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AsianFin -- As health-conscious consumers increasingly reach for sugar-free beverages, China’s sweetener industry is entering a new phase of growth. Once dominated by erythritol, the market is now eyeing allulose as the next potential blockbuster product.
The Healthy China Initiative (2019–2030) has set clear dietary goals: by 2030, the average daily intake of added sugar per person should not exceed 25 grams. With consumers paying closer attention to sugar intake, demand for sugar alternatives has surged. Research shows that 75% of Chinese beverage consumers now choose sugar-free products for health reasons.
Driven by this shift, the market for sugar-free beverages in China topped 40 billion yuan ($5.5 billion) in 2023 and is expected to reach 60 billion yuan ($8.2 billion) by 2025, according to institutional research. China already dominates global supply, accounting for 75% of the world’s sugar substitute production.
Erythritol has been at the center of the sugar-free wave. Known for its safety, zero calories, and stability in food applications, the sweetener gained massive popularity in 2021, thanks to the success of Genki Forest’s sugar-free sparkling water.
The rush in demand led to a rapid capacity build-out. By May 2023, China’s annual erythritol production capacity had soared to 380,000 tons, well beyond global demand. This oversupply triggered a fierce price war, with prices plunging from 40,000 yuan per ton to under 10,000 yuan.
For many producers, the period was painful. Companies such as Sanyuan Bio saw wild swings in their revenue share from erythritol—at one point contributing over 90% of sales. By 2024, however, the market began to stabilize as weaker players cut capacity or shifted to other businesses.
Today, the industry is settling into a more sustainable phase. Prices have modestly rebounded to around 10,000–13,000 yuan per ton, while producers are competing less on sheer capacity and more on efficiency, purity, and downstream applications.
“Blind expansion is over,” said Wang Jianbin, director of the R&D center at Dongxiao Bio, one of China’s leading erythritol producers. “The competition is now about improving efficiency and quality.”
Dongxiao has shortened the fermentation cycle of erythritol by 25% compared to the industry average and increased purity to above 99.5%. The company is also developing value-added products such as erythrulose, a tanning ingredient popular in Europe and the U.S.
Thanks to its diversified applications—in food, beverages, supplements, oral care, and even cosmetics—erythritol is expected to remain a staple in the sugar-free industry. Partnerships with global names including Coca-Cola, Nestlé, Unilever, and BASF further cement its role.
While erythritol stabilizes, industry leaders are betting big on allulose, a rare natural sugar that tastes almost like sucrose but with just 10% of the calories. It also does not raise blood sugar levels, making it particularly attractive for diabetics and consumers managing their weight.
On July 2, 2025, China’s National Health Commission formally approved allulose as a food ingredient, a green light that analysts believe could unleash a new wave of demand.
Major producers are already investing heavily. Baolingbao boosted its annual allulose capacity to 5,000 tons in 2024 and announced a 20,000-ton expansion earlier this year. Sanyuan Biotech is doubling its production to 20,000 tons, while Dongxiao Biotech expects to launch its first allulose products before year-end.
The global market is still small—worth $173 million in 2023—but it has been growing at a rapid 33% compound annual rate since 2019. By 2030, it could reach $545 million, fueled by broader regulatory approvals and rising consumer adoption.
“Allulose used to be prohibitively expensive due to low production efficiency,” Wang noted. “But with technology improving, costs are falling. That said, it remains more costly than erythritol.”
Despite the enthusiasm, challenges remain for allulose. Production costs are higher than for erythritol, and consumer awareness is still limited in China. Manufacturers will need to invest in education, marketing, and distribution to bring the new sweetener into mainstream use.
Moreover, technical barriers such as conversion efficiency in production remain a hurdle. Analysts caution that while allulose could be the “next erythritol,” widespread adoption will depend on whether companies can scale efficiently and bring prices down.
China’s sugar substitute industry has a clear competitive edge thanks to its scale, technology, and policy support. With 75% of global supply already coming from Chinese producers, the country is well-positioned to shape the next chapter of the industry.
The race is no longer just about replacing sugar—it’s about capturing consumer trust in the age of health-focused diets. As erythritol settles into stability and allulose gears up for mass adoption, the sector is expected to see another cycle of innovation, investment, and intense competition.
“Sugar-free is no longer a trend—it’s becoming the default,” said one industry analyst. “The companies that can balance science, cost, and consumer perception will define the future of sweetness.”
