---
title: "Coke Gets Angry Again: A 28-Year Siege"
description: "The production of carbonated drinks is simple: inject carbon dioxide under pressure into sugar water. Interestingly, Coca-Cola and Pepsi, the two giants of global carbonated drinks, are like a bottle of cola—they fizz over if anyone loosens their cap. According to media reports, at the start of 2022, the two cola giants issued a threat: \"This year, we are determined to bring down Genki Forest.\" \"By 2022, there will be no more Genki Forest sparkling water in the market.\" A downstream distributor of Coca-Cola told The FunTalk that they had heard the rumors, but so far, Coca-Cola has not taken any specific targeted actions."
author: "最话团队"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2022-03-26"
categories: "Brand Marketing, Consumer & Categories, Dealer Operations"
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citation: "最话团队. “Coke Gets Angry Again: A 28-Year Siege.” New Distribution, 2022-03-26. https://xinjignxiao.com/en/articles/coke-gets-angry-again-a-28-year-siege-56cadaca/"
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---

# Coke Gets Angry Again: A 28-Year Siege

> The production of carbonated drinks is simple: inject carbon dioxide under pressure into sugar water. Interestingly, Coca-Cola and Pepsi, the two giants of global carbonated drinks, are like a bottle of cola—they fizz over if anyone loosens their cap. According to media reports, at the start of 2022, the two cola giants issued a threat: "This year, we are determined to bring down Genki Forest." "By 2022, there will be no more Genki Forest sparkling water in the market." A downstream distributor of Coca-Cola told The FunTalk that they had heard the rumors, but so far, Coca-Cola has not taken any specific targeted actions.

The production of carbonated drinks is simple: inject carbon dioxide under pressure into sugar water. Interestingly, Coca-Cola and Pepsi, the two giants of global carbonated drinks, are like a bottle of cola—they fizz over if anyone loosens their cap.
According to media reports, at the start of 2022, the two cola giants issued a threat: "This year, we are determined to bring down Genki Forest." "By 2022, there will be no more Genki Forest sparkling water in the market." A downstream distributor of Coca-Cola told The FunTalk that they had indeed heard the rumors, "but so far, Coca-Cola has not taken any specific targeted actions. Recently, there was an internal meeting about launching new products, but no large-scale distribution has been carried out yet." In fact, the hostility of the two cola giants towards Genki Forest has been spreading in the market for some time. Since 2021, there have been reports that the two cola giants have been restricting Genki Forest's production through control of the upstream supply chain. This young brand's long-dormant asset-heavy model has been brought to the forefront, adopting a strategy of "self-built factories + investing in the supply chain" to build its own moat. These methods are certainly heavy and will inevitably test Genki Forest's commercial operating space. A beverage industry distributor told The FunTalk that in response to external changes, Genki Forest has adjusted its policies for distributors this year. In fact, the emotions and decisions of the two cola giants are not difficult to understand. Douglas Daft, former president of Coca-Cola, said, "Coca-Cola is and always will be at the center of local business." Looking at the decades since the two cola giants returned to the mainland market, this statement is essentially their action plan—**Attack to occupy the commercial center; attack to prevent others from occupying that position.**
This is not the first time the two cola giants have taken action against Chinese beverage brands. As early as 1994, this siege had already begun. At that time, although they had returned to the mainland market for over a decade, the two cola giants had not fully opened up the Chinese market. The main reason was that there were already many local soda brands in China. They not only occupied consumers' minds but also controlled sales channels.
Especially the eight major soda factories known as the "Eight Great Soda Factories": Tianjin Shanhaiguan Soda Factory, Shenyang Bawangsi Soda Factory, Wuhan No. 2 Beverage Factory, Beijing Beibingyang Food Factory, Guangzhou Asia Soda Factory, Laoshan Soda Company, Chongqing Tianfu Cola Group, and Shanghai Zhengguanghe Soda Factory. These soda factories all have long histories, with the earliest, Shanghai Zhengguanghe, established in 1864. By 1983, the sales of the eight soda factories accounted for 42% of the national total.
