Recently, news of a local regional beverage brand being acquired by a private equity firm under the global luxury group LVMH attracted industry attention. Why did "Wei Yi," a plant-based protein drink from the Sichuan-Chongqing region focusing on the foodservice channel, gain the favor of a global luxury group? This starts with a broader context. From January to June 2024, China's beverage output reached 98.1 million tons, a year-on-year increase of 7.9%, equivalent to an annual output of nearly 200 million tons, making China the world's largest beverage producer. The domestic foodservice channel has become an important channel for rapid beverage breakthroughs, and this is also a key opportunity for new brands to break through. Now, in Zhejiang, a new brand is rapidly rising with its big single product—Fan Xiao Qi·Milk Qi. Regarding them, we have discovered three particularly distinct characteristics:
**1. The brand has built its own direct sales team at headquarters, directly competing with leading beverage brands in the foodservice channel to seize absolute market share;**2. Extremely focused on the foodservice channel;
3. Firmly believes in "defining the product defines the market" and implements a big single product strategy. "New Distribution" has been deeply observing industry trends. In fact, we noticed Fan Xiao Qi two years ago. Now, with its rapid development, based on these characteristics, I directly interviewed Fan Xiao Qi's founder, Chen Zhenyu, to uncover the answers one by one. Fan Xiao Qi founder Chen Zhenyu How was the new category "Milk Qi" born? The concept of "Milk Qi" did not come out of thin air; it is the result of the Fan Xiao Qi team's deep insight and thinking about market trends and consumer needs. Mr. Chen reviewed the brand's early journey and shared: "We previously tried various mature categories, such as soda, tea drinks, soy milk, etc. (all in glass bottles), but we were always constrained by the fact that these mature categories already had leading brands, and we could foresee our ceiling, which was clearly not the end we wanted." Moreover, during extensive contact with distributors, he also found that although mature categories reduce the need for consumer education on category awareness and allow rapid market entry, they conversely bring huge involution. In exchanges with many distributors, he also found that everyone was working very hard and always wanted to escape vicious competition. This triggered his thinking: how to carve out a new path in the beverage market? He discovered: To forge a path for a new brand, one must create a new category. Only then can greater market opportunities be obtained. By chance, Mr. Chen tasted Japan's national-level beverage Calpis, and later came into contact with Xinjiang's milk beer. These products inspired him. He believed he could create a new lactic acid bacteria beverage more suitable for Chinese dining. This product has three characteristics: **1. A brand-new category name, leading the redefinition;**2. The health attributes of lactic acid bacteria, plus a refreshing taste—Milk Qi strictly controls the concentration and sweetness of the milk flavor to ensure it is refreshing and not greasy, while overcoming the technical difficulty of adding gas to milk drinks, with a gas content exceeding 2.7, achieving a satisfyingly fizzy taste. It adheres to the principle of pairing with meals to relieve greasiness and spiciness, and the principle of making a product loved by the masses rather than a niche obsession;
3. Glass bottle packaging with outstanding design, very eye-catching in refrigerator displays. Current feedback from the terminals also confirms this: Many consumers notice it because of the appearance, buy it out of curiosity for the first time, and give it high praise. Foodservice Channel: A Huge Market Opportunity and New Product Opportunity According to data from the National Bureau of Statistics, in 2023, China's catering revenue exceeded 5 trillion yuan for the first time, setting a new historical record. The recovery of the catering industry fully demonstrates its resilience, potential, and vitality. Faced with such a trillion-yuan market, beverage companies cannot help but be tempted. For the foodservice channel, Mr. Chen, who has been deeply involved for many years, got straight to the point: The foodservice channel is relatively closed, and new products have greater opportunities for sell-through; unlike the circulation channel, new products are less likely to "collect dust." Compared with the traditional circulation channel, consumers may randomly choose new products when dining, providing greater exposure and sales opportunities for new products. He explained that in the circulation channel, consumers usually have purchase intentions and brand preconceptions before entering the store. In addition, in the circulation channel, large brands such as Coca-Cola and Nongfu Spring have established strong barriers, especially in terminal displays and freezer placement, making it difficult for new products or new distributors to expand in the circulation channel. In contrast, brands in the foodservice channel are relatively smaller