---
title: "Genki Forest No Longer Aggressive"
description: "In the fiercely competitive summer bottled beverage market, Genki Forest's traditional Chinese health water product 'Zizai Shui' has become a notable presence on shelves, occupying prominent positions in many convenience stores and vending machines. Distributor Qin Bin in Chongqing told Caijing that Zizai Shui now accounts for 10%-15% of his Genki Forest product sales, achieving this from zero in just 8 months, surpassing the performance of Genki Forest's flagship products at the same stage."
author: "半熟财经"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2024-09-18"
language: "en"
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# Genki Forest No Longer Aggressive

> In the fiercely competitive summer bottled beverage market, Genki Forest's traditional Chinese health water product 'Zizai Shui' has become a notable presence on shelves, occupying prominent positions in many convenience stores and vending machines. Distributor Qin Bin in Chongqing told Caijing that Zizai Shui now accounts for 10%-15% of his Genki Forest product sales, achieving this from zero in just 8 months, surpassing the performance of Genki Forest's flagship products at the same stage.

In the fiercely competitive summer bottled beverage market, Genki Forest's traditional Chinese health water product 'Zizai Shui' has become a notable presence on shelves, occupying prominent positions in many convenience stores and vending machines. Distributor Qin Bin in Chongqing told Caijing that Zizai Shui now accounts for 10%-15% of his Genki Forest product sales. From zero to this achievement, the product took only 8 months. This also surpasses the performance of Genki Forest's flagship products at the same stage—sparkling water took two years to be accepted and grow; electrolyte water took a year and a half. Innovation has always been the biggest growth driver for Genki Forest. The company started with sparkling water, and when sparkling water declined and conflicts with distributors deepened, electrolyte water restored distributor confidence. Now, products like 'Zizai Shui' and 'Ice Tea' are becoming new growth segments. However, behind a few hits, Genki Forest has many unsuccessful innovations, like a lottery with low odds. For example, from September 2020 to September 2021, Genki Forest launched about 30 new beverage flavors, most of which failed. In early this year, founder Tang Binsen's internal letter reflected on the past: 'In some years, the sales system wasted 70-80 million, R&D wasted 70-80 million...' The sunk costs of innovation troubled him, and he began to question whether 'innovation for innovation's sake' violated industry rules. Over the past year and a half, Genki Forest has become more cautious and conservative: clearer organizational structure, slower product launches, more diverse trial sales methods, and more standardized processes. In its early days, Genki Forest, waving the banner of internet thinking, relied on innovation to create hits, playing the role of a 'challenger' in the traditional beverage industry. Now, it is learning to become a mature consumer company.

**An Innovation-Driven Company**

The product manager for 'Zizai Shui' is a post-90s woman who joined Genki Forest from the investment industry in 2019. In her years there, she devoted most of her time and energy to developing 'Zizai Shui'. Inspired by Guangdong herbal tea, she approached Tang Binsen with only a concept: to make a healthy, flavorful water based on traditional Chinese ingredients. To her surprise, Tang immediately supported her and let her share her idea at the 'Genki Universe Conference'. Tang Binsen himself is a serial entrepreneur, having worked on office software, antivirus software, and achieved great success in gaming. In 2014, he founded Challenger Capital, giving him dual identities as entrepreneur and investor. After founding Genki Forest in 2016, he insisted on combining 'internet spirit' with consumer goods, specifically by continuously exploring consumer needs and designing products from those needs. Under this ethos, many people from non-consumer industries joined Genki Forest. The product manager for Zizai Shui previously worked in investment strategy; the former product manager for 'Youkuang' (a mineral water product) worked in branding at an internet company. Tang Binsen is a boss who especially supports employee innovation, believing in young people. Many Genki Forest products were proposed by young people; the initiator of 'Alien' electrolyte water is also a post-90s. Creating a 'hit product' to achieve a leap is what many Genki Forest product managers aspire to. The company itself is established in the beverage industry through hits. In this relatively stable industry, several major beverage companies tightly control offline distribution systems, leaving little room for new entrants. Early Genki Forest products could only rely on online marketing and new retail channels like e-commerce, convenience stores, and vending machines. The success of sparkling water allowed Genki Forest to build its distribution network and win over core distributors. At its peak, sparkling water was often out of stock, with distributors queuing for orders and waiting half a month to a month. 2021 was Genki Forest's 'glory year': data showed annual sales reached 7.3 billion yuan (mainly sparkling water), and the company raised two rounds of financing, with valuation soaring to $15 billion. To encourage employees to propose ideas, Genki Forest established the 'Genki Universe Conference System'. According to several employees, this monthly meeting is mainly for the innovation department but encourages all employees to participate. Anything can be discussed—recent market observations or wild product ideas. It doesn't require rigorous presentations; sometimes just a 5-minute verbal pitch with few constraints. Many ideas are exchanged and collide at this conference. According to the Zizai Shui product manager, almost every 3-6 months, a new idea goes from conception to incubation. She revealed that when an idea is proposed, Tang Binsen rarely sets limits; as long as you have a reasonable argument, he agrees to let you try. At the project approval stage, Tang's favorite questions are: Do you like drinking it yourself? Would you drink it every day? Would people around you buy it? In contrast, he rarely rejects a product idea based on what already exists in the market or industry; he mainly looks at whether the product meets a consumer need or can additionally satisfy consumer needs. The financial investment in Genki Forest's innovation is not high. According to the Zizai Shui product manager, in the early stage, the innovation cost for Zizai Shui was just the cost of raw materials from across the country, personnel costs, and the cost of a large pot. Since 2019, Genki Forest has built six factories in Chuzhou (Anhui), Zhaoqing (Guangdong), etc., achieving self-production of all products. These factories also support all innovation teams in production. Generally, new products can be produced on existing equipment. But Zizai Shui was different: it chose a large-pot boiling method rather than industrial extraction, so the factory had to purchase a person-height large pot. This pot became the biggest investment in the early stage of Zizai Shui.

