---
title: "Genki Forest Falls from the \"Cloud\""
description: "Genki Forest's rise, like a stone thrown into a lake, stirred ripples in China's long-quiet beverage market. People are keen to dissect its success logic: geographic arbitrage, aesthetics as justice, influencer marketing, seizing the consumer mindshare of \"0 sugar, 0 fat, 0 calories,\" and fully exploiting convenience store channel dividends. There is no shortage of criticism and doubt: \"fake Japanese goods,\" \"copycat,\" \"inflated valuation,\" \"sugar-free scam,\" and \"consumer goods companies that focus too much on marketing and not enough on product will have no future.\" At the recent Yabuli Forum..."
author: "芽郁"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-06-27"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/genki-forest-falls-from-the-cloud-963cca71/"
markdown: "https://xinjignxiao.com/en/articles/genki-forest-falls-from-the-cloud-963cca71.md"
original_source: "https://mp.weixin.qq.com/s/SP_TYKfvH2ufBtHOsmwKQw"
translation: "https://xinjignxiao.com/zh/articles/%E5%85%83%E6%B0%94%E6%A3%AE%E6%9E%97%E5%9D%A0%E8%90%BD-%E4%BA%91%E7%AB%AF-963cca71.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/genki-forest-falls-from-the-cloud-963cca71/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Genki Forest Falls from the "Cloud"

> Genki Forest's rise, like a stone thrown into a lake, stirred ripples in China's long-quiet beverage market. People are keen to dissect its success logic: geographic arbitrage, aesthetics as justice, influencer marketing, seizing the consumer mindshare of "0 sugar, 0 fat, 0 calories," and fully exploiting convenience store channel dividends. There is no shortage of criticism and doubt: "fake Japanese goods," "copycat," "inflated valuation," "sugar-free scam," and "consumer goods companies that focus too much on marketing and not enough on product will have no future." At the recent Yabuli Forum...

Genki Forest's rise, like a stone thrown into a lake, stirred ripples in China's long-quiet beverage market.
People are keen to dissect its success logic: geographic arbitrage, aesthetics as justice, influencer marketing, seizing the consumer mindshare of "0 sugar, 0 fat, 0 calories," and fully exploiting convenience store channel dividends.
There is no shortage of criticism and doubt: "fake Japanese goods," "copycat," "inflated valuation," "sugar-free scam," and "consumer goods companies that focus too much on marketing and not enough on product will have no future."
At the recent Yabuli Forum, founder Tang Binsen revealed the answer to last summer's "national guessing game." Why is Genki Forest so popular?
**Whether it's user thinking, product thinking, or data thinking, the "internet spirit" is the success philosophy that Genki Forest has always touted.** Compared with traditional beverage companies undergoing digital transformation and experiencing growing pains, Genki Forest inherently possesses internet genes.
On Genki Forest's official website, we can see the company's self-positioning: an innovative beverage company with independent R&D and independent design. Indeed, in China's beverage market, where brands are severely aging and the landscape is highly solidified, Genki Forest can be considered a fresh, refined, and idealistic image.
But idealism will eventually be brought back to reality. Unlike Perfect Diary, a new consumer brand that can thrive solely on e-commerce channels and online operations, Genki Forest's lifeline lies offline; it must maintain reverence for offline channels and the dealer system. The internet spirit is fine, but "internet purity" is not.
Building its own factories, deploying coolers, and competing head-on with traditional beverage companies that have stronger property load-bearing capabilities...
**Now, this disruptor that came with the internet spirit to transform the traditional beverage industry seems to have become "less internet." The internet spirit that Genki Forest has always regarded as its underlying belief is facing potential challenges.**
**From Infinite Game to Finite Game**
Philosopher James P. Carse, in "Finite and Infinite Games," defined two types of games: finite games, played for the purpose of winning; infinite games, played for the purpose of continuing the play. Finite games are played within boundaries; infinite games are played with boundaries.
Essentially, the underlying logic of the beverage industry's past "channel is king" approach is a finite game. Products are placed there, and consumers have little choice. Beverage manufacturers believe that as long as there is a channel, products will sell.
