Startup Commentary”Why Do Leading Beverage Brands Flock to Discount Stores Despite Selling Only a Few Dollars Cheaper Than Convenience Stores?”

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Positive Reviews: Discount Stores Open Up New Growth Spaces for Beverage Brands and Drive Channel and Product Innovation

In recent years, discount supermarkets and snack stores represented by Haoteimai, Wanchen Group, and Mingming Henmang have risen rapidly. The penetration rate of beverage sales in these stores soared from 20% in 2023 to 40% in 2025, with an annual growth rate of 20% (data from Nielsen IQ). This channel transformation brings not just a simple “price shock” to leading beverage brands but also multiple positive values.

First, discount stores provide an efficient “incremental market” for brands. Traditional beverage sales rely on mature channels such as convenience stores and supermarkets, but the growth of these channels has reached saturation. Discount stores, with their model of “low prices + full – category coverage”, precisely attract price – sensitive consumers. Whether it’s the demand of office workers for near – expiration products for “immediate purchase and consumption” or the preference of the sinking market for cost – effective beverages, discount stores can efficiently meet these needs. For example, Dongfang Shuye is sold at 4.5 yuan in discount stores (compared to 6 yuan in convenience stores), and Yuanqi Forest sparkling water is sold as low as 2.9 yuan (compared to 4.8 yuan in Hema). This directly expands the coverage of consumption scenarios. For brands, this means reaching new consumer groups with lower channel costs without undermining the core customer base (such as convenience store users).

Second, discount stores serve as a “regulator” for brand inventory management. The beverage industry has obvious seasonality and production cycles, and the handling of near – expiration products has always been a pain point. In the traditional distributor system, near – expiration products are often sold at low prices or digested internally, which can easily lead to price chaos. Discount stores, through the direct – purchase model of “factory – general warehouse – store”, shorten the intermediate links. They can not only take in the brand’s overstocked and near – expiration products (such as Lemon Republic’s lime juice being quickly sold even when it’s half a month from expiration) but also reduce consumers’ concerns by clearly marking the expiration dates. This cooperation model not only reduces the brand’s inventory backlog losses but also improves the turnover efficiency of the supply chain.

Third, discount stores force brands to innovate in product and channel strategies. To balance the price conflict between discount channels and traditional channels, leading brands have launched “channel – customized products”. For example, Coca – Cola’s 400ml “slimmed – down version” is exclusively for snack stores (sold at 3.5 yuan), and Want Want and Huanlejia have developed differentiated packaging such as Tetra Paks and cup – shaped packages for discount channels. This strategy meets the “low – price” demand of discount store users and avoids direct price competition with traditional channels (such as convenience stores and supermarkets), protecting the brand’s price system. More importantly, the development of customized products promotes the brand’s in – depth exploration of segmented consumption scenarios. For example, small – sized packages are more suitable for immediate consumption, and Tetra Paks are more suitable for family sharing. These innovations may benefit traditional channels and become a long – term supplement to the product matrix.

Fourth, the rise of discount stores accelerates the “channel flattening” process in the beverage industry. Traditional beverage sales rely on a multi – level distributor system, and the mark – up in intermediate links drives up the terminal price and limits the brand’s direct perception of the market. Discount stores, through the direct – purchase model and in – depth cooperation with brands, reduce 3 – 5 levels of middlemen. Brands can reach consumers more directly and obtain terminal sales data (such as which products are more popular in discount channels and the price sensitivity), thus optimizing production plans and marketing strategies. For example, the sales proportion of China Want Want in snack stores increased from a low – single – digit figure in 2023 to 15% in 2025, which is the result of adjusting the product structure based on channel feedback.

Negative Reviews: Risks of Price System Impact and Channel Imbalance, Brands Need to Beware of “Quenching Thirst with Poison”

Although discount stores bring growth opportunities to beverage brands, their potential negative impacts on the industry ecosystem also deserve attention. In the short term, the low – price strategy of discount stores may damage the long – established price system of brands. In the long term, over – reliance on discount channels may lead to brand value dilution, the collapse of the distributor system, and even industry involution.

First, the “price – slashing” model of discount stores directly impacts the traditional price system, leading to the phenomenon of “price inversion”. As reported in the news, the beverage prices in some snack stores are even lower than the purchase prices of small distributors. For example, a distributor in Jiangsu reported that “consumers compare prices with those in snack stores, and small store owners secretly buy goods from snack stores”. If this phenomenon spreads, it will seriously dampen the enthusiasm of traditional distributors. Distributors may turn to “parallel importing” or abandon agency, ultimately undermining the brand’s channel control. For example, Nongfu Spring’s red – bottled water does not enter discount stores due to strict price control to avoid price chaos. Although Dongfang Shuye is sold in discount stores, it needs to balance the price through promotions in convenience stores (such as 3 bottles for 10 yuan) and low prices on e – commerce platforms (3 – 4 yuan). The long – term existence of such “multi – channel price differences” may weaken consumers’ trust in the brand’s pricing.

Second, the “low – price label” of discount channels may damage the high – end image of brands. Beverage consumption has a “symbolic attribute”. For example, Yuanqi Forest has built a high – end image with its positioning of “0 sugar, 0 calories”. If its sparkling water is sold at a 30% – 50% discount in discount stores for a long time, consumers may perceive a “decline in brand value”. Although brands try to isolate the price impact through customized products (such as small – sized packages), consumers are highly sensitive to “the same product with different prices”. For example, when the 500ml Dongfang Shuye in discount stores is sold at 4.5 yuan while it’s 6 yuan in convenience stores, consumers will inevitably question “why such a big price difference”, which will affect the brand’s premium ability in mainstream channels.

