Danone offers zero-sugar sparkling H2O

Danone Waters China, a unit of global food and beverage giant Danone, has officially launched its first zero-sugar sparkling water to double down on the rising carbonated soft drink segment, joining the growing number of brands trying to attract health-conscious younger consumers in the country, just in time for summer as temperatures rise nationwide.

The new beverage, Ling Qi, joined the Danone water family after Mizone, a leader in vitamin drinks. This is expected to create a new trend for healthy beverages, whose distribution starts in March. The drink has been available in multiple retail channels, said Danone.

The introduction of the new drink is an answer to the emerging demand from younger consumers who not only enjoy tasty and healthy products but also expect them to be stylish and fun, said industry insiders.

Zhu Danpeng, a Guangzhou-based independent food analyst, gave high hopes for the carbonated beverage sector in the years to come, highlighting the great potential of zero-sugar carbonated drinks.

"For younger consumers with aspirations for healthy and trendy products, Danone's new zero-sugar water has met such demand and is boosted by Mizone's extensive retail channels," said Zhu.

Eduardo Lacerda, vice-president of marketing at Danone Waters China, agreed as he pointed to Ling Qi's unique position that targets Gen Z.

"It is stylish, refreshing, healthy and trendy enough to be outstanding," he said. The newly launched product has two innovative flavors: Lemon & Lime and Orange &Blood Orange.

Lacerda said the company is committed to brand rejuvenation and product innovation.

"By offering consumers the healthy and high-quality products, we strive to better meet the diversified healthy consumption needs of the new generation and fulfill their desire for new ideas and inspirations in drinks," he said.

Leveraging Danone's scientific expertise in the health food industry for years, the product touts the goodness of a zero-sugar product and multiple vitamins.

Data from AC Nielsen show that in the past three years, carbonated soft drinks (CSD) have dominated with a leading market share and rapid growth in the beverage category. By November 2021, the CSD market has grown by 15 percent versus a year earlier. In the meantime, zero-sugar CSD hit the market in 2021 with 85 percent sales growth, it said.

Consultancy firm Mintel Group Ltd's beverage report this year showed the share of flavored water in new nonalcoholic drink launches reached a new high in 2021, while CSD also saw a rebound in new product development in China.

Frequent drinkers of CSD increased from 40 percent in 2020 to 43 percent in 2021. As a result, the number of daily drinkers of CSD also exceeded those of sparkling water in 2021.

Roolee Lu, senior research analyst of Mintel, said given the reduction of sugar in nonalcoholic drinks, low sugar is preferred over normal sugar content for most drink categories except juice.

With increasing attention on healthy diets, consumers are not only cautious about the intake of unhealthy ingredients but also have greater nutritional expectations about nonalcoholic drinks, the report said.

More players have stepped forward in the CSD sector to prepare for sharply higher demand in the summer. Global beverage giant Coca-Cola unveiled its first limited edition product Coca-Cola Starlight in February to connect young consumers closely with trendy and innovative designs and tastes. The new drink combines the Coca-Cola taste with a dash of "something (that) seems from outer space".

This month, the company also launched a new zero-sugar lemon Sprite with mint flavor soda for consumers who want a healthy drink and diverse tastes, the company said.

Coca-Cola also launched a new brand called XIAO YU ZHOU AH! HA! in recent years, aiming to meet the strong demand of young people by offering a zero-sugar formula and snappy packaging.

In the spring, the company launched XIAO YU ZHOU AH! HA! Strawberry white chocolate flavored sparkling water in China.

Coca-Cola's fourth-quarter and full-year fiscal report in 2021 showed its sparkling soft drink segment grew 8 percent for the quarter and 7 percent for the year, resulting in volume running ahead of 2019 levels. Unit case volume grew 11 percent for the quarter, with growth driven by China, India and the Philippines.

"China delivered strong performance in the quarter by capturing a growing trend among consumers of zero-calorie offerings. We doubled our zero-sugar sparkling portfolio in terms of volume compared to the fourth quarter of 2019," said James Quincey, chairman& chief executive officer of The Coca-Cola Co.