**The 'Aftermath' of Excessive Innovation**

The R&D cost for a single new product is not high, but the cumulative cost of multiple new products is significant. In a 2021 interview, founder Tang Binsen mentioned that Genki Forest had nearly 100 products in reserve. An insider who has spoken with several senior Genki Forest executives told Caijing that the sparkling water team at that time adopted a 'scratch lottery' strategy—scratch more tickets to win a few—meaning frequent launches to test the market and incubate hits. But behind this strategy was massive resource waste and harm to sales staff and distributors. At that time, Genki's sales system also had management chaos. In 2022, conflicts between Genki Forest and distributors were frequent. Many distributors reported that ordering from Genki Forest was like 'opening a blind box': if they wanted to order popular flavors, the company often bundled other flavors. For example, ordering 5,000 boxes of white peach sparkling water might come with 2,000 boxes of other flavors. Genki's best-selling sparkling water flavors have always been a few like white peach and summer black grape. When the market was good, other flavors could sell. But in 2022, due to the pandemic, many beverage companies faced unsold inventory. Many distributors' goods sat unsold, eventually expiring and having to be destroyed. Besides blind boxes, 'channel crossing' (diversion) was rampant—products flowed between regions with different pricing, disrupting the price system, causing distributor complaints. Damaged distributor confidence ultimately affected Genki's sales. An insider revealed that after 2022, sales of many Genki Forest products declined, and distributors became conservative in ordering. In 2023, sparkling water sales halved compared to 2021. To restore distributor confidence, Genki made several reforms. First, internal anti-corruption: Ye Licheng, former head of the marketing center, was detained by police for suspected major corruption and economic crimes. In 2023, Genki launched a 'co-built sales representative' model, hiring sales reps to handle shelf placement, material placement, and activity execution, previously done by distributors. Genki and distributors share the salary, with Genki covering 60%-70%. According to Qin Bin, if products don't sell before expiration, Genki compensates for part of the difference, with both sides sharing 50% of the loss. Also because of 'no limits' on innovation, the vast majority of Genki's new products failed market tests, especially in areas where it lacked expertise. For example, cola: Genki has long dreamed of making cola, launching cola-flavored sparkling water in 2023, but sales figures have never been disclosed. Another example is drinking water. Quan Si, after joining Genki, took over 'Youkuang', a drinking water product. Despite efforts, she couldn't save it. An insider said Youkuang has ceased production. Quan Si noted that drinking water and beverages are fundamentally different products. Beverages have high differentiation, making customer acquisition easy but retention difficult; drinking water has low differentiation, making acquisition hard but retention stable once achieved. These two product types have created giants in different markets, often with barriers. For example, C'estbon and Yibao find it hard to do beverages. Conversely, beverage companies find it hard to succeed in drinking water. 'Genki Forest's capability model has a competitive advantage in beverages; it's easy to launch new products and users easily choose them, but drinking water is not a good business for Genki at this stage,' Quan Si said. However, Genki hasn't given up on drinking water; besides Youkuang, it launched 'Forest Water' and 'Chuqi'. Quan Si revealed that previously, Genki would pour significant resources into new products, launching them directly to market with almost no small-scale testing, leading to unfocused resources and strategy. Sales staff were exhausted, having to promote proven products while testing new ones. 'The capability models, energy, resources, and work methods for promoting mature products and testing new ones are different; sales can't handle both,' Quan Si said. This dispersion slowed growth of mature products and hindered promotion of new ones.

