Introduction: Genki Forest has extended its reach into the heartland of local beverage brands. "When Genki Forest first started distributing in lower-tier cities like third- and fourth-tier cities, it faced some difficulties due to consumption habits, but the brand's recognition gave it an advantage. Currently, while products like乳茶 (milk tea) and外星人电解质水 (Alien electrolyte water) are still in the initial penetration stage, there is significant room for growth in the distribution and sell-through rates of sparkling water products in mom-and-pop stores and township supermarkets," a distributor recently told Food Finance. Image source: Genki Forest official Weibo 01 Genki Forest Targets Lower-Tier Markets: What's the Status of Local Brands? "Going downmarket" involves two aspects: one is penetrating into lower-tier cities and even townships and rural channels, and the other is occupying small channels like roadside mom-and-pop stores. Objectively speaking, when Genki Forest first announced its entry into lower-tier markets, there was no shortage of pessimistic voices, because its product pricing and attributes like 0 sugar, 0 calories, 0 fat, and healthiness did not seem to perfectly align with the consumption concepts of lower-tier markets. But it must be admitted that Genki Forest's extremely high "visual familiarity" in lower-tier markets is genuinely enviable, and the fact that it feels "familiar" upon first appearance is an obvious reality. Such a "widespread reputation," even with the brand name already penetrating various rural channels, is closely related to its clever marketing strategies. In the past two years, Genki Forest's advertisements have been overwhelming, appearing on variety shows and new media platforms like Douyin and Kuaishou. Additionally, in 2020, Genki Forest set a goal to deploy 80,000 freezers in the offline market, and since 2021, it has been almost frantically deploying freezers in traditional offline channels. It is reported that Genki Forest offers a 200 yuan reward per freezer for sales staff and 100 yuan for supervisors, leading to tens of thousands of freezers suddenly occupying traditional channels like restaurants and small shops. Image source: Genki Forest official Weibo This laid the foundation and advantage for Genki Forest to "become familiar" in lower-tier markets and then convert that into sales. At this point, many local beverage brands in lower-tier markets might worry: Genki Forest is coming to the countryside with its "good popularity"—will it pose a threat to us? To answer this question, consider this scenario: You are quite popular in your neighborhood group back home, but one day, the "child of others" who studies at Tsinghua returns to the village. The学霸 (top student) who is already famous in the hometown will inevitably be surrounded by greetings from relatives and friends. At that moment, don't you feel neglected and your status shaky? Genki Forest's "going to the countryside" seems like this for local brands, but after investigating the market, Food Finance found that this is not the case. "In third- and fourth-tier cities, small counties, and especially rural markets, consumers have strong tolerance for similar products. They don't have a 'one mountain cannot tolerate two tigers' mentality. On one hand, their brand loyalty is not that high; on the other hand, more products in the same category mean more choices for them. In other words, they won't reject a brand just because it's the first time they see it on the shelf, nor will they 'lock in' a brand just because they see it often," said Liu, a distributor in a township in Henan, about the competitive relationship among food and beverage brands in lower-tier markets. That is to say, here, Want Want and Wahaha can coexist peacefully, the choice between JDB and Wanglaoji is not exclusive, if Huiyuan orange juice is out of stock, they casually pick up Minute Maid Pulpy Orange, and the taste of Coca-Cola and Pepsi seems not much different. As for Genki Forest, if there is any threat to local brands, it might only be that it has a slight advantage in novelty. 02 Weakening vs. Going National: Why Do Local Brands Have Different Fates in the Same Arena? According to a research report by Guotai Junan Securities, excluding the 390 million people in first- and second-tier cities, the population in third-tier and below cities, counties, towns, and rural areas is nearly 1 billion. The lower-tier market, covering nearly 300 prefecture-level cities, 3,000 counties, and 40,000 townships, has a huge user base and retail terminals, which is an "incremental space" that any FMCG company planning long-term development cannot ignore. This makes it easy to understand why Genki Forest, having already established a comfortable zone in first- and second-tier cities, still chooses to "leave the city and go to the countryside," expanding into lower-tier markets. It is because such "incremental space" is truly tempting. But this does not mean that all local beverage brands can enjoy the dividends of this incremental space under such natural market advantages. Some brands, after being popular for a while, fail to go national and instead become weaker, while others gradually break free from regional restrictions and thrive in larger markets. For example, Future Cola. At its inception, Future Cola positioned itself with a nationalist image, using the slogan "Chinese people's own cola." Since its production in 1998, its early sales exceeded 600,000 tons, close to the sales of Coca-Cola and Pepsi, forming a competitive force. By the time Future Cola had been on the market for a year, its annual sales reached 2-3 billion yuan. Image source: Tmall · Wahaha Official Flagship Store However, this peak did not last long. Playing the "national flag" emotional card, Future Cola initially attracted attention by leveraging national sentiment, but on one hand, because it was deeply rooted in rural areas for a long time and did not