After iced tea, now iced coffee. Yuanqi Forest wants to turn coffee into a "water substitute" too?

Ask AI · What is the market acceptance of coffee as a daily water substitute?

Author: Hannah

Source: Beverage Marketing (ID: ypyx999)

Cover image source: Nongfu Spring flagship store

Last month, Beverage Marketing published an article about the ready-to-drink coffee market. In the article, it mentioned a phenomenon—large bottles—or becoming the key breakthrough point for the ready-to-drink coffee segment.

What’s surprising is that when the article was being written, Nongfu Spring quietly launched a new product called “Iced Coffee.” It comes in two flavors: bursting-juice iced orange and bursting-juice grape. It is low sugar and 0 fat. According to reports, the new product has a 900ml spec. It uses selected Southeast Asian imported coffee beans and the -196℃ liquid nitrogen freshness-locking cold-press technology. It is designed to deliver a tangy-sweet, refreshing taste with abundant fruit aroma.

This image is possibly AI-generated

At present, the product has been launched on Tmall and JD.com. The price is about 4.74 yuan per bottle. As of April 1, 2026, the product ranks first on Tmall’s “Coffee Beverage New Products Ranking,” and it has already “defended the top spot for 6 consecutive days.”

This product was previously previewed at Nongfu Spring’s 2025 distributor conference. To be serious, it is actually a branch under Nongfu Spring’s iced tea line. Previously, it also mentioned products such as Iced Energy and Iced Fresh Lemon Water, and after that, it should roll out gradually.

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Copying the successful path of iced tea?

It seems that the appearance of “iced coffee” is actually meant to carry forward the previous heat of “iced tea.”

If so, let’s first look at the underlying logic behind iced tea going viral.

Indeed, the iced tea line has been one of Nongfu Spring’s best-performing breakout cases in recent years.

When iced tea was just launched in 2023, it sold 200 million yuan. In 2024, it surged to 1 billion yuan directly, with a growth rate as high as 500%. At a glance from the data, in the period from July 2024 to May 2025, in the sugar-sweetened tea market, Nongfu Spring’s iced tea gained a 150% increase in market share.

And its breakout formula is also very clear. First, it occupies the lemon black tea segment—a best-selling category for many years—requiring little additional market education. It simply follows the trend by launching an iced tea product, effortlessly standing on the shoulders of a giant. Leveraging the category’s existing market heat, it quickly attracts its target customer group and opens up sales channels for the product.

Second, it made a big move to reduce sugar. As a pioneer in zero-sugar beverages, no one understands young consumers’ attention to sugar and health more than Nongfu Spring. Therefore, while ensuring the iced tea’s taste, it reduces the product’s sugar content. It both satisfies consumers’ demand for delicious drinks and aligns with their health considerations—achieving a balance between the two.

Finally—and this is the most critical point—it uses a pricing strategy to downgrade the suggested retail price, helping it successfully capture market share.

Don’t be misled by how every major brand is now pushing 1L large-capacity products. But in 2023, the concept of “low-income beverages” had only just emerged for a short time. Iced tea quickly jumped on the 900ml large-capacity trend, with a suggested retail price of just 6 yuan. This highly cost-effective pricing lets consumers get more product for a lower price, strongly matching today’s consumers’ desire for value.

So whether it’s having drinks at family gatherings or using them daily at the office or on the go, the large-capacity yet affordable Nongfu Spring iced tea has become a more attractive choice.

Maybe it was iced tea’s rise that made Nongfu Spring see its ability to generate cash. That’s why iced coffee appeared. We can see that this iced coffee continues the iced-tea product logic in multiple aspects.

The most obvious is packaging. The bottle of iced coffee uses a visual style similar to iced tea, while the bottle shape adopts the “short-and-stubby” type similar to the larger-spec iced tea. The pricing also continues the prior “high value-for-money” style…

But if that’s the case, can it sustain past glory?

From the perspective of Beverage Marketing, that may be a bit difficult.

