As a startup founded less than 10 years ago, Genki Forest is a standout presence. In the 2023 GEI China Unicorn Enterprises list, Genki Forest ranked eighth with a valuation of $15 billion, surpassing Xiaohongshu of that year. Over eight years, Genki Forest incubated three products with sales exceeding 1 billion yuan, which is undoubtedly a huge victory. But problems also exist. The three star products—sparkling water, milk tea, and Alien electrolyte water—were launched in 2018, 2019, and 2021 respectively. Since then, Genki Forest began to slide sharply from its peak. According to a report by LatePost, its sales growth dropped from the previous annual rate of 2-3 times to about 20% in 2022. The formidable barrier in front of Genki Forest is the offline sales channels in lower-tier markets, which are difficult to penetrate. There, established giants dominate, and Genki Forest's products, priced higher without significant taste differentiation, are labeled as "hard to sell" and even abandoned by distributors. Learning from traditional giants—this is the goal set by Genki Forest's founder, Tang Binsen. An employee told Snow Leopard Finance that "slowing down the pace" is a common phrase within the company. After cost reduction, efficiency enhancement, and going all-in on sales, Genki Forest, which carved a path with internet thinking, now has to retread the old path that cannot be bypassed. The story is no longer sexy; the young unicorn must face the trivial and clichéd daily grind. This is a truth proven by countless brands: in China's food and beverage industry, there are no shortcuts. Cola sells a case a day Genki takes 10 days to sell a case Within a week, Zhao Chun (pseudonym) from Wuyi County, Hengshui, Hebei, visited the small grocery store nearest to his workplace for the third time, still unable to find Genki Forest's newly launched limited-edition green bamboo grapefruit sparkling water this year. The clerk told Zhao that not only did their store not carry Genki Forest's new products, but nearby retail supermarkets also couldn't find them; only chain convenience stores and large supermarkets stock them. This is because many grocery store owners in third- and fourth-tier cities have found that they already have a backlog of Genki Forest inventory, and bringing in new stock would make it even harder to sell. Since last year, A Cheng (pseudonym), a grocery store owner in Zhengzhou, has felt that Genki Forest is "not selling well." Various brands have launched different sugar-free sparkling waters, and Genki Forest's uniqueness has disappeared. By this year, Genki Forest products in A Cheng's store are almost unsold; the sparkling water, usually priced at 5 yuan per bottle, has been reduced to 4 yuan but still doesn't sell. He told Snow Leopard Finance that several neighboring peers have successively removed Genki Forest products this year. In the food and beverage industry, taste homogenization is inevitable. Young consumers in first-tier cities are willing to pay for trying new products and trendier brand images, but in the vast lower-tier markets, pragmatism is the mainstream. In A Cheng's store, there are 5-yuan 1-liter Master Kong ice black tea, 3-yuan Coca-Cola, and the more nationally recognized Nongfu Spring's Oriental Leaf; Genki Forest's entire product line is almost crushed. A small shop owner in a Shijiazhuang county town told Snow Leopard Finance that in summer, Coca-Cola can sell a case a day, while selling a case of Genki Forest sparkling water takes 8-10 days. In fact, under the joint "siege" of giants, Genki Forest's survival pressure has been increasing in recent years. Zhao Yuanjun (pseudonym), an industry insider who once researched Genki Forest, revealed to Snow Leopard Finance that Genki Forest used erythritol as a natural sweetener, creating the "0 sugar, 0 calories, 0 fat" label and quickly became popular. But soon, other beverage brands followed, leveraging scale advantages to sign large orders with erythritol OEM factories and making "not cooperating with Genki Forest" a condition for signing. The traditional giants' "strangulation" targets not only upstream raw materials but also offline channels. Zhao Yuanjun once visited several distributors in third- and fourth-tier cities and found that large enterprises firmly control distributors' purchase shares, even signing exclusive agreements that only allow their own products in freezers, making it impossible for Genki Forest products to be placed. This summer's beverage season has intensified competition unprecedentedly. Wahaha accelerated its offline channel layout, deploying freezers to terminals in some county-level cities. Distributors said Wahaha hopes "every customer can buy Wahaha products in major supermarkets and stores." Dongpeng Special Drink, Xiang Piao Piao, and others publicly announced further investment in offline channels, while Mengniu, Master Kong, Uni-President, and Nongfu Spring have never left the frontline. Price wars continue. In June this year, Nongfu Spring fully reduced prices; its newly launched green-bottle purified water was placed in the most prominent position on supermarket shelves, with a promotional price for 12 bottles as low as 8.9 yuan, just 0.74 yuan per bottle. In some supermarkets, 12-bottle packs of C'estbon purified water also dropped to 10 yuan. In this cutthroat competition, Genki Forest can only struggle forward amid the involution. "Half the warehouse is Nongfu Spring" During the high-flying years of 2018-2020, Genki Forest's sales maintained an annual growth rate of 2-3 times. The turning point came in 2022. The previous year's internet-famous bestseller, Genki Forest's Sakura White Grape soda sparkling water, became what distributors called the "deadly Sakura White," and other flavors of sparkling water also piled up in warehouses. That year, Genki Forest's sales growth slowed to about 20%. The sparkling water that had been hot for years hit a ceiling and suddenly fell into a "can't sell" predicament. A series