**The 'Harvest' of Innovation**

It's hard to judge whether Genki's 'lottery' innovation is more beneficial or harmful. The Alien electrolyte water, which went viral at the end of 2022, is also a product of its innovation encouragement. Launched in 2021 for sports人群, its concept wasn't widely understood. In December 2022, electrolyte water became a 'magic cure' for sore throats among COVID patients, and Alien saw explosive sales. In 2023, Alien continued to grow; Qin Bin revealed it sells especially well in universities and gyms. Like sparkling water, Alien had a first-mover advantage in a new beverage category. When launched, there were few notable electrolyte water brands; Pocari Sweat, in China for over 20 years, hadn't made waves, and Jianli's performance was flat. After Genki launched Alien, it quickly dominated the market. According to a report by Qianzhan Industry Research Institute, in 2022, Alien held 47.0% of the electrolyte beverage market, ranking first, with Pocari Sweat at 23.8% in second. In 2023, according to insiders, Alien's annual sales were around 3 billion yuan, on par with sparkling water. Qin Bin revealed that in his Genki product sales, sparkling water accounts for 30%, electrolyte water 40%, surpassing sparkling water. However, even with Alien, Caijing learned from multiple sources that Genki's overall performance in 2023 was only flat compared to 2021; to grow, it needs more hits. 'Zizai Shui' was born in this context—Genki needs to be frugal while desperately seeking new growth points. In early 2023, Zizai Shui was produced in small batches and sold on Genki's online flagship store with no marketing budget; several thousand boxes sold out in four days, standing out among new products. The next step was planning its official launch. Adding a dedicated production line and purchasing large pots was a huge investment, not to mention marketing budgets and sales resources. Senior management had to decide whether to spend on an unproven beverage. Zizai Shui eventually got a good outcome. On one hand, the Chinese-style health water market was still blank. According to Qianzhan's '2024 China Chinese-style Health Water Industry Trends Report', from 2018 to 2022, only four brands entered this category. Chinese-style health practices are becoming a lifestyle for young people; around the time Zizai Shui was conceived, 'soaking goji berries while partying' was a hot topic, and the expensive 'Yizheng Gen' ginseng water attracted attention. Qianzhan predicts the market could exceed 10 billion yuan in five years. On the other hand, in the sugar-free tea boom, Genki's products like Ran Tea and Xian Tea underperformed compared to Nongfu Spring's Oriental Leaf and Suntory. Genki needs a new product. Sugar-free tea is a substitute for water; sugar-free Chinese health water can be seen as an upgrade, also serving as a 'water substitute'. It might fill the gap Genki lost in sugar-free tea. For these reasons, Zizai Shui was designated a strategic product. In 2023, for half a year, Genki re-laid out the production line for Zizai Shui. In autumn/winter 2023, Zizai Shui was relaunched with promotional and resource support. In less than four months, sales exceeded 100 million yuan. According to Qianzhan data, with a 58.6% market share, Zizai Shui's 2023 sales reached approximately 264 million yuan. In his internal letter, Tang Binsen highlighted it as positive proof of the corporate culture of 'believing in young people'. More importantly, Zizai Shui proved the company still has the ability to discover new consumer trends and create trendsetting products, somewhat dispelling the shadow over Genki Forest.

**Reflection and Change**

Excessive innovation leads to resource waste, but innovation can also bring huge returns, as seen in 2023. As Genki Forest sheds its internet mindset and grows into a mature consumer company, it needs to find a balance in controlling innovation costs. Genki is indeed changing in this direction. Now, Genki has a mechanism for new product incubation and testing. It still encourages employees to propose and approve projects, but there are more processes in the testing phase. Specifically, new products first go on sale in Genki's online flagship store; if sales are good and market feedback is positive, more production lines are allocated. When entering offline channels, it's not a nationwide rollout but targeted placement. Initially, Zizai Shui was only placed in a few convenience stores and vending machines in first-tier cities; after good performance, it gradually expanded. Even now, it hasn't fully covered second-tier cities. After 2023, Genki's launch speed slowed significantly. Previously, it took 8-9 months from trial sale to mass launch; now it's 15-16 months. An insider revealed that Genki reduced the number of new products and flavors; annual new products (including new flavors of old products) are only one-third of 2022's count. The same source said Genki's iteration standards are becoming clearer: if a new product doesn't reach monthly sales of 100 million yuan within six months, internal resource allocation is cut, or it's delisted for adjustment. This restraint has brought positive feedback. In his internal letter, Tang Binsen wrote that waste has significantly decreased, and the subtraction and restraint in product incubation and brand innovation have been recognized by the market, with inventory backlogs and indirect R&D waste greatly reduced, and management efficiency improving across areas. But challenges remain severe. Just as sparkling water faced intense competition after its success, electrolyte water and Zizai Shui face the same. After 2023, Kangshifu, Mizone, Dongpeng Beverage, Jianlibao, Wahaha, Coconut Palm, Panpan, etc., entered the electrolyte water market, crowding the track. According to Mashangying data, Genki's electrolyte water market share fell from 50% in December 2022 to under 30% in July 2023. After Zizai Shui launched, five brands entered the Chinese-style health water track that year, and ten in 2024. Bottled beverages have low barriers to innovation and imitation; China's strong supply chain and numerous OEM factories mean a hit product is quickly copied. Innovation is important, but capturing consumer mindshare early may be more critical. Over the past decades, beverage giants that first captured the market have enjoyed this dividend, with distribution networks reaching towns and villages, allowing products to last for decades. With abundant resources, giants can afford to cultivate markets, like Oriental Leaf's decade of silence before its boom. These are still unattainable for Genki. In the competitive beverage industry, new companies with weak foundations struggle. It's clear that Genki Forest is not avoiding its problems and weaknesses; it's moving forward with bumps, perhaps less sharp-edged, but steadily maturing.

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