Click to read the original text for details Recently, Yuanqi Forest launched a new product: cola-flavored sparkling soda, which has stirred up a small wave of discussion in the beverage industry. Opinions are divided: some say it's a direct challenge to the "two colas" (Coca-Cola and Pepsi), others believe it could change the market landscape of the "sugar-free" cola segment, while some are pessimistic, calling it just another round of brand communication leveraging the inherent buzz of Yuanqi's new product launches. Personally, first, cola-flavored soda is just a new member of Yuanqi Forest's sparkling soda line, belonging to the sparkling soda product series. Moreover, after the white peach flavor, new members of this category seem to have not brought consumers any breakthrough surprises. Secondly, in terms of the product's inherent attributes, this product gives consumers the feeling of combining "acidic cola" with "alkaline soda" (though phosphoric acid has been removed from the ingredient list). Whether this cross-over taste can be accepted by consumers still depends on the company's next promotional efforts and the test of time. Finally, regarding channels, the distribution rate of Yuanqi series products still lags far behind leading beverage companies like Coca-Cola and Nongfu Spring. The cola-flavored soda has a long way to go to achieve significant sales volume. Today, we will discuss this new product and its competitive elements against cola from the three dimensions of product, channel, and consumer. 01 Comparison of Product Competitiveness Generally, there are three dimensions to measure a product's competitiveness: overall cost leadership, differentiation, and focus. 1. Overall Cost Leadership: There are two competitive dimensions here. First, if the competitor is positioned as a sparkling soda in the 5-yuan price band, Yuanqi Forest's national strategic layout of "super city clusters + self-built factories" is basically complete, breaking through upstream and downstream supply chain bottlenecks. With five major factories and a total production capacity of 5 billion bottles, covering approximately 700 million people in China, if they can achieve excellence in all aspects at this level, gaining a competitive advantage in overall cost leadership should be achievable quickly. Second, if the competitor is positioned as Coca-Cola at 3 yuan, then the competitive advantage of overall cost leadership is almost impossible to achieve. Coca-Cola's operational efficiency is nearly top-tier in the FMCG industry, and its scale is also top-tier, making it very difficult to surpass. 2. Product Differentiation: Compared with traditional cola beverages, Yuanqi's cola-flavored sparkling water achieves quality upgrades in three main aspects: First, Yuanqi Forest decided to remove phosphoric acid from the traditional cola formula. Studies show that excessive intake of phosphate can harm bones and cardiovascular health. Consuming 700mg of phosphorus daily can affect bone health, and 1.8g of phosphate daily can lead to tooth decay. Phosphate additives commonly used in beverages are more easily absorbed by the body than those naturally present in food. Second, Yuanqi Forest refuses to add chemical preservatives commonly used in traditional colas, such as sodium benzoate and potassium sorbate. Finally, Yuanqi Forest strives to use more natural ingredients to improve taste and health. For example, it uses erythritol, a natural sweetener extracted from crops like corn, to replace aspartame, an artificial sweetener commonly used in traditional colas, and uses natural citric acid instead of the commonly used sodium citrate. In summary, Yuanqi Forest's cola-flavored sparkling soda has already labeled itself as: natural, healthy, and zero burden. This differentiation concept is not new in essence; Nongfu Spring proposed it long ago, but only for bottled water. However, for the cola category, it is a new concept and an innovation in category differentiation. 3. Product Focus: The possibility of focusing resources on this single product is low. When asked whether there are plans for large-scale distribution and the probability of product success, Yuanqi responded: "The product you see now is still a concept version, with no large-scale distribution plan, because we believe there is still room for optimization, so we are continuously iterating on this product. We want to take it slow, collect user feedback, improve little by little, and gain everyone's approval. We are making this product with the mindset of 'fail, try again; fail, try again; fail, try again.'" 