Source: Market Value List (ID: shizhibang2021)

The trend of sugar-free beverages has been blowing through first- and second-tier cities for several years. Whether in street-side convenience stores, supermarkets, or restaurants, sugar-free drinks have almost become an essential beverage category. Companies focusing on sugar-free drinks have overwhelming advertising and rounds of financing, as if sugar-free has taken over the world. Compared to their prominence in first- and second-tier cities, a field survey by Market Value List found that in county towns, sugar-free beverages present a different scene: although displayed in supermarkets, they are ignored by consumers. Young people in county towns do not experience 996 work schedules or "blessings," do not have million-yuan mortgages to repay for the rest of their lives, nor do they have tens of millions in stock options to cash in. They simply want to find some fun in their limited urban space, and they are not as concerned about sugar or no sugar as their counterparts in first- and second-tier cities. According to the China Urban and Rural Construction Statistical Yearbook, as of 2019, there were 1,516 counties in China, with a county-town population of 141 million—a massive consumer group. Clearly, this has become the hardest fortress for sugar-free beverage companies, represented by Genki Forest. This article will focus on several issues: What is the specific situation of sugar-free beverages in county towns? Why can't their distributors persuade convenience store owners? And why does the health trend fail here?

County Towns: The World of Sugary Drinks Market Value List selected Wu'an, a county-level city in southern Hebei, as a research sample. As a county-level city, Wu'an ranked 80th in the national county economy last year and is the only national top-100 county in Handan. From this year's Wu'an Two Sessions report, we can glimpse the city's economic status: It has 7 China Top 500 enterprises and 11 China Top 500 private enterprises. It has over 100 enterprises with annual sales revenue exceeding 20 million yuan, 50 exceeding 100 million, 24 exceeding 1 billion, and 5 exceeding 10 billion, with social deposits exceeding 100 billion yuan. In this county town, where steel is the pillar industry, young people are mainly concentrated in steel plants and related industrial chains. The 200,000-plus industrial workers have stable income, strong consumption power, and high willingness to consume. In an era when many prefecture-level cities did not have KFC, the KFC, Dicos, and Mr. Lee in the central urban area were already packed every day. In the retail system of county towns, large supermarkets are responsible for "complete goods," medium-sized supermarkets and convenience stores for "convenience," and farmers' markets for "cheapness." We can observe these places to roughly outline the sales situation of sugar-free beverages here. To gain a deeper understanding of sugar-free beverage sales in county towns, Market Value List visited all stores of two local large supermarket chains, 4 internet cafes, 5 primary schools, convenience stores at the entrances of 20 residential communities, and wholesale markets near the urban area.

1. Large Supermarkets: Available and Complete, but Pushed Aside. Sunshine and Food Forest are the two largest supermarket chains in Handan, with a total of 4 large stores in Wu'an. In large supermarkets, the highest-frequency beverage sales location is not the beverage section shelves but the display cabinets at the entrance. At the entrance of Sunshine Supermarket, three freezers are placed side by side, belonging to Coca-Cola, Pepsi, and Master Kong. "Prime locations like the exit are usually reserved for big brands, and these display cabinets are provided by them. Our management is very strict; a brand's display cabinet can only contain its own beverages," a supermarket beverage staff member told Market Value List. In the beverage section, traditional sugary drinks and drinking water dominate, occupying over 90% of the shelves. There are also areas for sugar-free beverages, mainly from Coca-Cola, Pepsi, and Nongfu Spring. Genki Forest and other brands' sugar-free drinks can be seen but are few. "As a large supermarket, having a complete range of goods is our advantage, so most beverages on the market can be found here. But small-brand beverages are not our main sales focus; in many cases, they are just for completeness," a supermarket sales guide told Market Value List.