Of course, each of the eight major soda factories, when taken individually, could not match the capabilities of the two cola giants in any aspect. Therefore, under the background of encouraging foreign investment at that time, each opened their doors to joint ventures with the two cola giants, with the intention of exchanging market for technology to strengthen national brands.
Tianfu Cola, which originated in Chengdu, Sichuan, was the first truly domestic cola in China. At its peak, Tianfu Cola had 108 joint factories across the country, with annual sales of over 200,000 tons and profits and taxes exceeding 70 million yuan. On January 18, 1994, Pepsi signed a joint venture agreement with Tianfu Cola and held 60% of the shares. They gained a lot: first, the joint factories spread across the country; second, the nationwide sales channels. In fact, the Chinese side was not without vigilance at the time. The competent authority stipulated in the approval document that Tianfu Cola's production and sales should not be less than 50% of total output.
In the first year, Pepsi complied, but then it began to decrease. By 1996, the production share of Tianfu Cola under the joint venture controlled by Pepsi had fallen to less than 25%, far below the "red line" set in the approval document, and a large number of original Tianfu Cola management personnel were stripped away. After that, the company fell into a state of annual losses. Also in 1994, Coca-Cola acquired the Wuhan No. 2 Factory, and the factory's soda was quickly shelved. After only five or six years, the once-famous No. 2 Factory soda was discontinued. Coca-Cola, leveraging the factory's channels, quickly completed full distribution in the regional market. Similar things happened to Tianjin Shanhaiguan, Shenyang Bawangsi, Beijing Beibingyang, Guangzhou Asia, and Qingdao Laoshan. From then on, seven domestic soda factories fell in a bloodless commercial war, a heavy and tragic chapter in Chinese business history, known as the "Two Colas Drowning the Seven Armies." In that era almost monopolized by the two colas, the only survivor, Shanghai Zhengguanghe, also had a hard time and soon fell into market competition.
Oracle CEO Ellison once had a market philosophy: **The best way to eliminate competitors is to buy them out.** In that era when China was poor and weak, this market philosophy was widely applied.
In 1994, Zhonghua Toothpaste, with a 40-year history, was acquired by Unilever, a daily chemical giant; in the 1980s and 1990s, the well-known Huoli 28 laundry powder was acquired by the American company Miseg in 1996; Dabao, which was once a household name with "Dabao, see you every day," was acquired by Johnson & Johnson in 2008... In the beverage market alone, Lebaishi, which once aspired to be China's Danone, was controlled by French Danone in 2000. Huiyuan Juice, which had fought a long battle with international giants in the juice market, finally declared bankruptcy in July 2021, ending in tragedy. Now, it seems that only Wahaha is the survivor of this era. After a three-year trademark dispute with Danone, Zong Qinghou regained the Wahaha trademark, thus building today's beverage empire.
Today, the two cola giants seem to have a new target—Genki Forest, a young company skilled in user insight.
In fact, the two cola giants' fear of Genki Forest is not entirely unfounded. This emerging beverage manufacturer has already shown its strength. Founded in 2016, Genki Forest has doubled its valuation in just five years, becoming a new unicorn worth over ten billion US dollars. Currently, Genki Forest's product line covers almost the entire beverage industry, including carbonated drinks, fruit juices, tea drinks, functional drinks, mineral water, and even dairy products. But objectively speaking, its flagship product is still the fruit-flavored sparkling water with 0 sugar as the core selling point. In fact, before Genki Forest's sparkling water was launched, zero-sugar drinks had existed in the market for a long time, such as Coca-Cola Zero. But Coca-Cola may not have realized that 0 sugar would be a big explosion point to ignite the market, so it did not conduct large-scale marketing campaigns around this concept. Therefore, when Genki Forest's sparkling water was launched with the concept of 0 sugar and 0 calories, it immediately defined the zero-sugar sparkling water segment and positioned itself as the leading brand in this segment. Among the Z generation, who advocate health and widely have body anxiety, this zero-sugar drink first captured their minds. According to public data, in 2021, Genki Forest products covered more than 30 provinces, municipalities, and autonomous regions across the country, and were exported to 40 countries including the United States, Japan, and Singapore.
