Source: Huashang Taolue (ID: hstl8888)
Raw material shortages, preform supply cuts, and contract manufacturers forced to choose sides have intensified the sugar-free carbonated beverage war, with international giants using their trump card against emerging domestic brand Genki Forest.
For years, domestic brands have staged comebacks in fields dominated by international giants, but in beverages, especially carbonated drinks—a three-hundred-year-old segment with little technical barrier—they have been suppressed by the giants.
Since the reform and opening up, Coca-Cola leveraged its first-mover advantage in developed markets to open China's doors, and together with Pepsi, has divided the market, sitting firmly on the throne, with waves of local challengers either failing, leaving in regret, or struggling.
As a newcomer, Genki Forest, founded in 2016, grew sales from zero to 2.7 billion yuan in just four years, becoming a new-generation challenger under the monopoly of giants, and a thorn that must be removed.
Facing relentless giants, will Genki Forest be different?
Beiping Ocean, Tianfu Cola, Shanhaiguan, Bingfeng—in recent years, with the rise of national trend consumption, these familiar yet unfamiliar old soda brands have returned to people's lives.
This also reminds people of a fact:
Coca-Cola and Pepsi have monopolized over 80% of China's carbonated beverage market for over twenty years.
The prosperity of China's beverage industry originated from the carbonated soda explosion around the 1980s.
At that time, every city and even county built its own soda factory, giving rise to local brands such as Beijing Beiping Ocean, Shenyang Bawangsi, Tianjin Shanhaiguan, Qingdao Laoshan Cola, Wuhan Binjiang No.2 Factory Soda, Chongqing Tianfu Cola, and Guangzhou Asia Sarsaparilla, known as the "Seven Domestic Brands," offering a variety of styles and flavors.
Since then, carbonated beverages have become the most indispensable drink category for Chinese people after alcohol, tea, and juice.
But with the invasion of the "foreign water army" composed of Coca-Cola and Pepsi, within just a few years, local soda factories with insufficient strength closed down in large numbers, and even those that had made a name for themselves could not protect themselves and retreated step by step.
In Hangzhou alone, which later gave birth to Wahaha and Nongfu Spring, more than 100 beverage factories closed down at that time.
By the late 1980s, the domestic beverage industry was in disarray, and the market share of the "Two Colas" rose sharply. Tianfu Cola, once served at state banquets, sent out a distress signal:
Save the national beverage industry!
At the 1990 Beijing Asian Games, Jianlibao, which emerged under the name "Magic Water," spent 15 million yuan to win the "official designated beverage" status, carrying the banner of national beverages.
Coca-Cola countered by "stirring things up," not only spending 3.5 million US dollars to become the largest sponsor but also deploying thousands of tricycle vending carts on Beijing streets, and even launching free activities a few days before the closing ceremony, causing the whole city to line up with bowls and cups to "grab water," overshadowing the official designated Jianlibao.
The first face-to-face contest between Jianlibao and foreign soda had mixed results, but it could not reverse the overall collapse of domestic carbonated beverages.
After the Asian Games, the two giants Coca-Cola and Pepsi launched a series of general offensives against the "Seven Domestic Brands" that held their local markets.
On January 18, 1994, Pepsi-Cola signed a joint venture agreement with Tianfu Cola, holding 60% of the joint venture, successfully acquiring it without firing a shot, capturing one of the strongest fortresses in China's carbonated beverage market.
At this point, all seven major domestic soda brands had fallen, either through joint ventures, acquisitions, or equity participation, and their hard-earned marketing networks were divided up by the "Two Colas," causing many old sodas in people's memories to disappear.
Facing this result, Tianfu Cola's head, Li Peiquan, resigned after finalizing the joint venture agreement, leaving behind a sentence:
"I am sorry to all the factory workers."
Afterwards, under the pincer attack of the "Two Colas," Jianlibao lowered its prices to the limit, but standing alone, it instead triggered internal crises.
In 1998, Wahaha, which started with water and health products, launched "Future Cola" based on the lighter taste preferences of Chinese people, claiming to be "Chinese people's own cola." It once captured 15% of the market between the two giants by going to rural areas and offering lower prices.
Just as Future Cola and the "Two Colas" were forming a three-way split, Coca-Cola and Pepsi launched a price war in rural markets with even lower prices and greater discounts, dropping to "as low as one yuan."
Future Cola, however, could not solve the problems of low-end positioning in rural areas and rampant counterfeits. After struggling for a few years, it ultimately failed to escape the fate of domestic cola failure.
One by one, famous brands fell, and the "Two Colas," which once ruled 90% of China's carbonated beverage market, became unstoppable.