"The internet spirit is believing in infinite games," Tang Binsen said in an interview with Zhisland. Finite games satisfy needs, while infinite games create needs. Simply put, it means constantly creating new things to stimulate new user needs.
**This aligns perfectly with Genki Forest's aggressive product strategy. Rapid testing and rapid iteration are the core ideas behind Genki Forest's product development, and are also seen by outsiders as an important manifestation of bringing internet values into the beverage industry.**
At the 2020 dealer conference, Tang Binsen stated that Genki Forest still had 95% of new products yet to be launched, and 2021 would be a big year for Genki Forest products.
Starting with sparkling water, the company has gradually expanded its production lines to include milk tea, coffee, yogurt, energy drinks, and other categories. **To some extent, Genki Forest's multi-category layout aims to improve marginal effects through scale expansion. Whether it can bet on the next "sparkling water" is crucial to whether Genki Forest can spread the costs of multi-category trial and error.**
Based on controlling trial-and-error costs, the asset-light model of OEM manufacturing is undoubtedly a more logical choice for Genki Forest. In the traditional food and beverage industry, this is a very common production method. Genki Forest started this way.
Beverage giant Coca-Cola actually also operates an asset-light business. In Coca-Cola's profit structure, the upstream "concentrated syrup" (Coca-Cola's raw material) and the downstream channel links have higher profits.
As a result, Coca-Cola's main body gradually divested its canning factories, transforming from a production-oriented company into a brand-oriented company holding the "concentrated syrup" formula and focusing on brand operations.
Under the OEM model, because the company's investment in production lines is relatively small, increasing output requires only minimal reinvestment, reflected in a very high marginal return on investment. If it builds its own factories, the upfront construction of production lines requires huge capital investment, and factory rent, employee salaries, depreciation and amortization... trial-and-error costs will increase significantly.
**Coca-Cola shifted from heavy to light, while Genki Forest is shifting from light to heavy.**
After the completion and commissioning of three production bases in Chuzhou (Anhui), Zhaoqing (Guangdong), and Xiqing (Tianjin), on May 7, Genki Forest signed a contract with the High-tech Zone of Xianning, Hubei, to establish its fourth self-built factory in Xianning. On June 16, Genki Forest signed a cooperation agreement with the Dujiangyan People's Government, planning to establish its fifth forest factory in Dujiangyan.
Its explanation to the outside world: because OEM factories have to balance production for their own brands, their capacity cannot meet the demand of Genki Forest's rapidly growing product sales. On the other hand, the OEM model's response speed is slower, which is not conducive to keeping up with the rapid iteration and upgrade pace of the beverage market. Building its own factories means Genki Forest will have stronger control over product R&D and quality control.
**But for Genki Forest, managing the heavy-asset model well and entering a positive cycle of growth is not without difficulty.**
The heavy-asset model certainly has advantages such as independent property rights and exclusive benefits. Once scale effects and a virtuous cycle are formed, it can build a strong moat, and surplus capacity can also be used for OEM production for other brands.
But large tangible assets inevitably raise fixed costs, tie up a lot of capital, and have long payback periods. If faced with debt repayment and collection pressure, it is easy to fall into liquidity risk. Compared with variable costs, fixed costs are difficult to reduce significantly in the short term; the only hope is to dilute them through increasing revenue.
Although Genki Forest's sparkling water is popular, it faces growth pressure. Moreover, many sparkling water products are aggressively entering the market following Genki Forest's paradigm, using erythritol as a sugar substitute in formulas, and most product packaging uses white as the base color to highlight the healthy and refreshing characteristics of sparkling water.
Style can be replicated, and formulas are not trade secrets. Genki Forest does not have an unbreakable product moat.
In contrast, Coca-Cola has achieved deep binding with consumer emotions and consumption scenarios, Nongfu Spring has mineral water as a rigid-demand big product, and traditional beverage giants all have enough time to develop new products. Even if a new product fails, it will not affect the company's long-term development.