During the 2019 Double 11 shopping festival, Genki Forest sold 2.26 million bottles, ranking first in the water beverage category, and for the first time, its online beverage sales surpassed the two cola giants to rank second; during the 2020 Double 11, Genki Forest ranked first in the water beverage category on Tmall and JD.com with total sales of over 20 million bottles. It is not difficult to see that Genki Forest's sudden rise is an extreme application of brand positioning methodology. These methods have already been verified in the love-hate relationship between Coca-Cola and Pepsi, and even the tactics to capture young people's minds are similar. Pepsi was born in 1898, while Coca-Cola's first advertisement was published in the Atlanta Journal as early as 1886. For a long time, Pepsi faced the situation of being a latecomer in the cola market, competing with the leader in the soft drink industry. As the book "Positioning" wrote, "**The first brand to enter people's minds typically holds twice the long-term market share of the second brand, and four times that of the third, and this ratio is not easily changed.**" But Pepsi found a consumer group that Coca-Cola had not precisely targeted: young people. Because of its long-term competitive advantage, Coca-Cola had already become a national beverage brand in the United States and could not focus on the minds of young people. At that time, Coca-Cola was sold in 195 ml bottles, while Pepsi was sold in 335 ml bottles, but the prices were the same.
So Pepsi targeted this weakness and launched an advertisement imitating the British hunting song "John Peel," with lyrics: "Pepsi hits the spot, 335 ml, that's great, five cents buys two, Pepsi is your choice." The strategy of "five cents for two" hit teenagers, as children generally believe quantity is more important for snacks. Under economic pressure, Coca-Cola could neither lower prices nor destroy bottles and repackage. Thus, Pepsi successfully captured Coca-Cola's market with this excellent marketing campaign. Later, Pepsi took this positioning to the extreme. Its slogan "The Choice of a New Generation" directly targeted the youth market. To win the hearts of this generation, it spent heavily to hire the super popular idol Britney Spears as its spokesperson.
In China, it used the most popular young celebrities Wang Fei, Aaron Kwok, and Kelly Chen in advertisements. The slogan "Wish you Pepsi" was deeply rooted in people's hearts. **Over the years, a war to capture consumer minds has been ongoing between the two cola giants.** The most classic is the advertising war with metaphors of being each other's "stepping stones." Pepsi once launched an advertisement where a little boy buys a drink from a vending machine. Because he is not tall enough to reach the Pepsi, he first buys two bottles of Coca-Cola to step on. After buying, the little boy leaves satisfied, leaving the two bottles of Coca-Cola behind. The implication is that Coca-Cola is only fit to be a stepping stone. Coca-Cola immediately launched a counter-advertisement, also with a little boy buying cola, also unable to reach, but this time, the stepping stone is Pepsi, and at the end, the little boy puts the Pepsi back in place. Coca-Cola wanted to express that customers love Coca-Cola more, and Coca-Cola consumers are more civilized. Roger Enrico, former CEO of Pepsi, once commented on the relationship with Coca-Cola: **"The war between the two must be seen as a protracted war without gunpowder. Without Coca-Cola, Pepsi would not likely be a creative, agile competitor. The more successful Coca-Cola is, the sharper we must be. And across the trenches, I believe Coca-Cola people would say that no one has contributed more to Coca-Cola's success today than Pepsi."**
Just as Pepsi challenged Coca-Cola, the rise of Genki Forest is not entirely a bad thing for the two cola giants. When 0-sugar sparkling water became popular, the entire sugar-free beverage market also experienced an explosion.
According to the "2021 China Sugar-Free Beverage Market Trend Insight Report" released by the Chinese Academy of Sciences, the sugar-free beverage market reached 11.78 billion yuan in 2020, a seven-fold increase from 2014; by 2025, the market will grow to 22.74 billion yuan, doubling in scale within five years; by 2027, the market will continue to climb to 27.6 billion yuan.