connect with trends or meet market demands, this was one reason for its decline. On the other hand, after "imitating" the two major foreign colas and becoming popular, it did not incorporate its own innovation, leading consumers to view Future Cola as a knockoff of the two major colas. When it was on the decline, Future Cola seemed not to realize the severity of the problem and continued with its inherent thinking, which caused it to stagnate and even go further downhill. This is another reason. But as the saying goes, different fates in the same arena. In stark contrast to brands like Future Cola, which were once popular domestic beverages, victims of the "two colas" encirclement, and local brands that once held a place in lower-tier markets, old national brands like Beibingyang, Huayang, and Bingfeng are ushering in their "second spring" in the new era, advancing from regional markets to national expansion. For example, Huayang Soda, with a history dating back to 1927, is a representative of authentic old Guangzhou-style soda. Once, Huayang Soda was not only popular in southern regions like Guangdong and Hong Kong but was also jokingly called "North-South Two Oceans" along with Beibingyang Soda. Although it faded from people's view for various reasons, in the current trend of national trend (guochao), Huayang Soda has made a comeback. Bingfeng, one of the "Sanqin Set" (a local specialty) and honored with titles like "Xi'an Time-honored Brand," "Shaanxi Time-honored Brand," and "Shaanxi Food Industry Best Popularity Brand," has now stepped out of Xi'an and is sprinting for an IPO, earning people's high expectations. Dayao Soda, which created the large soda category, has partnered with actor Wu Jing as its spokesperson, shining on various new media platforms and national catering channels. "Asia Soda," one of China's eight major sodas, has broken out of Guangdong and reached the whole country; ... Riding the wave of national trend, these former local sodas are rising strongly and accelerating their national expansion. 03 Under the Nostalgia Trend: How Can Brands Usher in a "Second Spring"? Due to historical reasons, old soda brands generally have strong regional influence, such as Bingfeng in Shaanxi, Beibingyang in Beijing, and Bawangsi in Northeast China. In recent years, these old factories, with an average brand age of over 80 years, have begun to accelerate their national expansion by leveraging the national trend and nostalgia. However, this by no means implies that simply labeling a brand as "national trend" will lead to smooth sailing, nor does it mean using sentiment to hold consumers hostage. Especially for brands like old soda brands that have a foundation in national trend, they should dig deeper into the profound culture behind the brand and the consumption concepts that keep pace with the times. So, in the new market, what key points should old brands grasp to successfully break through current limitations, move to a larger stage, and become known nationwide from being confined to one corner? First, product upgrading. For example, to cater to the health upgrade in consumption, they should focus on features like sugar reduction, fat reduction, and additive reduction. How to provide consumers with higher value through innovations that directly hit pain points while stabilizing and upgrading quality is the primary consideration for winning. Second, brand revitalization. The return of old soda brands naturally relies on the push of nostalgia, but nostalgia is a catalyst, not a "protective charm." Nostalgia can represent a certain era, but it cannot represent every era. It may be a memory for the post-70s, post-80s, and post-90s, but it is relatively unfamiliar to many Gen Z. Therefore, once nostalgia no longer works on a certain group of consumers, it poses a great challenge to brand development. At this point, brand rejuvenation becomes particularly important. Third, marketing and promotion. In the Internet age, the importance of marketing is self-evident. In this regard, Huayang 1982, which carries the banner of "trendsetter of domestic soda," is worth learning from. Looking at holiday marketing alone, from traditional Spring Festival, Dragon Boat Festival, and Mid-Autumn Festival to the popular Women's Day and Youth Day among young people, Huayang Soda clearly voices its brand proposition and resonates with consumers, making it a representative soda brand in marketing. Finally, expanding channels. Recently, Meituan data shows that national trend beverages, mainly including Laoshan Cola, Shenhui Herbal Tea, Hongbaolai, Tianfu Cola, Asia Soda, Beibingyang, and Bingfeng, saw sales in the first half of 2022 increase by over 150% compared to the same period last year, and in July 2022, sales increased by over 210% year-on-year. Regional old sodas have also gained some sales in e-commerce through promotion. This breakthrough is not only a matter of following the trend but also represents an attempt by old sodas to break regional restrictions. From a macro perspective, policy opportunities like the dual circulation of the national economy and economic internal circulation have brought great benefits to more regional brands going national. Looking ahead, we don't know how far these local brands will go, but what we can see is that more national brands are investing more effort in striving for a larger stage. The beverage industry is a sunrise industry that never goes out of style. In the limited market space, facing traditional giants like the "two colas" and new-style beverages like Genki Forest, old national beverage brands under pressure from both sides have shown their strong "combat effectiveness." Perhaps when facing a larger national and global stage, they will shine brilliantly under the highly rising national confidence and brand "ambition" in the future. *Images not labeled with source are from the comprehensive network. Source: Food Finance (ID: gh_a08436e069b7) Author: Market Vane