Source: Consumer Titanium (ID: xiaofeitaidu)

Genki Forest, which launches new products throughout the year, has made a year-end move by rolling out its mineral water brand "Youkuang" on a large scale in offline channels. Priced at 4 yuan, Youkuang sits alongside water brands like Nongfu Spring and Ganten, leading many to see its launch as a continuation of the intense rivalry between Genki Forest and Nongfu Spring.

In the eyes of industry insiders, the mineral water track is already a field dominated by giants, where success depends on broad brand awareness, strong channel control, and low-cost capabilities based on economies of scale and scope. After a year of expansion and product launches in 2021, Genki Forest is not content to remain a "small but beautiful" player competing with traditional giants, and is now revealing its "mineral-rich" foundation.

Soft Mineral Water vs. Nongfu Spring?

Recently, Genki Forest has been quietly advancing a "first": its mineral water product "Youkuang" has entered offline channels on a large scale for the first time. This Youkuang mineral water, appearing on shelves at FamilyMart stores in Shanghai, is also Genki Forest's entry into the domestic bottled water market, claiming to be the first new brand to introduce the concept of "soft mineral water."

According to Genki Forest, the bottled water project started in September 2020, and the brand was finalized as "Youkuang" at the end of last year. In July this year, the first Youkuang product quietly launched on e-commerce channels such as Tmall and JD.com. At that time, Genki Forest stated that the "Youkuang" mineral water was only sold online on a small scale, still in the testing phase, with offline distribution not yet started.

An industry analyst noted that Youkuang's entry into offline channels six months after its online launch indicates good online sales data, which could be an important signal of Genki Forest's formal entry into the bottled water market. Data shows that FamilyMart has nearly 3,000 stores in China, ranking among the top convenience store brands in the country.

The newly listed Youkuang mineral water carries the label "natural soft mineral water," with the water source from the Cangshan World Geological Park in Dali, Yunnan, as its first source. The product description claims it is soft on the palate, sweet and silky, fitting the definition of "soft mineral water"; it also highlights keywords such as containing metasilicic acid, weak alkalinity, and low sodium. Priced at 4 yuan, Youkuang is not in the same tier as Evian (over 12 yuan), but it sits alongside brands like Nongfu Spring and Ganten.

Many see Youkuang's emergence as a continuation of the fierce battle between Genki Forest and Nongfu Spring—this time, the roles are subtly shifting, with Genki Forest seemingly attempting to launch a new challenge in Nongfu Spring's core business area.

Li Yingtao, a senior analyst in the new consumer industry at Analysys, told Consumer Titanium: "Newcomers in mineral water who want to break the traditional giants' 'strong get stronger' pattern often do so through segment upgrades or model upgrades. Genki Forest has adopted this approach, introducing the concept of 'soft mineral water' rich in metasilicic acid, and has found water resources in Cangshan. This initial choice is undoubtedly correct. How the product performs remains to be seen; to break the established pattern, Genki Forest still has a long way to go."

Genki Forest's choice of the mineral water track also reflects long-term, ambitious considerations. Not long ago, when asked if there were "categories as big as sparkling water," Genki Forest founder Tang Binsen replied, "Mineral water is one of them."

Genki Forest: "Mineral-Rich"

Consumer Titanium observed that the newcomer Genki Forest faces a field dominated by Nongfu Spring and other veteran players. According to a report by Guanyan Tianxia, China's bottled water market has been growing steadily, expected to reach 234.9 billion yuan in 2021.

The report notes that industry concentration is high, with Nongfu Spring holding a 26.5% market share, ranking first; followed by China Resources C'estbon with 21.3%; then Master Kong with 10.1%; Wahaha, Ganten, and Ice Dew hold 9.9%, 7.4%, and 5.3% respectively. The top players are all giants with "mineral-rich" backgrounds.