In this explosive growth market, almost all beverage giants have entered the game. In February 2021, Coca-Cola introduced its sparkling water AHA to China, named "AH!HA! Xiao Yuzhou." Coca-Cola's transformation produced relatively good results. According to James Quincey, Chairman and CEO of Coca-Cola, "China's market grew strongly last quarter," "especially zero-sugar Coca-Cola, which doubled compared to the fourth quarter of 2019." In addition to Coca-Cola's interception, other beverage brands also rushed in to besiege Genki Forest. In June 2021, Pepsi launched its sparkling water "bubly smile," and Nongfu Spring also launched its own soda sparkling water, which created annual sales of over 600 million yuan. In the same year, Wahaha launched a new product "Xiao Qingxun Soda Sparkling Water"; by June, it made another effort, not only launching its beverage brand KellyOne's sparkling water "Shengqi Bobo" but also inviting Wang Yibo as spokesperson for promotion. Looking back, in 2020, Heytea and Naixue also launched bottled sparkling water drinks. The actions of giants and new consumer brands directly led to pressure on upstream production capacity such as raw materials and production lines.
For example, erythritol, an important raw material for 0-sucrose sparkling water, has recently seen rapid price increases and tight supply. International giants may even rely on their scale advantages to plunder upstream resources or directly use competitive exclusive tactics to cut off upstream supply.
According to 36Kr, at the beginning of 2021, the boss of an international beverage giant personally called the contracted OEM factory, demanding that all factories producing Genki Forest products stop work. By May of that year, even the preform factory providing carbonated drink bottles for Genki Forest had stopped supply. Under the pressure of the giants' huge demand, weaker domestic brands had to find other ways. At the end of February 2022, Genki Forest's sixth self-built factory will land in Jiangsu, focusing on the Yangtze River Delta region, with an expected annual output value of 2.4 billion yuan after production. Although many new sparkling water brands started with OEM, as sales volume increases, companies will establish more stable self-owned production capacity. But the supply cut-off incident made Genki Forest determined to strengthen its self-built factories. Since 2020, Genki Forest has built factories in Chuzhou (Anhui), Zhaoqing (Guangdong), Xiqing (Tianjin), Xianning (Hubei), and Dujiangyan (Sichuan), corresponding to the five major city clusters in East China, South China, North China, Central China, and Southwest China, focusing on the Beijing-Tianjin-Hebei, Yangtze River Delta, Pearl River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, Sichuan-Chongqing, and Hunan-Hubei markets, initially building a national strategic layout of "super city clusters + self-built factories." Pepsi once conducted a market survey and found that when consumers choose drinks, they actually make only three choices: first, choose between soft drinks and fruit juice or milk; second, choose cola or non-cola like Sprite or 7UP; finally, choose among Pepsi, Coca-Cola, and other cola brands. But for a century, the love-hate relationship (and joint promotion) between the two cola giants has been so lively that it creates an illusion for consumers—there are only two kinds of drinks in the world: Coca-Cola and Pepsi, and you only need to make one choice. When Genki Forest's sparkling water appeared in the market as a disruptor, people began to return to first-principles thinking about business competition. Whether you make soda or any other drink, there is always a chance to be chosen by consumers. In 2007, Yiqing Food Group, which managed Beibingyang Food Company, negotiated with Pepsi to take back Beibingyang. On the condition of "not producing any carbonated beverages under the Beibingyang brand for four years," Yiqing Group regained the brand's operating rights. In November 2011, this old brand beverage, which had disappeared for over a decade, returned to the market. In 2017, young creative Jin Yawen started the "No. 2 Factory Soda Rebirth Plan," bringing Hankou No. 2 Factory back to consumers' choices. This soda, with its national trend selling point, has now become an internet celebrity.
At the same time, more and more diverse beverage brands have appeared in supermarket coolers. Some want to block Genki Forest, some want to replicate Genki Forest, but among the dazzling array, the two cola giants have also seen their positions squeezed. **To date, this 28-year siege has not ended, and there is no final winner. There will always be new generations of consumers growing up, and there will always be pieces of mind to be captured.** Genki Forest is not the first target besieged by giants, nor will it be the last.
Source: The FunTalk (ID: gh_29e3081c421f) Author: Ma Suofei
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- Author: 最话团队
- Published: 2022-03-26
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- Original source: https://mp.weixin.qq.com/s/rQMX7-oVYu5KxCFHT2Vs4g

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