Source | Pinyinhui Observation
China's beverage industry is undergoing unprecedented structural divergence. On one side, leading brands like Nongfu Spring, Genki Forest, Dongpeng Beverage, and Wahaha are conquering markets with double-digit growth; on the other, small and medium-sized brands are seeing declining survival rates, with most struggling to stay afloat.
Behind this divergence lies the collapse of regional protection systems for small and medium-sized brands. The question of whether to firmly implement 'long-term strategy' or address the immediate 'survival crisis' has become a key issue for many such brands. Wen Zhibing, partner at Pinyinhui, stated: "For most small and medium-sized beverage brands, 'sales growth' and 'market stability' cannot be achieved simultaneously; they must choose one." He noted that these brands commonly face a harsh reality: they know regional protection policies are core strategies for maintaining market order and protecting distributor interests, but under survival pressure, they often have to compromise with reality. For example, a regional juice brand, in its newly developed southwest market in 2024, introduced three distributors with overlapping channels in the same city to quickly meet annual sales targets and seize market share. This led to chaotic pricing, forcing distributors to cut profits to distribute goods, ultimately triggering a collective "exit from the network." Image source: Xiaohongshu user @分享自由.爱 A brand owner with years of beverage production experience admitted: "Even though we know having multiple distributors in the same region will trigger price wars, when market competition pressure increases, we are pushed forward, sacrificing long-term interests to survive the immediate crisis." The essence of this contradiction is a product of imbalanced power in the supply chain, a game among multiple stakeholders from production to consumption that has created the current predicament. In fact, apart from top brands at the pinnacle, most small and medium-sized brands have little bargaining power when facing channels. Such problems often stem from the brands themselves. On one hand, there is an imbalance in negotiation power: small and medium-sized brands lack channel influence, and when facing channels and distributors with mature networks, they are often "asking for favors" and cannot impose too many requirements. On the other hand, 90% of small and medium-sized brands have not established digital channel management systems, making it difficult to track product flow in real time; channel crossing is often only discovered after distributor conflicts arise. For instance, Wangxiaolu, which rose on its hit product "Tiger Skin Phoenix Claws," announced termination of cooperation with Hema at the end of 2023 due to pricing issues, but in February 2024, under performance pressure, resumed cooperation. Additionally, although systems like "one product, one code" and "blockchain traceability" have emerged in the industry, a complete digital system often costs from 400,000 to 500,000 yuan to millions, making it difficult for small and medium-sized brands to afford. Image source: Xiaohongshu user @有color的面包圈 At the same time, under survival pressure, small and medium-sized brands focus more on short-term payment collection, even actively becoming rule-breakers. A distributor told the author that a brand that has grown rapidly in the past two years, in order to expand nationwide faster, opened five or six accounts in a third-tier city, caring only about selling goods and not after-sales service. Wen Zhibing said: "Small and medium-sized brands actually want to do regional protection well, but often under survival pressure, they take the lead in undermining such strategies." He further explained that many small and medium-sized beverage brands often open a large number of accounts in the early stages of development, then gradually eliminate and optimize their channel networks. Although this can cultivate more suitable distributors to some extent, in reality, it is difficult to control the degree, easily leading to backlash from distributor word-of-mouth, ultimately affecting brand image and sales. This leads to a vicious cycle in the industry: multiple distributors in one region → chaotic pricing → distributor profit damage → brand trust collapse → channel contraction → further reliance on short-term sales bets. Image source: Xiaohongshu user @咕噜噜🌾 Moreover, the explosion of instant retail, hard discount, and community group buying channels has broken geographical boundaries for beverage sales but also provided a breeding ground for channel crossing. This is particularly evident on Pinduoduo, where 20% of low-priced beverages come from cross-regional reselling, with small and medium-sized brands accounting for over 60%. Some small and medium-sized brands even participate directly, squeezing distributor profits and raising consumer doubts about brand value. A distributor complained: "The price on Pinduoduo is lower than my purchase price, and others offer '9.9 free shipping.' If I were a consumer, I'd also prefer to buy on Pinduoduo." Additionally, the lack of a benefit distribution mechanism between manufacturers and distributors is a major cause of channel crossing. For example, a beverage brand's rebate policy overemphasizes sales targets, forcing distributors to sell at low prices to complete tasks. This mechanism of "emphasizing sales over order" essentially reflects manufacturers transferring short-term performance pressure to channels. Image source: Xiaohongshu user @雪玲 Regional protection and channel crossing chaos in the beverage industry are essentially the inevitable pain of the disconnect between traditional channel models and new-era consumer demands. Solving this predicament requires brands to adhere to differentiated paths, enhance their voice in the industry, and more importantly, jointly build a fair and transparent collaborative ecosystem. Image source: Xiaohongshu user @一个卖饮料的阿姨 As the industry enters an era of stock competition, the way out for small and medium-sized beverage brands is not to blindly chase scale, but to find "a sufficiently narrow niche and a sufficiently deep moat." Those willing to invest energy and money in segmented tracks will eventually gain the power to set rules in channel games. For example, Rangcha, in the early stages of the unsweetened tea boom, focused on the high-mountain tea category, accumulating national channel and brand awareness. Later, when competition in unsweetened tea intensified, it launched unsweetened fruit tea as a differentiated category, becoming a leader in that category. By signing brand ambassadors and investing in marketing advertising, it raised its visibility at the terminal, ultimately gaining voice in channels and among distributors, and the right to set rules.
Haowangshui, through its "value symbiosis model," deeply connects customers and creates co-created value between manufacturers and distributors. Leveraging online momentum, it builds strong brand power, using this as a lever to ignite offline enthusiasm for co-creation and co-building, deeply linking consumer needs, and extending from product competition to innovation and strategic competition, injecting innovative blood into the industry.
In the author's view, the channel chaos in the beverage industry is essentially a conflict between short-term interests and long-term value. If small and medium-sized brands want to break through, they need to use technology as a spear and segmented tracks as a shield, rebuilding trust bonds in manufacturer-distributor relationships. As management guru Peter Drucker said: "The only valid purpose of a business is to create a customer." Only by adhering to long-termism can they escape the quagmire of price wars, move to the high ground of value wars, and ultimately achieve win-win symbiosis among brands, distributors, and consumers.