**But constrained by the weak profitability of a single hit product and the high costs of heavy assets, Genki Forest's multi-category trial and error is undoubtedly "walking a tightrope." Relying solely on marketing and external capital operations, it is difficult to guarantee that the "infinite game" will not become a "finite game," and that the speed and passion of the "internet spirit" will not cool down.**
**It seems Genki Forest can use rapid product iteration to beat the old masters with random punches, but in the end, it may exhaust itself.**
**The Difficulty of Going Downmarket and the Data Dilemma**
To achieve growth on the existing basis, in addition to continuously creating hit products, Genki Forest must also do a good job of channel sinking. Deploying smart coolers is Genki Forest's new weapon for 2021.
In summer, coolers are the best position for sales. At the 2020 dealer conference, Tang Binsen stated that by April 2021 at the latest, 80,000 smart coolers would be deployed to monitor product sales data at various retail points in real time.
Compared with the national layouts of cooler giants like Coca-Cola and Nongfu Spring, this number currently appears somewhat conservative. In 2022, Genki Forest's goal is to break into the top three in the cooler market.
In the early days, Genki Forest's main offline arena was chain convenience stores with higher entry barriers and channel fees, and younger consumer groups, such as Bianlifeng and 7-Eleven.
In addition to the growth space of convenience stores and the high overlap with target customer groups, the digitalized product selection process of convenience stores is also what Genki Forest values.
Data plays an important guiding role in the daily operations of convenience stores. Typically, convenience stores decide the specific placement of products based on product sales data. Although convenience stores do not proactively share this data with brands, brands can monitor it through third-party data agencies.
However, the high commissions of convenience stores determine that this is destined to be a "not-so-profitable" business. Logistics fees, cooler lane fees, marketing fees, etc., can total as much as 30%-40%.
**The channel investment in smart coolers may be Genki Forest's consideration to control operating costs while expanding channel scale.**
**In the early days, Genki Forest tasted the sweetness of channel expansion from convenience stores, but outside convenience stores, the formats of other channels are much more complex, and channel expansion is not easy.**
First, Genki Forest's products, often priced above 5 yuan, have not yet been validated for acceptance in lower-tier markets.
Second, offline channel resources nationwide are already tight overall, and many small shops have no place to put coolers. So where Genki Forest's 80,000 smart coolers will go is still debatable. "Removing other coolers to make space for Genki Forest" cannot be achieved just by shouting slogans.
Genki Forest is also aware of its idealistic approach. On one hand, it promises merchants a certain "guaranteed sales," and cooler display fees are slightly higher than those of Coca-Cola and Nongfu Spring.
On the other hand, it incorporates the efficiency of cooler-network connectivity into the evaluation system for dealers, stating that it will implement differentiated management of dealers and give "core dealers" more incentives, including granting certain company equity.
**In the short term, subsidies and incentives are certainly a shot in the arm, but they cannot be relied on as a meal. Moreover, coolers depreciate, terminal execution can easily go off track, and channel management and maintenance costs are high. Currently, dealers' attitudes toward helping Genki Forest deploy smart coolers are unclear.**
Typically, the process of traditional offline channel maintenance is: the manufacturer provides coolers, dealers deploy coolers at terminals to achieve product channel coverage, and the manufacturer's sales staff or dealer teams conduct continuous terminal inspections to ensure product displays are complete and replenish stock in a timely manner, thereby driving sales.
In simple terms, traditional offline terminal maintenance relies on a human-wave tactic. But as sales outlets increase, many outlets cannot be monitored effectively, and the cost of manual terminal inspections is rising, with longer feedback loops. Dealers are often unwilling to provide operational data feedback to brands.
**Pain points such as untimely replenishment during peak seasons and inability to guarantee cooler displays also make it difficult for brands and dealers to quickly grasp accurate sell-through data. This puts a question mark on Genki Forest's data-driven hit product methodology.**
Smart coolers are attempting to solve these problems. Through high-definition cameras monitoring coolers around the clock, brands and dealers can monitor cooler displays and dynamic sales anytime, anywhere from PC or mobile, set reminders for out-of-stock or non-compliant displays, and automatically report abnormal information. They can even optimize product display plans and order ratios through sales data analysis.
Of course, this also means that many different display standards will inevitably arise.