2

Iced tea vs. iced coffee

Even if the route looks similar, fundamentally, iced tea and iced coffee actually belong to two completely different categories.

Iced tea is a tea beverage. In China’s beverage scene, the position of tea beverages is self-evident. After dominating for decades, its flair remains undiminished. Whether it’s the lemon black tea that came first or the green tea that was introduced later, they all have deep “historical roots” in the Chinese market. This gives new products within the same category broader market space.

What about ready-to-drink coffee? Coffee itself is an imported product. Chinese consumers, in general, don’t have historical genetic roots of drinking coffee. In recent years, the main reason coffee sales have surged is the growth in consumers’ demand for staying alert and reducing swelling under today’s era background. But the overall coffee market is clearly not comparable to the market size of tea beverages.

If we further break it down to the ready-to-drink coffee market, the circle has to keep shrinking. This is because although coffee sales have continued to grow in recent years and have cultivated a certain consumption habit, most of the benefits have been taken by on-site chain coffee brands led by Luckin and Kudi. Compared with that, the benefits that ready-to-drink coffee can capture are only a small fraction, and to some extent, due to the extreme prosperity of on-site coffee, it has even led to ready-to-drink coffee’s quiet decline.

This is also why, although major brands have frequently launched ready-to-drink coffee products in recent years, the segment has never really “blown up.”

At the same time, taste is also a big problem. One of coffee’s biggest characteristics is that it’s bitter—and humans naturally have an instinctive aversion to bitterness.

Although Nongfu Spring’s iced coffee attempts to neutralize the bitterness by adding fruit flavors like bursting-juice iced orange and bursting-juice grape, trying to create a “tangy-sweet, refreshing, and bursting with fruit aroma” taste, coffee bitterness in essence is still difficult to completely mask.

For consumers accustomed to the clean, refreshing taste of traditional tea beverages, the acceptance of a drink with coffee bitterness may be limited.

In addition, the ready-to-drink coffee market also faces a problem of taste homogenization. Many brands are trying to improve taste by adding elements like fruit and milk, which makes it hard for consumers to form unique memory points when choosing. This also increases the difficulty for Nongfu Spring iced coffee to break through in the market.

But based on information observed in beverage marketing, Nongfu Spring’s concept for iced coffee is not limited to “coffee” alone—it is more inclined to build a “water substitute” that can meet the needs for staying alert and reducing swelling.

According to what the editor learned, the biggest difference between this iced coffee and the large-bottle coffee mentioned in the editor’s article last month lies in its “caffeine” content. Previously, most large-bottle ready-to-drink coffee products focused on “sugar-free black coffee.” They followed the “one bottle of coffee, multiple drinks” route, so caffeine content generally exceeded 200mg/kg. But clearly, this approach is not very suitable for consumers who are sensitive to caffeine.

Image source: Xiaohongshu @baobaobao

As for Nongfu Spring’s iced coffee, each bottle has about 90mg of caffeine, which can be “green-lit” and is suitable for most consumers. There is basically no risk of insomnia, and it effectively expands the consumer base manually.

With this positioning, it is no longer restricted to the functional attributes of traditional coffee. Instead, it penetrates everyday drinking scenarios. It aims to let consumers, when they are thirsty, besides choosing mineral water and tea beverages, also consider this iced coffee as an alternative option that combines good taste with a mild alertness effect.

3

Written at the end

Of course, from the perspective of consumption scenarios, a “water substitute” positioning means it can fit into more diverse everyday settings.

However, achieving this shift is not easy. Water and tea beverages are deeply ingrained in consumers’ minds as “quenching thirst.” Coffee’s label as bitter and the strong functional attribute of “staying alert” may lead some consumers to prefer excluding iced coffee when they simply want to quench thirst.

In addition, there are already many water-drink products on the market that emphasize “light functions.” Nongfu Spring’s iced coffee needs to clearly convey its differentiated advantages—“tangy-sweet fruit aroma + low caffeine + large capacity”—in competition with these products. Only then may it truly secure a place for itself in the “water substitute” segment.