2. Medium and Small Supermarkets: Faintly Visible, Excluded from Shelves. Xinxin Supermarket is located among three relatively large residential communities and is a relatively large medium-sized supermarket. On its shelves, beverages are arranged by brand. Genki Forest was not seen here, and Nongfu Spring's sugar-free sparkling water was mixed among sugary drinks, inconspicuous. After roughly searching the shelves, Market Value List specifically asked a sales guide if they had Genki Forest. The salesperson said yes, but after searching twice, she couldn't find it. She then explained that the supermarket had recently renovated and expanded. Previously, the supplier had sent some, but they didn't sell well and might have been removed. The beverages on the shelves are placed by the supplier's staff, and supermarket staff only handle daily tidying. Among the convenience stores visited, more than half had no sugar-free beverages on their shelves. Of the few sugar-free drinks available, most were placed in inconspicuous positions as tie-in sales. New brands like Genki Forest were only sold in 5 of the 20-plus convenience stores visited.

3. Farmers' Markets: Hard to Find. At the farmers' market closest to the urban area, Market Value List visited several large wholesale outlets. These outlets are essentially warehouses, stacked from inside to outside with full boxes of beverages. Among the outlets visited in Wu'an, only one said they had Genki Forest, but they were not distributors and had only 2 boxes in stock. It was learned that Genki Forest's local distributor was not in this market.

Shop Owners: If It Doesn't Sell, It's a Loss Through our visits, we found that sugar-free beverages, especially new brands like Genki Forest, have no power to fight against sugary drinks. How do supermarket owners and distributors view sugar-free beverages? A convenience store owner in Wu'an told Market Value List that they don't pay much attention to whether a drink is sugar-free; they only care about how well it sells. "Most people who come to buy drinks are young people. They ask most about a certain flavor. Those who specifically look for sugar-free are few." Compared to supermarkets, convenience stores are closer to consumers and are always a battleground for suppliers. At the same time, convenience stores have small spaces, are more sensitive to sales volume, and are more selective in choosing suppliers. Under these two factors, large beverage brands with deep pockets and rich product lines dominate convenience store shelves. In every convenience store, you can see display cabinets with refrigeration provided by Coca-Cola, Pepsi, or Nongfu Spring. In the long-term competition for convenience stores, suppliers not only support supermarkets with hardware but also continuously optimize services according to the characteristics of convenience stores. Most convenience stores are mom-and-pop shops with few other employees, so shelf tidying is not as standardized or timely as in large supermarkets. In response, suppliers not only deliver goods to the door but also place them on shelves. This not only "pleases" the store owners but also further controls the shelves—whoever places the products naturally puts their products in the best and most visible positions. A convenience store delivery person told Market Value List that there are too many beverage brands and series. The brand they represent has many series, but the best sellers are still several sugary ones, which move fastest. Sugar-free drinks are now supplied but sold as a sideline, in a trial stage. For every ten boxes of sugary drinks sold, not even one box of sugar-free drinks moves. Even in the perception of a delivery person for a major beverage brand, Genki Forest is just a series under another major brand, with nothing special. In his concept, sugar-free just represents a flavor. A wholesale alcohol outlet owner told Market Value List that wholesale markets only sell the fastest-moving goods because profit margins are thin, and they rely on volume to make money. "If something doesn't sell well, we won't stock it. It takes up space and doesn't move, which equals a loss. This year, Snow Beer sells well. Go check; every outlet has Snow Beer."

Why Can't They Conquer County Towns? Sugar-free beverages are so healthy, but why don't young people in county towns like them? There are three fundamental reasons:

1. Health Hidden in the Smoke of Daily Life. The explosion of sugar-free beverages is based on people's increasing emphasis on health, but in county towns, people's understanding of health is different, especially among young people. "If I can't drink alcohol one day, life is over," is a common saying from Xiao Zhang. Xiao Zhang works as a furnace operator at a local large steel plant, earning about 7,000 yuan a month after taxes. His wife also works at the steel plant. They bought a house long ago and go out with friends once or twice a week. Young people in county towns do not have 996 or "blessings," do not have million-yuan mortgages to repay for the rest of their lives, and do not have tens of millions in stock options to cash in. They just want to find some fun in their limited urban space and live their lives well, not paying too much attention to their bodies. In their understanding, health means not having major problems. Every day at dusk, the most bustling places in the city are the small and medium restaurants. Drinking and socializing are their daily routine. The cautious health maintenance mode of drinking sugar-free beverages is not in their life options. In county towns, people see sugar-free beverages as just one of many beverage categories, like a flavor in a brand, with nothing special. Those who choose them do so just to taste something new, like trying a new flavor, not for health reasons. Compared to health, people care more about taste when choosing a drink.

