Based on the latest market data, the downward trend of Suntory’s Asia-Pacific market revenue is very clear, and Japanese FMCG companies’ China strategies are facing systematic challenges. The following is an in-depth analysis:
Suntory’s Asia-Pacific Market Performance Under Pressure
According to Suntory’s Q3 2025 financial report data, the company’s revenue in the first three quarters reached 1.2781 trillion yen, but operating profit was only 126.5 billion yen, a year-on-year decrease of 9.2%; the profit in Q3 alone was 91.7 billion yen, a year-on-year decline of 9.9%[1]. More notably, in regional market performance, both Suntory’s Asia-Pacific region and Japanese domestic market showed double-digit profit decline trends.
The collapse in the unsweetened tea market is particularly fatal. Data shows that in 2024, Suntory’s market share in the unsweetened tea market plummeted from 21.12% to 12.04%, while the average market share of Nongfu Spring’s “Oriental Leaf” exceeded 70%, and Suntory’s was only 8.7%[1]. As of June 2025, Nongfu Spring’s market share increased by 10.94 percentage points year-on-year to 79.36%, while Suntory’s decreased by 6.96 percentage points year-on-year, and its market position is facing severe challenges[1].
Analysis of the Root Causes of Strategic Dilemmas
Channel Encirclement Dilemma
is the primary problem facing Suntory. Suntory has long relied on Japanese convenience store channels such as 7-Eleven, Lawson, and FamilyMart, forming a layout centered on first- and second-tier cities[1]. However, the current Chinese unsweetened tea market has entered the stock competition stage, and this channel shortcoming is becoming an unavoidable weakness. Local brands have established dense sales networks in third- and fourth-tier cities and township markets relying on their strong sinking channel capabilities, while Suntory’s channel penetration is obviously insufficient.
Slowing Market Growth
intensifies competition. According to Maswin brand data, during the peak beverage sales season from April to September 2025, the year-on-year growth rate of unsweetened ready-to-drink tea sales was far lower than the same period last year[1]. From Q1 2023 to Q4 2024, the year-on-year growth rate of the share of unsweetened ready-to-drink tea in the beverage market has fallen from a high of over 127% per quarter to 8.09% in Q4 2024[1]. The fading of industry dividends means that stock competition is more brutal, and the advantages of leaders will be further amplified.
Brand Perception Misalignment
is also worthy of attention. Although 84% of Chinese consumers mistakenly believe that Suntory is a “domestic brand”, this cognitive dividend is fading. Against the background of rising consumer nationalism, the “foreign identity” of Japanese brands may turn from an advantage to a burden, especially in contrast to local brands’ continuous national tide marketing.
Adjustment Directions for Japanese FMCG Companies’ China Strategies
First, implement a deep channel sinking strategy.
Suntory must break its path dependence on Japanese convenience stores and establish a channel system covering all levels of the Chinese market. Specifically, it can achieve penetration from first- and second-tier cities to third- and fourth-tier cities and county-level markets by cooperating with local distributors, acquiring regional channel providers, building or cooperating to establish sinking channel networks, etc. Refer to Nongfu Spring’s channel construction experience to establish a “capillary” terminal coverage capability.
Second, promote localized product innovation.
Suntory has launched the “Huanfang” series to enter the Chinese health preservation track[1], and this direction is worthy of deepening. In product research and development, it should be closer to Chinese consumers’ taste preferences and health needs, and develop new categories with Chinese characteristics. At the same time, the pricing strategy needs to be more flexible, formulating differentiated price systems according to different channels and regions to enhance product cost-performance competitiveness.
Third, build a localized supply chain layout.
By establishing production bases and R&D centers in China, reduce logistics costs, shorten product launch cycles, and avoid potential trade policy risks. A localized supply chain can also enhance the brand’s “Chinese attributes” and partially offset consumers’ national emotional resistance.
Fourth, explore strategic cooperation and mergers and acquisitions.
In a fiercely competitive market environment, the efficiency of independent expansion may be limited. Through strategic investment or mergers and acquisitions of Chinese local FMCG enterprises, channel, brand and market resources can be quickly obtained. In January 2025, Suntory established a special non-alcoholic department to integrate non-alcoholic businesses[1], indicating that it is undergoing organizational structure adjustments, and more aggressive strategic actions can be considered in the future.
Fifth, strengthen brand narrative and consumer connection.
In brand communication, Japanese brands should tell “quality stories” rather than simply “Made in Japan”, emphasizing product quality, process standards and historical heritage, and establishing emotional connections with Chinese consumers. At the same time, enhance consumer stickiness and brand loyalty through digital marketing, private domain operation, etc.
Strategic Implementation Suggestions
The strategic adjustment of Japanese FMCG companies in China needs to follow the rhythm of “short-term hemostasis, medium-term transformation, and long-term layout”. In the short term, focus on channel expansion and product promotion to curb the downward trend of market share; in the medium term, reshape competitive advantages through supply chain localization and product innovation; in the long term, establish real localized operation capabilities in the Chinese market, transforming the Chinese business from a “foreign brand” to a “local enterprise”.
The time window left for Suntory and other Japanese FMCG companies to adjust in the Chinese market is narrowing. When local brands build competitive barriers in various segments, Japanese brands need not only product innovation but also systematic reshaping from channel penetration to brand communication.
References
[1] 36Kr - “Profit of ‘Domestic Brand’ Misrecognized by 84% of Chinese Plummets; Chinese Halo of Japanese Beverage Giant is Fading” (https://m.36kr.com/p/3613383587508741)