In Li Yingtao's view, basic consumer goods like mineral water depend on broad brand awareness, strong channel control, and low-cost capabilities from economies of scale and scope. Additionally, mineral water relies heavily on scarce, high-quality water sources.

Having found a high-quality water source, Genki Forest is not content to compete with traditional giants as a "small but beautiful" player. Over the past year, Genki Forest has shown weight gain through capacity expansion and capital support, revealing its "mineral-rich" foundation.

At its supply chain and food safety strategy conference on October 26, Genki Forest announced the initial completion of its national layout of "5 super city clusters + self-built factories," with a total planned investment of 5.5 billion yuan for five factories, bringing total production capacity of over 5 billion bottles.

Regarding Genki Forest's shift from heavy marketing to heavier investment in supply chain and products, Li Yingtao said: "For most companies, heavy marketing in the early stage is a prudent choice; with scale, companies have more funds to invest in R&D and supply chain. Companies that quickly achieve scale through heavy marketing need to shift to heavy R&D as soon as possible, otherwise they will gradually become mediocre brands, like Lenovo, which couldn't escape the 'trade, industry, technology' path. Since building R&D and supply chain is a long-term project, qualitative change takes time, but Genki Forest is already on its way."

Scale growth has also been accompanied by expanded financing. In November, news emerged that Genki Forest was about to complete a new round of nearly $200 million in financing, led by Temasek, with follow-on investments from old shareholders such as Sequoia China and Warburg Pincus. This round began in July, just over three months after its previous round ended. According to statistics, Genki Forest's valuation has increased 2.5 times in just half a year.

A "Product-Rich Year" with a Target of 7.5 Billion

As 2021 draws to a close, whether Genki Forest's Youkuang natural soft mineral water, which has just entered offline channels, can stir waves in the traditional bottled water track remains to be seen. Before Youkuang's year-end offline debut, Genki Forest had already launched a diverse range of products, making this year a "product-rich year" in the industry's view.

In October, Wang Xuegang, director of Genki Forest's research institute, released new product development data: in the past 12 months, over 30 new beverage flavors were added, with an average product development cycle of 5.5 months. As of September this year, R&D costs increased by 350% year-on-year, with total R&D expenses accounting for the highest proportion among beverage companies of similar scale.

Public reports show that in July, Genki Forest entered the coconut juice category with the product "Summer Breeze," claiming to use fresh coconuts from Sumatra, featuring first-press pulp and low sugar, with 43 kcal per 100ml. Around September, Genki Forest launched the plant-based milk drink ALMO sugar-free almond milk, described as using Australian almonds, with each bottle equivalent to 32 almonds.

In November, following Alien, Genki Forest launched its second functional beverage brand, Big Monster, in canned packaging, available in low-sugar and classic versions. Its sugar-free tea brand Xiancha also released a new mulberry leaf tea at the same time, continuing the 0 sugar, 0 calorie, 0 fat formula, without added caffeine.

In addition to these new products, Genki Forest has also quietly expanded into new convenient foods such as baijiu, snail noodles, and hot and sour noodles this year. Public reports show that since 2020, Genki Forest has invested in or acquired companies, covering more than ten categories including meat products, light meals, snacks, coffee, and alcohol. The ever-expanding Genki Forest is striving to cultivate the next hit product beyond sugar-free sparkling water.

Guo Yuxuan, a researcher at the Understand Economic Research Institute and market analyst, pointed out that Genki Forest's expanding scope gives the capital market room for imagination: "Although Genki Forest leads in the sugar-free segment, there are many beverage categories, and market share growth is limited. Using a diversified business model to attract investors can increase their imagination about the Genki Forest brand."

There is less than half a month until the end of 2021. Earlier, Tang Binsen set sales targets of 7.5 billion yuan for offline channels and 800 million yuan for online channels in 2021. As for current performance and how much height Youkuang, newly on online shelves, can add to Genki Forest, we must wait for Genki Forest's answer.

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