Genki Forest's sugary drinks are becoming more numerous. Ice Tea, Xiao Ying Coffee Ice Orange Americano, Alien Vitamin C Water... Products launched in recent years no longer emphasize sugar-free but instead market low sugar. At the same time, names like drinking water, Pu'er tea, and Yuanqi Zizai Shui have appeared in Genki Forest's product matrix, with SKUs too numerous to count. When a company that burst onto the scene with '0 sugar, 0 calories' as its hallmark begins to pivot repeatedly, we should realize the brand is changing. And Genki Forest's change stems from declining performance. During the high-growth years of 2018-2020, Genki Forest's sales growth rates reached 300%, 200%, and 309% respectively. By 2022, sales growth had plummeted to around 20%, a cliff-like drop. As for 2023, specific growth figures have not been released. Fortunately, this summer and autumn, Genki Forest won its battles beautifully. According to the '2024 China Traditional Wellness Water Industry Trend Insight Report' released by Qianzhan Industry Research Institute, the traditional wellness water market is showing explosive growth, with Genki Forest's Zizai Shui leading the track with a 58% market share. Mixed news is nothing new for Genki Forest. Since growth slowed, the company is no longer the internet star brand with a halo. After returning to ordinariness, Genki Forest has been struggling to explore a future it refuses to accept as ordinary.
Trapped by Sugar-Free Genki Forest's desire to make sugary drinks has long been known. The most famous incident was the '0 sucrose' controversy in 2023. A master's degree holder in epidemiology from the University of Munich questioned Genki Forest's milk tea product on Zhihu, accusing the company of downplaying key facts in its marketing. The label said '0 sucrose, low fat,' and the promotion said 'milk tea lovers need not fear gaining weight,' but the ingredient list on the back showed that while no sucrose was added, crystalline fructose was used. A company that started with sugar-free beverages must be highly sensitive to 'sugar.' It's far-fetched to claim Genki Forest didn't realize the milk tea contained sugar. Genki Forest knowingly took the risk, betting on market tolerance. Either the market wouldn't notice, or if it did, the sugar content was low enough to be 'tolerable.' But this tactic was not clever. When consumers discovered it, most felt deceived and were furious. The milk tea, which had potential to become the second big hit after sparkling water, saw its momentum slow significantly due to this incident. What exactly is the barrier for sugar-free beverages? After much thought, it seems only anchoring on the word 'sugar-free' matters. In other words, making a fuss over sugar-free ingredients. Genki Forest originally rooted itself in consumers' minds through ingredients.
Genki Forest's trump card sugar-free ingredient is erythritol. Compared to artificial sweeteners like aspartame, erythritol is a higher-quality natural sweetener. However, it still fails to dispel consumers' concerns: Do sweeteners stimulate appetite, especially for sweets? Do they affect gut microbiota? Do they reduce satisfaction from sweetness, potentially leading to obesity? Current research remains inconclusive. The general consensus is that sweeteners are still better than sugary foods, but no one can provide strong endorsement for sugar-free, so controversy persists. As for newer sweeteners like allulose, Genki Forest has not yet ventured into them. Even if it does, similar controversies are hard to resolve. Another major challenge for sweetener beverages is taste. Sweetener drinks are detectable—they taste odd, an indescribable sensation caused by the sweeteners. Many consumers say sugar-free alternatives 'lack soul' and leave a dry mouth. Why don't people like sweetener drinks? Because they're 'not tasty'—two simple words that hit hard. Let's revisit Genki Forest's actions. In May this year, Ice Tea achieved monthly sales exceeding 100 million yuan, becoming one of Genki Forest's big hits. Ice Tea was developed and tested in 2022 and launched in 2023. Initially, there were two versions: one reduced sugar, one zero sugar. As the market evolved, the reduced-sugar version was retained. The milk tea mentioned earlier follows the same logic. If the R&D team could have formulated a sweetener-based product with acceptable taste from the start, there would have been no need to risk fooling consumers with '0 sucrose.' These two incidents directly prove that on the sweetener track, companies still cannot solve the taste deficiency, which will continue to hinder brand development. Genki Forest's product line extension from sugar-free to sugary is inevitable and also a necessity.
The Mystery of Big Hits Yuanqi Zizai Shui is Genki Forest's new traditional wellness water series. Among them, 'Red Bean and Coix Seed Water' and 'Red Date and Wolfberry Water' have become popular items in supermarkets. According to LatePost, Genki Forest's 'Zizai Shui' is expected to exceed 1 billion yuan in sales in 2024. Previously, its big hits with annual sales exceeding 1 billion yuan were '0 sugar, 0 fat, 0 calorie' sparkling water and 'Alien Electrolyte Water.' 'Zizai Shui' will become Genki Forest's third big hit. Why did Genki Forest choose to develop traditional wellness water? Precisely, it fears competitors taking market share. Traditional wellness water and sugar-free beverages share many overlapping customer groups. As the saying goes, 'Don't let water flow to others' fields'—better to do it yourself than let others. This mindset has been applied to almost all new product development. Genki Forest tries every beverage category with market demand. However, R&D and trial-and-error come at a cost. In an internal letter at the beginning of this year, founder Tang Binsen reflected on the past: 'In some years, the sales system wasted 70-80 million, the R&D system wasted 70-80 million...' Clearly, the company's extravagance has put heavy pressure on costs. Creating big hits must be targeted.