Third, the living space of new brands in discount channels is compressed, which may suppress the innovation vitality of the industry. As reported in the news, snack stores “attract consumers with low – price big brands and then sell new brands with higher gross margins”. However, as the discount channel enters a stable period, the opportunities for new brands (especially white – label brands) have significantly decreased. Tang Shunyue, the co – founder of Youcongqi, pointed out that “new brands could get opportunities during the rapid growth period in the previous two years, but after the adjustment of the product structure this year, white – label brands have almost no chance”. This is because discount stores, in order to maintain the consumer perception of “low – price big brands”, will give priority to customized or near – expiration products of leading brands. For new brands to enter, they need to offer lower prices and higher gross margins, which may lead to a vicious cycle of “trading low prices for sales volume and having difficulty making profits with low gross margins” for new brands with limited funds. In the long run, the industry may lose its innovation drive due to the monopoly of discount channels by leading brands.

Fourth, over – reliance on discount channels may lead to “false growth” of brands. Some brands invest a large amount of resources in discount channels for short – term sales growth and may even reduce product quality (such as using cheaper packaging or raw materials) to meet the low – price demand. For example, if a brand reduces the volume of a 500ml beverage to 400ml to match the 3 – yuan price range in discount stores, although it can maintain profits in the short term, it may leave a negative impression of “brand shrinkage” on consumers in the long term. More importantly, consumers in discount channels have low loyalty. They come for low prices and may leave if they find lower prices in other channels. If brands cannot build user stickiness through product power or service, the so – called “growth” may just be a numerical game of “low – price promotions”.

Advice for Entrepreneurs: Balance Channels and Brands, Find the “Long – Term Value Anchor” in the Transformation

Facing the channel reconstruction storm brought by discount stores, beverage entrepreneurs need to formulate strategies from two dimensions: “short – term response” and “long – term layout” to avoid falling into the “low – price trap” and seize opportunities in the channel transformation.

1. Clarify channel positioning to avoid price system chaos:
   
   Entrepreneurs need to divide the functions of different channels according to product positioning. For example, core products (such as Nongfu Spring’s red – bottled water) should maintain price stability and brand image through traditional channels (convenience stores and supermarkets). Near – expiration products or non – core SKUs can be cleared through discount channels, but the proportion should be strictly controlled (e.g., no more than 20% of total sales) to prevent consumers from associating the brand with low prices. For customized products, ensure obvious differences in packaging, specifications, and functions from products in traditional channels (such as small – sized packages or specific flavors) to prevent consumers from making direct price comparisons.

2. Drive product innovation with data to enhance channel adaptability:
   
   Consumers in discount channels are price – sensitive but have a high demand for “immediate satisfaction” (such as immediate purchase and consumption). Entrepreneurs can develop suitable products based on this characteristic. For example, launch beverages in small – sized (300 – 400ml), portable packaging (Tetra Paks, bottled). This not only meets the low – price positioning of discount channels but also satisfies consumers’ demand for “no stockpiling, immediate consumption”. At the same time, use the sales data from discount channels (such as which flavors and specifications are more popular) to feed back into product development in traditional channels, forming a positive cycle of “channel – product”.

3. Protect the interests of distributors and build an “omni – channel collaboration” system:
   
   Traditional distributors are still an important support for brands. Entrepreneurs need to balance the relationship between discount channels and traditional channels through a “profit distribution mechanism”. For example, provide “channel – exclusive rebates” to distributors (such as additional rewards for meeting sales targets in traditional channels) or cooperate with distributors to develop “joint promotion activities” (such as offline display competitions) to enhance their sense of identity with the brand. In addition, use digital tools (such as distributor management systems) to achieve transparent management of inventory and prices, avoiding “parallel importing” and price inversion.

4. Focus on the core value of the brand to avoid the “low – price dependency syndrome”:
   
   Regardless of channel changes, the core value of the brand (such as health, taste, emotional resonance) is the key to long – term competitiveness. Entrepreneurs need to be wary of over – compressing costs and reducing product quality to cater to discount channels. For example, if Yuanqi Forest reduces its R & D investment in “0 sugar, 0 calories” due to the demand of discount channels, it may lose its differential advantage. Instead, use discount channels to convey the brand’s “inclusiveness” (such as “enjoy healthy beverages at a more affordable price”), binding low prices with brand value rather than simply emphasizing “cheapness”.

5. Pay attention to opportunities for new brands and explore the path of “customization + segmented scenarios”:
   
   Although the threshold for new brands in discount channels has increased, there are still opportunities. For example, develop “scenario – customized products” for discount stores (such as small – bottled drinks for office immediate consumption or large – packaged drinks for family sharing), or launch “limited – edition products” in combination with hot topics (such as season – limited flavors, IP – co – branded products). Meet the needs of discount stores for “attracting traffic + high gross margins” through differentiation. At the same time, new brands can use the traffic in discount channels to test the market acceptance of products and then introduce successful SKUs into traditional channels to achieve “achieving great results with limited resources”.

The rise of discount stores is a microcosm of the channel transformation in the beverage industry, which is essentially driven by consumer demand (the pursuit of cost – effectiveness) and supply – chain efficiency (removing intermediate links). For entrepreneurs, the key is not to “resist” or “blindly embrace” but to understand the underlying logic of channel transformation and find a balance between growth and brand, short – term interests and long – term value. Only in this way can they truly seize opportunities and achieve sustainable development in this channel reconstruction storm.

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