because leading brands do not have large-scale direct sales operations or teams in the foodservice channel, and even their freezer investments and maintenance frequency and intensity are far less than in the circulation channel. These all provide favorable conditions for new products to promote in the foodservice channel. On the other hand, the scenarios for beverage products are shifting from the past "planned purchases" concentrated in small shops to more dispersed "instant scenarios." Consumers no longer go to a specific small shop to buy a specific brand of beverage; instead, they choose beverages on the spur of the moment based on actual scenario needs (such as during meals). This instant demand forms a consumption pattern similar to current e-commerce live streaming: consumers enter a live stream not with a planned purchase in mind, but generate consumption needs during the viewing process. In the foodservice channel, the scale of consumers' "instant demand" may already far exceed the scale of "proactive purchase demand." Based on this, since its inception, the "Fan Xiao Qi" brand has firmly chosen to deepen its presence in the foodservice channel. Originally, being an obscure regional small brand could have been comfortable, but Mr. Chen, who has a obsession with brand and product, decided to stop being content after creating the "Milk Qi" category. How to Use "Milk Qi" to Dominate the Foodservice Channel? To successfully bring "Milk Qi" to market, the "Fan Xiao Qi" team has personally engaged in channel development and accumulated rich practical experience. Mr. Chen emphasized that building a model market is crucial. "Through direct sales channel practice, we used Ningbo as a model market and have developed over 50,000 foodservice outlets, all of which we visited one by one." These 50,000 foodservice outlets are mainly C and D class foodservice outlets. Through extensive development experience, the Fan Xiao Qi team found that CD (foodservice channel) outlets can be systematically developed. The development and operation model of the traditional circulation channel can also be systematically derived for the foodservice channel. The success of systematic operation not only demonstrates Fan Xiao Qi's market execution capability but also provides valuable experience and data support for its distributors. Their experience is currently being piloted in the Sichuan-Chongqing region, where Fan Xiao Qi's business iron army directly enters to empower customers. During the channel construction process, the packaging of "Milk Qi" has also been upgraded. By making the product expression more interesting, the packaging more eye-catching, and creating some differentiation, "Milk Qi" gradually evolved into its current form. Through unique brand positioning and packaging design, Fan Xiao Qi's "Milk Qi" product has strong recognition and differentiation in the foodservice channel. The development journey of "Milk Qi" is a process from exploring mature categories to innovative breakthroughs. Through practical verification in channel development and market promotion, Mr. Chen believes that the new category "Milk Qi" will achieve greater success in the beverage market in the future. From Regional to National Close Cooperation with Distributor Partners Mr. Chen stated that the foodservice channel distributors familiar to Fan Xiao Qi are also facing pains, whether it is the involution competition in mature categories or the bottleneck in the beer sector, which used to account for a large share—these are unspoken pains for everyone. Now, an innovative single product validated by the model market is proactively stepping out of Ningbo, especially focusing on the foodservice channel, seeking cooperation with distributors nationwide. They hope to find more like-minded partners to create a new category with Fan Xiao Qi and enjoy the opportunities and dividends of setting market rules in advance. "Distributors generally face the dilemma of 'products that sell well have no profit, and products with high profit are unreliable.' Fan Xiao Qi hopes to form a good cooperative relationship with distributors through the first-launch new category, jointly promoting business growth." The current category gaps in the market create new opportunities for cooperation between Fan Xiao Qi and distributors. "In the current beverage market, many categories have not been fully developed, which provides us with space to define the rules." "Our understanding of distributors goes beyond the surface, delving into their actual needs and pain points." He said that as a brand with a dual perspective, Fan Xiao Qi respects the interests of distributors while also striving to continuously explore how to better serve them. Mr. Chen's family background also gives him unique feelings towards distributors. His father was a distributor, and as a brand founder, he deeply understands the pain and challenges in the growth process of distributors. He said: "Fan Xiao Qi's experience has all been learned from distributors; now it's time to give it back to them." If you are interested in Fan Xiao Qi, please add the WeChat below to inquire about cooperation details.