---
title: "Predicting the Next 'Genki Forest' from Japanese Consumption Trends"
description: "This article analyzes the rise of Genki Forest, a Chinese beverage brand valued at $6 billion, and uses parallels with Japan's consumption patterns in the 1990s to predict the future of China's soft drink industry. It highlights the shift towards sugar-free beverages and the challenges of market saturation."
author: "梁缘"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2021-10-14"
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# Predicting the Next 'Genki Forest' from Japanese Consumption Trends

> This article analyzes the rise of Genki Forest, a Chinese beverage brand valued at $6 billion, and uses parallels with Japan's consumption patterns in the 1990s to predict the future of China's soft drink industry. It highlights the shift towards sugar-free beverages and the challenges of market saturation.

Source: Titanium Media (ID: taimeiti)

Among the hottest domestic beverage brands in recent years, Genki Forest, which completed six rounds of financing in five years and has a latest valuation of $6 billion, is one of the most notable new brands.
With excellent marketing, Genki Forest, which entered the market not long ago, has successfully disrupted the industry landscape, making sugar-free sparkling water a darling of the trend and driving sales of raw materials like erythritol that replace sucrose.
The Chinese beverage market is undergoing changes, and old players are losing their advantages. According to the latest data from the Zhejiang Provincial Market Supervision Administration and the Federation of Industry and Commerce, Wahaha, once known as the nation's number one beverage brand, saw its 2020 revenue reach 43.98203 billion yuan, a decline of 5.29% compared to 2019.
Meanwhile, new flavors and new business models in China's beverage industry are constantly iterating and emerging. The market is changing rapidly, entrepreneurs are flocking in, and numerous star capitals are entering the fray. First-tier well-known VCs such as Black Ant Capital, Sequoia China, and Plum Ventures are constantly appearing in the public eye.
Why do capitals prefer new consumer brands? Alexander Tamas, a partner at the famous Russian investment institution DST Global, summarizes this logic as "geographical arbitrage."
In fact, in 2019, China's per capita GDP reached $10,000, a level Japan achieved in the 1975-1980 period. After entering the medium-speed development stage, China's national consumption habits can learn from Japan.
Some investors use the development model of Japan's consumption upgrade in the 1970s to guide domestic consumer goods investment, with focuses including:
**1. Localization, seeking domestic substitutes; 2. Personalization, consumer goods targeting individuals living alone; 3. Automatic vending, with the popularity of QR codes in China, unmanned shelves were once all the rage; 4. Targeting new demographics, focusing on the life and consumption habits of the post-95 generation.**
Currently, China's economic development trends and consumer preferences share many similarities with the Japanese market around the 1990s. With this in mind, Titanium Media · Titanium Data Graphics has sorted out data on changes in the beverage industry at home and abroad to see where the future of China's soft drink industry is headed.

## **What will be the next phenomenal product in the soft drink industry?**
The similarities between China and Japan's economic conditions include: on one hand, economic growth is slowing down, and real estate prices are at high levels; on the other hand, population aging and the single phenomenon are both intensifying.
Moreover, in terms of consumption habits, both countries have the coexistence of consumption downgrading and upgrading, with women becoming the main consumers.
The consumption trend changes brought about by Japan's economic fluctuations around the 1990s are of reference significance for understanding the future consumption trends of China's beverage industry.
Both China and Japan's beverages are mainly for domestic sales, with little impact from import and export differences. In 2005, China's per capita beverage production was 26 kg/person, while Japan's was 140 kg/person in the same year, a significant gap that has narrowed considerably with the rapid development of China's beverage market over the past decade or so.
In 2019, China's per capita beverage production was 126 kg/person, while Japan's was 180 kg/person in 2018.
During the development of Japan's beverage industry, the turning point was the emergence of sugar-free sparkling water. 1985-1995 can be called the golden decade for the development of sugar-free beverages in Japan.
At that time, Japan's carbonated drinks had almost no growth, and market sales growth was mainly driven by sugar-free tea and coffee. Until 2015, Japan's sugar-free beverages maintained at least double-digit growth rates.
In the more than two decades after 1995, although the growth rates of Japan's tea beverages and sugar-free beverages slowed down, the beverage industry continued to upgrade towards health.
From 1990 to 2000, the market share of sugar-free tea beverages increased from 8.2% to 19.3%, and mineral water increased from 0.9% to 4.0%. Many functional beverage products with more refined ingredients began to occupy the market. It is worth noting that the growth of Japan's beverage market was still basically contributed by sugar-free beverages.
Looking back at China at this time, whether it is the old brand Nongfu Spring, Wahaha, or the emerging Genki Forest, in addition to focusing on the research and development of sugar-free sparkling water, sugar-free tea drinks and healthy functional products are also being gradually promoted.

## **The ceiling of the soft drink industry has appeared,**
## **Can new products still sell well?**
Compared with other countries, in 2019, China's sugar-free cola-type carbonated drinks accounted for only 3.4% of sales, while in European and American countries it was over 30%, with the UK reaching 63% and Japan reaching 44.6%.
Many industry insiders optimistically predict that China is still in the early stages of sugar-free carbonated drink development, with at least ten times the room for improvement compared to European and American countries.
However, data on the sales growth rate of China's soft drinks (excluding packaged drinking water) shows that the ceiling of China's soft drink industry has appeared, maintaining single-digit growth in recent years, with a compound annual growth rate of 4.83% from 2014 to 2019. It is expected that the future growth rate will further decline, with a compound annual growth rate of 4.54% from 2019 to 2024.
Moreover, due to the limitations of sales channels in China's lower-tier markets, it is not enough for brands to rely solely on marketing and online sales to open up the overall soft drink market.
Data on channel and terminal profits for various Chinese brands show that Genki Forest, with its relatively high unit price, can give distributors, convenience stores, and other terminals more profit sharing.
Now, old players like Nongfu Spring have also noticed this issue, and a new round of competition is unfolding at sales terminals such as distributors and convenience stores.
In addition, the soft drink market is also being squeezed by new tea beverage companies such as Heytea and Naixue Tea. In the future, new products in the soft drink industry can only compete for a piece of the existing stock market.

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