2. Acquaintance Society: No Socializing, No Consumption. County towns are acquaintance societies, and people's consumption scenarios and habits are formed around this attribute. Products with social attributes are easily accepted, while products emphasizing independence and individuality are often excluded from mass consumption in county towns. Compared to bottled drinks, various milk tea shops are much more "human." Milk tea shops not only sell milk tea but also some light meals, allowing friends to eat, drink, and chat. In the acquaintance society of county towns, such social effects are fully released. On the day of the Start of Autumn in 2020, "the first cup of milk tea in autumn" became a hot search. A year later, young people in first- and second-tier cities began chasing new hot searches, but in county towns like Wu'an, giving milk tea to each other has become a "quasi-custom" for the Start of Autumn. On the day of the Start of Autumn, all milk tea shops in Wu'an were overwhelmed with orders, forcing some to close their delivery platform interfaces and suspend orders to clear the long queues inside and outside the shops. In contrast, bottled beverages have an independent attribute from birth; their existence is to allow people to get what they want at minimal cost. In county towns, except for those who particularly like drinking beverages and buy bottled drinks specifically, most people only buy them occasionally when traveling or shopping. County towns are not big, and people's life radius is short, so beverages lack appropriate consumption scenarios in their daily lives. For county town residents, whether a drink contains sugar is not important; whether it can be used for socializing is.

3. Cost-Effectiveness: The Underlying Tone of County Towns. "Compared to sugary drinks, sugar-free drinks are more expensive. For example, the best-selling Coca-Cola and iced tea are only 3 yuan, while sugar-free drinks are generally around 5 yuan. Most people still think drinking sugar-free drinks is not worth it," a convenience store owner said. People in county towns have money, but not much. Spending money wisely is the basic logic of consumption, and pursuing cost-effectiveness ranks higher than pursuing health in their value system. A clear example is milk tea shops. As major sugar consumers, milk tea shops are everywhere on Wu'an's streets, especially Mixue Ice City, which is particularly thriving thanks to its cost-effectiveness. For the same 5 or 6 yuan, a cup of rich milk tea is more satisfying than a bottle of sugar-free drink. Drinking water is an eternal human need, but beverages are not. Compared to the drinking water industry, the beverage industry is more similar to fast-moving consumer goods like cosmetics and snacks. Because consumer demand changes frequently, product life cycles are shorter, typically 2-3 years. So we see that from Beibingyang to Jianlibao, from Red Bull to Mizone, from iced tea to sugar-free tea drinks, new products always stand at the forefront, and some brands are gradually forgotten. In a limited life cycle, if sugar-free beverage brands want to break through the ceiling of scale growth, in addition to deepening their presence in first- and second-tier cities, expanding into lower-tier markets is a very important route. This is consistent with the law of consumption trend diffusion. Generally, most consumption waves originate in first- and second-tier cities and then spread to third- and fourth-tier cities or rural areas, such as coffee, bars, and Western food, which follow this penetration path. But this is an extremely difficult market to crack. To get young people in county towns to accept sugar-free beverages, it is necessary not only to cultivate healthier concepts and change consumption habits but also to significantly increase income levels. This is a systematic and lengthy process that cannot be changed overnight, nor can it be changed by Tang Binsen and others. Therefore, county towns and even the vast rural areas are destined to be the hardest fortresses for sugar-free beverages to conquer.

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