**While cooler digitalization can reduce costs and increase efficiency, it still essentially relies on human management. The terminal management of mom-and-pop shops has not formed rigorous habits. If investment continues to increase, as the number of coolers grows, management difficulty will snowball.**
Now, in the "involution" and "decentralized" channels, dealers face increased survival pressure. Especially dealers serving small shop channels, where channel loyalty is low and easily poached, dealers often fight over this. When terminal owners are out of stock, they can source from wherever they want, ultimately only increasing dealers' terminal management and channel maintenance costs.
**For dealers, the upfront investment costs and the profound long-term changes these smart devices bring to channel operations are all factors that need consideration and digestion.**
**"Genki Forest" Alone Cannot Make a Forest**
With consumption upgrading, the market landscape has become segmented and homogenized, the life cycle of single beverage products is gradually shortening, and the era of a single product conquering the world is over.
Today's beverage giants are all building sub-brands to create leading products in different categories, such as Nongfu Spring's Tea π series and Coca-Cola's Zero series.
Genki Forest is also striving to break free from the profit model of relying on a single hit product and cultivate more profitable business formats. In addition to sparkling water, Genki Forest's existing product lines include Genki Forest Milk Tea, Ran Tea, Jianmeiqing Tea, Alien functional drinks, Beihai Ranch yogurt, Manfen juice sparkling water, and coffee latte milk tea.
But sparkling water and Ran Tea together account for nearly 90% of the company's sales. Among them, sparkling water accounts for about 60%, Ran Tea nearly 30%, and other products have had mediocre responses.
Tang Binsen has thus accelerated the pace of investment layout, or it can be said that Tang Binsen is looking for the next "Genki Forest." **If Genki Forest is a visible card in Tang Binsen's hand, then Challenger Capital is a hidden move. With the rise of Genki Forest, the map of Challenger Capital behind it is gradually emerging.**
According to public data, since its establishment in 2014, Challenger Capital has invested in more than 100 startup companies, including Tiger Brokers, Jiaxiang Interactive, Huoli 28, Lamian Shuo, Panda Brewing, Shizuren, Qingshi Zhuyi, Guanyun Baijiu, and others.
With one hand, Tang Binsen created the Genki Forest empire, once valued at up to 40 billion yuan; with the other, he quietly laid out in the consumer and TMT sectors through Challenger Capital.
An analyst familiar with Tang Binsen said: "Genki Forest and Challenger Capital are Tang Binsen's dual cores, one in the open and one in the dark.
The channels, advertising resources, and production-sales playbooks proven by Genki Forest are replicated in other invested brands, while Challenger Capital, through early-stage investment and deep post-investment management, continuously enriches Genki Forest's touchpoints and scenarios in the consumer goods track. Ultimately, this forms a consumer goods empire with the same genes and underlying logic."
**Channels and production-sales playbooks may be replicable, but can Genki Forest's success be replicated in batches? The answer may be pessimistic, because in the "post-Genki Forest" era, the game is just beginning.**
Health-oriented consumption concepts have long been surging in the FMCG industry. Before Genki Forest's sparkling water became popular, sugar-free sparkling water had already undergone years of market cultivation. Genki Forest was just a catalyst that ignited it, while also opening the curtain on a new round of fierce competition.
Now, beverage giants such as Coca-Cola, PepsiCo, Nongfu Spring, Uni-President, and Wahaha, as well as new-style tea brands like Heytea and Naixue Tea, have all launched their own 0-sugar sparkling waters.
Not only sugar-free, but consumers may also need more nutritious beverages. Recently, the high-dietary-fiber beverage brand "Letikong" received nearly 100 million yuan in Series A financing. The beverage industry is experiencing unprecedented fierce "involution."
Some analysts say: "Behind Genki Forest's high valuation, what the capital market is willing to pay for is the story of a successful brand company, not the story of a traditional beverage company." But Genki Forest's image seems to be gradually blurring. With the constraints of factories and coolers, the kite string is gradually tightening, and this "cloud" kite is being pulled back to the ground.
Source: Xin Shang (ID: baoliaohui) Author: Ya Yu Editor: Yi Ye
_**-END-**_


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671