In the summer of 2021, the sugar-free soda war intensified, driven by the stubbornness of the emerging domestic brand Genki Forest.
In recent years, with the increasing popularity of healthy eating concepts, the sugar-free series of Coca-Cola and Pepsi, which use sucrose as the core ingredient, have not expanded well, and their seemingly unbreakable carbonated product lines face a transformation crisis.
While the giants hesitated, Genki Forest, with its internet genes, more keenly identified consumer pain points and proved the explosive potential of this segment with a sugar-free sparkling water主打"0 sugar 0 calories."
For a time, various brands launched sparkling water series, triggering an industry war in the weak links of the "Two Colas" territory.
Facing such a threat, how could the giants, who had monopolized the market for years, be willing to let it go?
"At every important meeting of the 'Two Colas' this year, Genki Forest is sure to be mentioned." A former Pepsi executive revealed this detail to the media.
Before the summer peak season began, due to giants entering the market to buy up supplies, the supply of erythritol, the most important raw material for Genki Forest's 0-sugar sparkling water, became increasingly tight. The price of this natural sweetener rose rapidly from 15-18 yuan to over 30 yuan, and in June, the price even tripled.
Because the supplier also served Coca-Cola, favoring one over the other, Genki Forest had to find other ways. During this period, the shortage caused by raw material shortages had already led to a loss of 1 billion yuan in sales for Genki Forest.
But this was not the most serious crisis.
As early as the beginning of the year, a contract manufacturer suddenly informed Genki Forest that it would stop producing related milk tea products. It turned out that an international beverage giant's boss personally called the manufacturer, demanding an immediate termination of cooperation with Genki Forest.
An insider said: "They were very blunt, giving the head of the joint venture factory a direct order that no matter how much loss it caused, production must stop."
By May, the carbonated beverage bottle preform factory also stopped supplying Genki Forest.
"The factory said they simply had no stock. But in reality, they prioritized supplying the international giants, and only gave Genki Forest capacity if there was any left."
Long ago, when Genki Forest started making sparkling water, it discovered that most of the carbonated beverage production lines in the country were bottling plants of the "Two Colas," and it was impossible to get capacity.
Even if capacity was obtained, the contract manufacturers set up obstacles, stopping production at will, forcing Genki Forest to urgently contact other factories, and it took more than a month to resume production.
The beverage industry has no barriers, so why have the "Two Colas" maintained their dominance for so long? Some say it's the secret formula, some say marketing, some say culture, constantly mythologizing foreign brands as seemingly invincible.
Genki Forest's experience reveals the key reason why domestic brands cannot break through the shadow of the "Two Colas" to reach the national market—the "Two Colas" firmly control the upstream supply chain advantage of carbonated beverages.
This is the real "Iron Curtain" that Coca-Cola and Pepsi have been building since they entered China.
In 1981, Coca-Cola, which was only for foreigners in China at the time, built a factory on the outskirts of Beijing, and later set up 13 bottling plants in Shanghai, Guangzhou, Zhuhai, and other places.
Pepsi, which entered China a year later, also established eight bottling plants and two concentrate plants in Shenzhen, Guangzhou, Shanghai, Fuzhou, Beijing, Guilin, Chengdu, and Nanchang.
With the completion of localization, Coca-Cola and Pepsi were able to use extremely low costs and dimensionality-reduction marketing to devastate domestic beverages.
Later, the State Planning Commission and the Ministry of Light Industry responded to the industry's call to "protect national industries" and issued documents prohibiting imported beverages from building new factories in China.
Coca-Cola and Pepsi, with their economic strength, favorable joint venture conditions, and pervasive public relations efforts, made local governments eager for economic development unable to resist, helping them build capacity but falling into the joint venture trap, leading to the surrender of local soda brands without a fight.
To be fair, even Zong Qinghou, founder of Wahaha, who was confident, admitted that he envied foreign filling technology, which led to his marriage with French Danone, let alone the old sodas lacking funds and technology.
But the promise of joint ventures was merely bait from foreign giants.
A typical example is Tianfu Cola. The joint venture factory controlled by Coca-Cola attracted a large number of technical backbone, but after the production line was put into operation, it only served Coca-Cola, leaving the old, weak, sick, and disabled to sink together with the Tianfu Cola brand, and many people faced layoffs.
With the disappearance of one domestic old soda after another, the "Two Colas" took control of the carbonated beverage industry chain across China. As long as they controlled production capacity, the "Two Colas" could strangle any potential challenger in the cradle, thus maintaining their dominance in carbonated beverages.
For years, this supply chain hegemony has deterred countless startups, and Genki Forest is just another victim.
But this time, things seem different.