02 Comparison of Channel Competitiveness When it comes to channel strength, Yuanqi Forest's expansion speed is fast compared to similar beverage companies, but in terms of building channel competitiveness, it still lags far behind Coca-Cola. 1. Channel Coverage Model: Coca-Cola's channel coverage model has undergone countless iterations, evolving from regional intensive cultivation to channel intensive cultivation, and then to the direct control terminal model. In simple terms, it means the company directly intervenes and controls terminal sales and management, thereby omitting unnecessary intermediate distribution links. By strengthening control over terminals and enhancing terminal management, it aims to maximize sales. In contrast, Yuanqi Forest's channel coverage has not yet formed its own unique model. Despite high product penetration, it is mostly driven by brand, product, and word-of-mouth, and its ability to proactively reach all target consumers through channels is still weak. 2. Channel Profit: In terms of channel profit, the cola-flavored sparkling soda can completely outperform Coca-Cola. In fact, many channel distributors define Coca-Cola not by the amount of profit but as a door-opener for retail outlets or as a representation of the distributor's own brand strength. For retail outlets, Coca-Cola is almost synonymous with "quick-cash-moving goods," so Yuanqi and Coca-Cola cannot be compared on the same platform: one demands profit, the other is "forced" to stock. 3. Number of Distribution Outlets: Let's look at two public figures. According to Nongfu Spring's prospectus, as of May 2020, it had 2.43 million terminal retail outlets, of which 1.88 million were in third-tier and below cities, accounting for 77%. Tang Binsen said in an interview that Yuanqi Forest covers 800,000 terminals, 10% of which are convenience stores; that was in mid-November 2021. There are approximately 8 million beverage sales terminals available for coverage nationwide. Coca-Cola covers the most, with over 3 million sales outlets; Nongfu Spring has fewer than 3 million; Yuanqi Forest is still aggressively expanding and has entered around 1 million. This shows that Coca-Cola's number of outlets is more than three times that of Yuanqi Forest. 4. Other Factors: Outlet quality, scenario layout, maintenance frequency, channel interaction, etc., Yuanqi still has significant room for improvement. 03 Comparison of Consumer Competitiveness In terms of consumer competitiveness, Coca-Cola should be the top player in the industry. 1. Consumer Connection: Andy Warhol once said about Coca-Cola: "What's great about this country is that America started the tradition where the richest consumers buy essentially the same thing as the poorest. You can be watching TV and see Coca-Cola, and you know that the President drinks Coca-Cola, Liz Taylor drinks Coca-Cola, and just think, you can drink Coca-Cola, too. A Coke is a Coke." Relying on the world's largest, deepest, and most extensive channel system, Coca-Cola has built its core competitiveness in the FMCG market. It can be bought on every street corner in every city, and even at the base camp of Mount Everest. But now, it is gradually transforming from a brand emphasizing strong channels to a DTC (direct-to-consumer) brand. Over the past two years, Coca-Cola has been continuously exploring and never stopped moving on the path of engaging with young people and seeking innovation. 2. Differentiation and Mindshare Occupation: Let's first understand Yuanqi Forest's positioning: Chinese consumers should have more and freer choices. One day, when consumers stand in front of a convenience store freezer and want to choose a cola-flavored drink, they can have three, four, five, six, seven, or eight options. If they want a foreign brand, they can have it; if they want a domestic brand, they can have it; if they want sugary or sugar-free, they can have it. If they want sugar-free, there are products with different sweeteners to choose from. If they pay more attention to the ingredient list, they can also choose products without sodium benzoate and potassium sorbate. In short, it provides a new option for consumers who love the taste of cola but have new requirements for the ingredient list. One of the costs of this choice is paying an extra 2 yuan per bottle. So, will consumers pay for it? This question is hard to answer. For the younger generation of consumers, they only consider whether the price matches the value. If they identify with Yuanqi's taste experience, they will pay for what they love, which means whether Yuanqi Forest is willing to invest in educating this group of consumers and whether it is willing to let more consumers feel greater "sincerity." Final Thoughts: Whether Yuanqi Forest's cola-flavored sparkling soda has a chance to succeed, we first need to define what "success" means. From the perspective of benchmarking against cola, this product should not have been born; it has no chance. But from the perspective of "a single spark can start a prairie fire," with meticulous polishing and a focus on creating products consumers love, success is just a matter of time. As Yuanqi Forest itself said: "From the beginning, we had no intention of actively participating in any competition. The new product is positioned as just a flavor in Yuanqi Forest's sparkling water series. Our products do not contain sodium benzoate or potassium sorbate, and this product is also the first to try not adding phosphoric acid. Additionally, this product currently has no large-scale distribution plan, so there is no commercial competition." Cover image source | Yuanqi Forest official Weibo -END-