Beverages, as the category with the largest market capacity and the most frequent and rigid demand in FMCG, have always been the first choice for entrepreneurs in the industry. As the saying goes, 'A big pond raises big fish.' Although the capacity is large and the industry has maintained steady growth as a long-lasting sector, it is not easy for entrepreneurs to truly make a name for themselves and stir up some waves. Regarding beverage entrepreneurship, it can be roughly divided into two types: flashy or profitable. The first type excels in product user insights and emotional appeal, but unfortunately, they often receive praise without sales. People may like it, find it attractive, but they don't buy. The second type focuses on regional or channel-specific optimization, with less innovation in product and packaging, but better profit incentives for channels compared to giants like Cola and Nongfu Spring. Frankly, these brands are doing well now, but they often sell well without being praised, lacking breakthroughs or innovation in product and brand, making it difficult to go far in the future. Let's get back to the point and delve into beverage entrepreneurship. Recently, I had an in-depth exchange with the two founders of Yuaneng Sports Drink, which gave me a deeper understanding of beverage entrepreneurship. To summarize, the most fitting phrase would be: Dream of a hundred billion, but advance one pawn at a time. Yuaneng's entrepreneurship, as reflected in the article title, started with 100 sports venues, 100 refrigerators, and 100 scene ads. At its inception, Yuaneng was noticed by Matrix Partners China and received nearly 10 million yuan in investment. Founder Hu Hao has 10 years of offline operational experience, having served as the head of JDB's South China market. In 2019, he joined Alibaba to support O2O digital ecosystem construction. He has both traditional practical experience and internet thinking. Sales partner Zhang Huanwei, also a former JDB offline market operator, helped a new alcoholic beverage brand with its offline layout in 2021, achieving a miracle leap from zero to over 10 million yuan in monthly revenue for two consecutive months in a single central China city within just 4 months. He also developed a methodology for new alcoholic beverage brands' offline layout. The following are insights and summaries from the exchange with these two founders, hoping to inspire and provoke thought for relevant practitioners, whether on industry opportunity insights or offline operational logic. ****Finding Opportunities in a Super Red Ocean Market Beverages are a super red ocean market with numerous subcategories. How to discover demand opportunities in such a market? Hu Hao has his own analytical logic and thinking framework. One horizontal and one vertical: viewing category opportunities in competition. 1. The horizontal axis is the category: bottled water, tea drinks, carbonated drinks, juices, functional/sports drinks, coffee, etc. 2. The vertical axis is the brand: Cola, Pepsi, Nongfu, Wahaha, Uni-President, Master Kong, Genki Forest, Heytea, etc. Bottled water has a market capacity of 210 billion yuan, tea around 150 billion, carbonated drinks over 90 billion, juice 80 billion, and functional/sports drinks around 90 billion. Entrepreneurship starts with a dream; if a track doesn't have a capacity of tens of billions, no matter how hard you try, you can't reach a scale of tens of billions. In Hu Hao's view, if you start a business, you must have a hundred-billion dream, otherwise, don't do it. Around the horizontal and vertical axes, first look at the bottled water sector: the existing market is huge and growth is strong. Compared to mature markets like Europe, the US, and Japan, China's bottled water share in overall beverages will continue to grow, especially the penetration of urban household water, which is a key growth point for the bottled water market in the next decade. Frankly, this is a very good category track, but the core fatal point is that there is no handle for the entrepreneurial team. To put it bluntly, it's hard to differentiate and the entry barrier is high. The differentiation here refers to: Water itself is colorless and tasteless, making it hard for users to perceive differences in content quickly. Brand value extraction not based on product differentiation is like a tree without roots, hard to form deep recognition in users' minds. Although it's a good track, after in-depth research, Hu Hao chose to temporarily give up in the early stage of entrepreneurship. The next category is the tea track. From the price distribution, tea at 3-4 yuan, such as black and green tea, is basically controlled by Master Kong and Uni-President; tea at 4, 5, 6 yuan, represented by Xiaoming Tongxue, Chaπ, Suntory, and Oriental Leaf, is where mainstream brands are positioned. Of course, besides these traditional giants, there are new entrants like Heytea. In first, second, and third-tier cities, young consumers have high brand awareness of Heytea, giving it a clear late-mover advantage. When it comes to starting a tea beverage business, Hu Hao joked, 'The tea beverage track is too strong, whether it's giants or new entrants; I dare not do it!' The third category, carbonated drinks, has Cola and Pepsi at the front and Genki Forest at the back. Skip it; no need to think about it. The fourth category, juice, if you look closely at the data over the past 10 years, it has been declining, with only one structural change: NFC juice. NFC juice requires high raw material and supply chain standards, and Nongfu Spring basically controls the source, so it's not feasible. Finally, looking at functional/sports drinks, energy drinks represented by Red Bull have been cultivated and educated for 20 years in specific scenarios requiring alertness. Consumers are deeply ingrained in drinking beverages with the same taste, flavor, and even