in the size of the food delivery market, instant noodle consumption decreases by 0.053% [6]
2. Impact of Prepared Dishes and Self-Heating Foods
   : From 2023 to 2024, the size of China’s prepared dish market exceeded 500 billion yuan and 600 billion yuan respectively, with a compound annual growth rate of about 20%, and is expected to reach 1.072 trillion yuan in 2026 [6]
3. Rise of New Instant Food Categories
   : Emerging categories such as hot and sour rice noodles, rice vermicelli, and self-heating hot pots are growing rapidly, further eroding the traditional instant noodle market
4. Intensified Peer Competition
   : Uni-President China’s food business revenue in H1 2025 reached 5.38 billion yuan, a year-on-year increase of 8.8%, with double-digit growth in revenue from Qiehuang and a continuous increase in the proportion of high-end products [1]

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As Master Kong’s long-time rival, Uni-President China’s performance in H1 2025 is significantly better than that of Master Kong:

Indicator	Master Kong	Uni-President China
Revenue	40.092 billion yuan (-2.7%)	17.09 billion yuan (+10.6%)
Net Profit	2.271 billion yuan (+20.5%)	1.287 billion yuan (+33.24%)
Beverage Business	-2.6%	Low single-digit decline

Uni-President’s relative advantages mainly come from:

• More agile product innovation
  : premium products such as Qiehuang and Soup Daren continue to grow
• More flexible channel strategy
  : actively embracing instant retail and food delivery channels
• Younger brand positioning
  : more successful marketing targeting young consumer groups [1][2]

In the beverage segment, Nongfu Spring’s tea beverage business has performed outstandingly. In 2024, the revenue from Nongfu Spring’s tea beverage products exceeded that of packaged water for the first time, achieving annual revenue of

, a year-on-year increase of 32.3%, accounting for 39.0% of total revenue [7].

Nongfu Spring’s successful experience includes:

• First-mover advantage of Oriental Leaf
  : early layout in the sugar-free tea track, accumulating deep brand recognition
• Accurate grasp of health trends
  : precisely meeting consumers’ demand for “sugar control and zero burden”
• Continuous product upgrading
  : continuously launching new flavors and new specifications to maintain product freshness [8][9]

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Facing industry transformation, Master Kong is actively exploring in multiple directions:

Innovation Direction	Specific Initiatives
Healthy Transformation	Launched “sugar-free + low-sugar high-fiber” product lines, such as cassia seed and barley drink, wolfberry and chrysanthemum tea and other plant-based herbal beverages
Ready-to-Drink Tea Upgrading	Sugar-free jasmine tea, “Heirs of Tea” high-end series
Flavor Innovation	Ice Black Tea “Jelly Tea” (cross-border fusion of jelly and Ice Black Tea)
Instant Noodle Upgrading	“Tebietei” Fresh Instant Noodles, collaborated with Luo Yonghao for brand promotion

The company is optimizing its channel structure, reducing inefficient terminals, and improving single-store output:

• Contracted the distribution network, optimized the distributor system
• Strengthened cooperation with emerging channels (e-commerce, community group buying, food delivery platforms)
• Improved terminal operation efficiency, exchanging scale for profit [1][2]

Amid revenue pressure, the company achieved profit growth through cost optimization:

• Raw material cost control
• Production efficiency improvement
• Management expense optimization

Although Master Kong has adopted multiple response measures, it still faces severe challenges:

1. Brand aging risk
   : among young consumers, the “cost performance” advantage is fading, and brand appeal is declining
2. Difficulty in turning a large ship
   : the huge organizational system leads to low efficiency in terminal market information feedback
3. Insufficient innovation speed
   : most new products are follow-up in nature, lacking the ability to lead the industry
4. Lagging channel transformation
   : the advantages of traditional channels have become a burden in the era of instant retail

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Master Kong’s case reflects the profound transformation that China’s FMCG industry is undergoing:

:

• Instant retail (food delivery + 30-minute delivery) has become a mainstream consumption scenario
• Traditional channels (convenience stores, supermarkets) continue to see shrinking market share
• Online-offline integration is accelerating, and the O2O model has become the standard

:

• Health orientation: functional demands such as sugar-free, low-sugar, and high-fiber have become mainstream
• Personalization: customized and differentiated products are more favored by young consumers
• High-end orientation: consumers are willing to pay a premium for quality and experience

:

• Intensified cross-border competition: freshly-brewed tea and food delivery platforms divert market share from traditional FMCG
• Rise of emerging brands: brands such as Genki Forest and Guozishule are rapidly seizing market share
• Global competition: Chinese FMCG enterprises are going overseas to seek incremental growth [5]

:

• Revenue will remain under pressure, but profit growth is expected to be maintained through price hikes and cost optimization
• The number of distributors may continue to contract, but single-store output is expected to improve
• The pace of new product launches will accelerate, but the probability of a hit product remains to be seen

:

• If breakthroughs cannot be made in product innovation and channel transformation, market share may continue to decline
• There are still opportunities in the sugar-free tea track, but brand strategy needs to be repositioned
• Going overseas may become a new growth point, but it faces localization challenges

:

• Industry integration will accelerate, and small and medium-sized enterprises will exit the market
• Leading enterprises will reshape the competitive landscape through mergers and acquisitions or strategic cooperation
• Whether Master Kong can maintain its leading position depends on the effectiveness of its transformation

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1. The first decline of Master Kong’s beverage business is a landmark event
   : this is not only the company’s own problem, but also a microcosm of the pressure faced by the entire traditional FMCG industry amid channel transformation.
2. Food delivery disruption is structural
   : the combination of freshly-brewed tea and food delivery platforms is fundamentally changing consumers’ beverage consumption scenarios, and this trend is long-term.
3. The sugar-free tea dividend is not available to everyone
   : Nongfu Spring’s Oriental Leaf accounts for 75% of the market share, and other brands including Master Kong have limited voice in the sugar-free tea track.
4. The price hike strategy is a double-edged sword
   : it can improve gross profit margin in the short term, but may accelerate market share loss in the long term.
5. Brand aging is the biggest hidden danger
   : among young consumers, Master Kong’s “cost performance” label is losing its appeal.

Master Kong’s case provides the following implications for traditional FMCG enterprises:

Implication	Specific Recommendations
Channel Transformation	Actively embrace instant retail, and cannot cling to the advantages of traditional channels
Product Innovation	Increase R&D of healthy and personalized products, and cannot rely solely on follow-up strategies
Brand Youthfulization	Reposition brand connotation and establish emotional connection with young consumers
Organizational Efficiency	Improve the response speed to changes in the terminal market, and avoid “large enterprise disease”

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[0] Master Kong Holdings 2025 Interim Results Announcement - HKEXnews (https://www.hkexnews.hk/listedco/listconews/sehk/2025/0811/2025081100324_c.pdf)

[1] Securities Times - Master Kong’s Sales Decreased by RMB 1.1 Billion, Both Instant Noodles and Beverages Are Declining, Losing Over 3,400 Distributors in Half a Year (https://www.stcn.com/article/detail/3073519.html)

[2] China Times