Let's delve into the secrets of Genki Forest's past bestsellers. The first two well-known hits—sparkling water and Alien Electrolyte Water—were launched in 2018 and 2021 respectively. What do these big hits have in common? First, domestic demand was in an explosive phase; second, no leading brand had emerged in the category. Before Alien electrolyte drinks appeared, there were brands like Gatorade, Pocari Sweat, and Scream, but the market was fragmented. The concept of electrolytes was mainly confined to fitness circles and not widely known. With Alien's debut and the fitness craze, consumer recognition of electrolyte drinks rose steadily. According to the '2023 China Electrolyte Beverage Market Insight Report' by Qianzhan Industry Research Institute, the electrolyte beverage market grew 50.1% year-on-year in 2022, becoming the fastest-growing beverage category. In 2022, Alien took the top spot with a 47% market share, far ahead of second-place Pocari Sweat (23.8%) and third-place Scream (16.5%). By analogy, when Genki Forest launched sparkling water with the '0 sugar, 0 calories' concept, and now traditional wellness water, it successfully captured markets by riding the health trend. But in the beverage track, relying on one evergreen big hit to dominate is extremely difficult. Everyone wants to be Coca-Cola, but there's only one Coca-Cola. To control costs while developing new products, starting with 'Zizai Shui,' Genki Forest established a retention standard: if a new product fails to achieve a 30% repurchase rate within six months of launch, Genki Forest will reduce production or operational resources, or even delist it. New products cannot be reduced, but costs cannot increase. For Genki Forest, focusing on one or two new products with concentrated marketing and channel efforts is certainly better than aimless 'spray-and-pray' investment.
Inevitable Low Prices Know yourself and know your enemy, and you'll never be defeated. While facing R&D challenges in sugar-free beverages, Genki Forest must also monitor competitors' progress. According to a report by Mashangying Intelligence on the CR13 group rankings and market share reference lines for sugar-free ready-to-drink tea in April-May 2024, 'Nongfu Spring + Suntory combined market share exceeds 75%; adding Guozishule and Kangshifu, the combined share exceeds 85%.' This means that despite Genki Forest's rapid rise in recent years, as a new-generation player, it still faces several mountains. These mountains, though lagging in subcategories like sparkling water and electrolyte drinks, hold significant advantages in the broader sugar-free ready-to-drink tea category. On the other hand, after Genki Forest created sparkling water, countless peers smelled opportunity and joined the fray. Copying sparkling water or electrolyte drinks is not a technical challenge; Nongfu Spring, Wahaha, and Dongpeng Beverage have all quickly ramped up. Alien's market share is not unassailable, so Genki Forest's anxiety persists. Genki Forest's products are not cheap. For example, a 500ml bottle of Alien electrolyte water sells for about 5 yuan; a 550ml bottle of Nongfu Spring Scream (isotonic version) sells for about 4.2 yuan; a 555ml bottle of Dongpeng Bushuila sells for only 3 yuan. Low prices are the most critical factor for success in lower-tier markets. When all brands realize that competition in first-tier cities is saturated, lower-tier markets inevitably become battlegrounds. Business in lower-tier markets is both difficult and easy. The focus is the same: who is cheaper? A bottle of Coca-Cola costs 3 yuan, but a bottle of sparkling water costs 5 yuan—which will consumers choose? The answer is almost instinctive. Consumers in lower-tier markets are extremely price-sensitive; 5 yuan is two-thirds more expensive than 3 yuan. Moreover, consumers already know Coke tastes good, so why spend more to try 'new-flavored sparkling water'? Considering that lower-tier consumers have low acceptance of novel flavors in sparkling water and electrolyte drinks, Genki Forest must not only invest more in distributor distribution costs but also deeply consider whether to use sugary drinks like Ice Tea, which cater to broader tastes, for large-scale promotion. Relying solely on the 0 sugar, 0 calorie story to conquer lower-tier markets is somewhat weak. In the new cycle of consumption downgrading and value-for-money, which consumer track can escape price wars? Probably none. From Nongfu Spring launching green-bottle purified water at 1 yuan per bottle, it marks the official start of endless price wars in sugar-free beverages. Since price wars are inevitable, it's better to join early and seize the initiative. As an internet-born brand, Genki Forest is highly sensitive to market trends and consumer demands. What do today's young people need most? 'Poor man's drinks'—cheap, large, and refreshing all day. So Genki Forest changed. 900ml Ice Tea, 1.25L or even 2L sparkling water... Genki Forest's packaging sizes are getting larger, and prices are getting cheaper. Whether to beat competitors or penetrate lower-tier markets, low prices are not the only factor but are essential. According to multiple media reports, in 2022, Genki Forest faced issues like channel stuffing, cross-region selling, and market price chaos. It was under such circumstances that Tang Binsen wanted to slow down. But this slowness was quickly overshadowed by anxiety. Tang Binsen knows well that resting on past laurels won't work. Genki Forest can't be too fast, nor too slow. Between fast and slow, Tang Binsen must find a reasonable balance and make selective bets. Genki Forest's summer belongs to Ice Tea, and this autumn belongs to Zizai Shui. In Genki Forest's future, whether sugar-free or sugary doesn't matter much. What matters is having hits—and sustained hits.