visual color as Red Bull. Currently, if you want to innovate in content, competing with Red Bull, Dongpeng, and Lehu through different tastes, flavors, or packaging designs is almost impossible to become a category leader within 5-10 years. Looking at sports drinks, they have seen double-digit growth over the past 10 years, with some provinces even seeing over 20% growth after the pandemic. At the same time, there hasn't been much movement in the content of sports drinks in recent years. From a market capacity perspective, with a volume of 10-20 billion yuan and annual growth of 10%-20%, it can be basically judged that it should reach around 50 billion in 5-10 years. Hu Hao added, 'That was from an external industry opportunity perspective. Combined with internal capability accumulation, having served Wanglaoji in the past, we mastered a category playbook with clear functional benefits, typical consumption scenarios, and mature market tactics. Compared to sports drinks, it fits the category playbook logic.' Delving further into the content of sports drinks and benchmarking against foreign sports drink markets, Hu Hao and his team finally confirmed the sports drink track and established the core product differentiation: replacing synthetic ingredients in the previous generation of sports drinks with natural nutrients like fruits and plants. Leveraging this core difference in product content, Yuaneng has refined its brand spirit: encouraging people to exercise more in natural environments, explore the unknown, and challenge themselves. Yuaneng will become the definer of natural, healthy sports drinks in China! ****Focusing on Two Cities and Putting Down Roots After having the 1.0 product, Hu Hao didn't rush to recruit distributors. On one hand, he quickly upgraded to the 2.0 product (launching in May), and on the other, he firmly chose two base cities: Shenzhen and Changsha. In his plan, these two cities would serve as 'red bases' to establish model markets, thereby accumulating a complete method for sports drinks from 0 to 1 and building a core iron army team for future rapid national expansion. Why Shenzhen and Changsha? Sales partner Zhang Huanwei explained that Shenzhen can be considered the city with the highest beverage sales in the country. In the early years, Wanglaoji alone could achieve annual sales exceeding 1 billion yuan at its peak in Shenzhen; additionally, Shenzhen was the fastest city for Red Bull to break 10 million cases. With over 10 million young people and its southern location, the beverage sales cycle is long enough. A super first-tier city with super large demand capacity gives us more room for imagination. Changsha can be considered an emerging second-tier city with an internet-famous city label. The urban population has just exceeded 10 million. If we do well in Changsha, we can replicate the experience in future expansion to third, fourth, and fifth-tier cities. That's the reason for choosing base cities. With base cities, how do we proceed? How do we fight? What kind of methodology do we need to form? Zhang Huanwei told New Distribution, 'With base markets, the first priority is building the frontline team. In market competition, we need to cultivate team culture, especially the belief in winning battles, which is the most important factor for success when expanding to other cities in the future.' Besides polishing a team that can win battles in the base markets, we also determine distributor selection criteria, cooperation requirements, and support policies based on base market operational experience. With distributor selection criteria, we further define terminal attack standards, such as refrigerator placement, 'One Yuan Enjoy' promotions, and empty box recycling. We will test and iterate these tactics in these two markets repeatedly to judge their effectiveness. Ultimately, we ensure that in future expansion to other markets, we don't take detours or increase trial-and-error costs, achieving 'plan before acting.' As of now, Yuaneng has entered dozens of sports venues in Shenzhen and plans to enter 500 sports venues in the next month. Additionally, Yuaneng has reached a cooperation intention with Shenzhen Foxconn factory and will enter three factories in Shenzhen and Huizhou within the next two weeks. In Changsha, it has already covered 200 outlets, mainly in campuses and factories. Next month, it plans to cover 1,500-2,000 outlets. As the beverage peak season approaches, Yuaneng will accelerate distribution, display, and freezing operations in core channels in both cities. At the same time, it will focus on 100 sports venues, place 100 refrigerators, and run 100 large and medium-sized ads, aiming to build user awareness and drive sales based on core scenarios. During the exchange, Hu Hao also shared a small story: the 100 refrigerators to be placed in the market are supported by the Shenzhen distributor, which is a great encouragement to the team. According to Hu Hao, 'In 2022, besides continuous R&D on the product side and exploring new possibilities, we won't do anything else. We'll focus solely on Shenzhen and Changsha, advancing one pawn at a time, and grind to the end.' After completing the 0-to-1 battle in 2022, Yuaneng will comprehensively review the year's gains and losses and methods, applying them to next year's and the year after's business expansion. Summary: The above are the two core topics from the exchange with the two founders. These two topics are, in my opinion, the most important considerations for current innovative consumer brands: how to think about direction and how to implement practice. The conclusion is: Before starting, open your mouth wide; after starting, take small steps. I hope the insights on industry track analysis and offline market operational practice from the two founders of Yuaneng Sports Drink can inspire and provide reference for more friends. Are you 'watching' me?