of channel problems once masked by exciting high growth began to surface. In previous years, Genki Forest's salespeople regularly forced inventory onto distributors, leading to frequent inventory backlogs, cross-regional dumping, and arbitrary price changes. By the summer of 2022, too much inventory had accumulated, and the crisis erupted. According to 36Kr, Genki Forest had hundreds of thousands of cases of products with only one month of shelf life left or directly scrapped, accounting for as much as 20% of total inventory. In June of that year, Genki Forest's inventory turnover days exceeded 40 days. Normally, the beverage industry's inventory turnover is within 30 days, dropping to 20 days in peak season. The channel chaos pressed the pause button on Genki Forest's development and dragged distributors into the abyss. Former Genki Forest distributor Li Haitao (pseudonym) told Snow Leopard Finance that during the years when Genki Forest was selling like hotcakes, distributors benefited, but the 2022 inventory crisis "hurt" him; a large amount of short-dated goods were delivered, expiring before they could be sold. After finally clearing the inventory, the goods were no longer easy to sell, and profits kept shrinking, making money increasingly hard to earn. "In the past two years, Genki Forest has indeed made great efforts to rectify channels, with more standardized processes and regulations than in previous years," Li Haitao admitted. In 2023, Genki Forest elevated the importance of channels to an unprecedented level, investing more funds in distributor development and market promotion. Founder Tang Binsen publicly stated that he would learn from traditional enterprises and personally visited distributors across the country. But this also further tightened distributors' pockets. Third-party inspections became stricter, distributors' independent dumping and price reductions were controlled, and coupled with declining sales of Genki Forest in their regions, Li Haitao ultimately chose to terminate cooperation with Genki after weighing the options. Compared with traditional brands, distributors have a colder attitude toward Genki Forest. Cheng Li (pseudonym), a Genki Forest salesperson in a third-tier city in the south, told Snow Leopard Finance that distributors' trust in Genki Forest is significantly lower than in other traditional major brands, and Genki Forest's bargaining power is also lower. "Few well-funded distributors specialize in Genki Forest; many specialize in C'estbon or Nongfu Spring and sell Genki Forest as a sideline." To meet sales targets and respond quickly to market demand during peak seasons, almost all beverage brands require distributors to stock up. But distributors are often reluctant to hold too much Genki Forest inventory because it sells slower in lower-tier markets. In contrast, they typically hold a lot of Nongfu Spring inventory, even "half the warehouse is Nongfu Spring." Beating the "Big Brother" Is Not Easy Founded in 2016, Genki Forest was seen from its inception as an internet upstart born with a silver spoon, a catfish that created a sales miracle. Unlike traditional enterprises, Genki Forest took a high-profile marketing route from the start. Many people first saw the brand's name on hit TV dramas, variety shows, or large subway advertisements. Image source: Genki Forest official Weibo, Shanghai "Genki Station" event site. Additionally, in early channel layout, Genki Forest focused more on major e-commerce platforms and chain convenience stores like FamilyMart, Bianlifeng, and 7-Eleven in first- and second-tier cities. This was the "no man's land" that traditional giants had not yet focused on. But in China, the lower-tier market is the backbone. The lower-tier market population accounts for 71% of China's total population. According to Frost & Sullivan's "2023 China Lower-Tier Market Retail Industry ToB Service White Paper," China's lower-tier retail market size reached 17.6 trillion yuan in 2022, about four times that of high-tier cities, with overall growth faster than high-tier cities. To expand sales, the traditional retail channels dominated by many giants, especially those in lower-tier markets, cannot be bypassed. The days of happily running in no man's land are over; Genki Forest has to hit the iron wall head-on. In 2022, Genki Forest had over 1,000 distributors, Nongfu Spring had over 4,454, and Master Kong had 36,837. Now, Genki Forest is vigorously learning from Nongfu Spring in sales model, the latter being an industry-recognized channel powerhouse. This gives some distributors confidence to stay. Hebei distributor Yuan Liwei (pseudonym) told Snow Leopard Finance that he still has hope for Genki's future. "This year, Genki Forest hired a large number of Nongfu Spring salespeople and managers; the internal employees I've come into contact with previously came from Nongfu Spring and are very experienced." He believes that although Genki Forest's profit margins are lower than before, they are not much different from brands like Coca-Cola and Nongfu Spring. "This summer, the ice tea and electrolyte water in my area sold quite well." Yuan Liwei's judgment is that, given time and deep cultivation of various channel outlets, Genki Forest could also become a giant one day. Image source: Provided by interviewee Some distributor inventory Salesperson Cheng Li often jokes with colleagues that Genki Forest is the "passing line" in the beverage industry: those better developed than Genki Forest have achieved dominance; those worse are struggling on the brink of bankruptcy. As the summer heat gradually fades, competition in the beverage market continues. There's nothing innovative about laying traditional channels; it requires long-term meticulous cultivation. Genki Forest can only slowly and clumsily learn from traditional giants. PS: Click Read Original to view more about the 6th China FMCG Conference and the 3rd China FMCG Hard Discount Conference & the 3rd China FMCG Distributor Conference...