by MA Yue

China's bottled beverage and packaged dairy sales fell unexpectedly over the summer, as an aggressive price war among food-delivery platforms pulled consumers toward made-to-order drinks and away from retail shelves.

NielsenIQ data obtained by Jiemian News show beverage sales declined year on year for three consecutive months from July to September, with full-channel sales down 9% in September and offline sales down 10.4%. That marks a sharp reversal for one of China's most stable fast-moving consumer categories, which grew 8% in the 12 months to April 2025.

Production data tell a similar story. Soft-drink output fell 0.17% in July, 6.79% in August and 10.12% in September, according to the National Bureau of Statistics.

The slump overlapped with a wave of steep discounts on delivery platforms such as Meituan, JD Daojia and Taobao Flash, which ramped up subsidies to boost orders and defend market share in an increasingly crowded market.

Promotions ranging from "zero-yuan" milk tea to 3.9-yuan lattes from Cotti Coffee and 0.01-yuan lemon water from Mixue pushed made-to-order drink prices to unprecedented lows, often below or on par with bottled beverages. As a result, consumer price anchors shifted sharply: coffee that once seemed cheap at 9.9 yuan fell to around 5–6.9 yuan, while milk tea dropped from 15–20 yuan to 5–10 yuan, directly overlapping with the retail range for bottled drinks and ambient liquid milk.

Producers have started to feel the pressure. Uni-President China reported a low single-digit decline in beverage revenue in the third quarter, citing competition and price pressure from delivery platforms. Dairy giants Mengniu Dairy and Yili Group said made-to-order milk tea and coffee are eroding packaged liquid-milk consumption, adding pressure to an already slow-growing category.

The price war is also squeezing the chains that rely on delivery. Luckin Coffee said its delivery expenses surged 211% in the third quarter, offsetting operational efficiency gains. Executives said the spike in costs reduced margins and questioned whether such subsidy intensity is sustainable.

Industry analysts expect subsidies to ease, but the broader shift appears structural. Delivery apps offer convenience, customization and constant new product launches — advantages that standardized bottled beverages struggle to match, especially when delivery remains fast and relatively cheap.

Producers are adjusting by strengthening newer retail channels. Mengniu Dairy is expanding customized SKUs for warehouse clubs, snack-discount chains and instant-delivery platforms, while increasing fresh-milk supply to major tea and coffee brands such as Starbucks and Chagee. Beverage companies are also reworking distribution plans to regain visibility in physical stores and tap emerging channels.