After the "Two Colas" dominated the market, domestic beverages have not been without hope of recovering lost ground.
In 2002, Jianlibao, which had been mired in shareholder disputes for years, made a comeback with "Fifth Season," launching four major categories at once—carbonated drinks, fruit juices, tea drinks, and water—with 21 products, showing the greatest ambition in domestic beverage history.
To make "Fifth Season" a success, Jianlibao used its savings to win the CCTV bidding champion and invited Japanese diva Ayumi Hamasaki, quickly gaining fame across the country, and the brand name even became a trendy social term.
But when distributors enthusiastically came to Jianlibao for goods, they were stunned. It turned out that "Fifth Season" had too many categories, the front was too long, the new management was inexperienced, and the supply chain had many problems, leading to wasted advertising and missing the entire summer peak season, only launching in November during the off-season.
Without supply chain support, the more marketing, the faster the collapse—this is the lesson "Fifth Season" left for later generations.
In 2019, when the head of Genki Forest's supply chain just joined, founder Tang Binsen kept telling him that he wanted to build factories, but the head thought it was unnecessary.
The reason was simple: building a supply chain was not something even industry veterans like Wahaha would consider lightly, let alone Genki Forest. The high investment and risk deterred many startups, and it was the fundamental reason they could not escape dependence on contract manufacturers and were controlled by the "Two Colas."
Tang Binsen understood that Genki Forest's sales in the previous year were only over 100 million yuan, but a factory would need at least 1 billion yuan in sales to support it, otherwise, capacity would be idle and wasted, even dragging the company's cash flow into crisis.
Later, a series of supply cutoffs and production halts proved the importance of having an independent supply chain. Without breaking through this barrier, Genki Forest would forever have to act according to the whims of foreign giants.
In the summer of 2019, seeing that the annual sales trend would support building its own factories, Genki Forest immediately signed the contract for its first self-built factory.
Pushed into a corner by the giants, Genki Forest, with almost wolf-like ferocity, managed to survive the impact of the pandemic, accelerated permits and construction, and put three "super factories" into operation in one year at a speed almost impossible in the industry.
During this period, Genki Forest started construction as soon as it got the land, and with the super speed of one factory every six months, it started building five factories before daring to set a sales target of 7.5 billion yuan for 2021.
While making waves in the sparkling water track, Genki Forest's three factories in Chuzhou, Anhui; Zhaoqing, Guangdong; and Xiqing, Tianjin quietly upgraded their production lines to aseptic carbonated beverage lines, meaning products no longer contain preservatives such as potassium sorbate and sodium benzoate.
There are fewer than 20 aseptic carbonated beverage lines worldwide that meet the industry's highest standards. In China, there are about 13, and Genki Forest alone has put 8 into operation. Domestic beverage giants such as Mengniu, Jinmailang, and Uni-President are also purchasing and preparing related aseptic carbonated line equipment.
▲ Genki Forest sparkling water, ingredient list shows no sodium benzoate, potassium sorbate, or other preservatives
Having mastered the supply chain, Genki Forest has set off a new industry storm of "0 preservatives" after "0 calories, 0 sugar."
Facing this new trend, most of Pepsi and Coca-Cola's beverage products still remain in the previous generation of production processes and are unable to join the "zero preservative" competition.
It's hard for a big ship to turn around. Coca-Cola and Pepsi either have to spend heavily to transform their massive supply chains or directly withdraw from the "zero preservative" competition, leaving them in a dilemma.
▲ Coca-Cola Zero, Sprite Zero Sugar, and Pepsi Zero Sugar products, ingredient lists show they contain synthetic preservatives
Genki Forest continues to open new tracks, achieving a virtuous cycle of R&D, market, and capacity, turning the tables on the giants—something almost impossible under the supply chain system long controlled by the "Two Colas."
In recent years, people have been pleased to see domestic old sodas gradually reclaim their trademarks, restart bottling production, and announce their return, warmly embracing the national trend consumption awakened by nostalgia and internet communication.
Along with many new national brands, old soda brands are ambitious, taking steps to counterattack the "Two Colas," march nationwide, and land on the capital market.
But the collapse of the "Seven Domestic Brands" still warns everyone: behind the dazzling products and advertising smoke screens, it is the battle for supply chain discourse that truly determines the rise and fall of the industry.
Today, Genki Forest's difficult struggle under the Iron Curtain and its achievements are enough to show that no matter how international giants try to intercept, a thriving local supply chain and a vast, ever-changing Chinese market will always bring infinite possibilities.
Facing the once-immovable Iron Curtain, once we truly pick up the courage to "make the difficult but right choice," a "Chinese-style redemption" drama on the dining table officially begins.
Are you "watching" me?