Click 'Read Original' for details**** Source: New Entropy (ID: baoliaohui) Genki Forest's hit product methodology is failing. In mid-September last year, Genki Forest, riding high, launched Manfen Microbubble, with '99% juice content + microbubbles' as its selling point, claiming to fill a gap in the domestic market. In early June, Genki Forest announced Ni Ni as the first spokesperson for Manfen Microbubble. Before the announcement, there was little promotional content about Manfen Microbubble on Genki Forest's official Xiaohongshu and Weibo accounts. After the announcement, about one-third of the content posted by Genki Forest's official Xiaohongshu account was promotional posts for Manfen Microbubble, far exceeding other products. Xiaohongshu users also generally noticed frequent recommendations for Manfen Microbubble notes. The surge in promotional posts and ad spending indicates that nearly nine months after its launch, Manfen Microbubble has been selected as the fourth-generation hero product for Genki Forest to create a hit. However, the market response has been less than satisfactory, with frequent complaints about the product's formula and positioning, making the path to hit status fraught with obstacles. The poor start of Manfen Microbubble can be attributed to the continuous erosion of Genki Forest's brand vitality. From the 'fake Japanese' controversy last year to the 'fake sugar-free' controversy earlier this year, Genki Forest's most proud brand packaging and health concept have been dealt precise blows one after another. The road to truly sugar-free beverages is far off, and Genki Forest, forced to switch to low-sugar labels, has begun to go with the flow, promoting juice products containing natural fructose. While this has somewhat alleviated the embarrassment of the fake sugar-free incident, it has also diluted the established brand tone. Besides Manfen Microbubble, Genki Forest has launched multiple products in recent years, but none have replicated the glory of sparkling water. In this context, Genki Forest's strategy of driving brand development with hit products is bound to be affected. When in dire straits, one thinks of change. Genki Forest has placed its new growth points on M&A, R&D, and going overseas, but in these new directions, it still faces many difficulties. Creating the Fourth-Generation Hit: Full of Obstacles**** Genki Forest's most famous product is undoubtedly sparkling water. But before sparkling water became a hit, Genki Forest's first product, Ran Tea, had already gained some popularity, laying the brand foundation. In June 2018, Genki Forest launched sparkling water. After more than a year of brainwashing marketing and buzz, sparkling water successfully became a hit in the first half of 2020, and Genki Forest also joined the ranks of internet-famous brands. After having two generations of hit beverages, Ran Tea and sparkling water, Genki Forest launched milk tea with '0 sucrose' as its selling point at the end of 2019, targeting the minds of milk tea consumers. In terms of product attributes, Ran Tea and sparkling water are more suitable for spring and summer, while milk tea is more suitable for autumn and winter. After the first half of 2020 dominated by sparkling water, in the second half, milk tea finally began to trend and became Genki Forest's third-generation hit beverage. However, the milk tea with its cute Japanese-style packaging did not enjoy the hit dividend for long before falling into a huge 'overturn' incident. In January this year, review bloggers began to question whether Genki Forest's milk tea was truly sugar-free, attracting consumer attention. In the midst of a huge public opinion vortex, Genki Forest publicly apologized in April, saying it would change the '0 sucrose' label on the packaging to 'low sugar'. However, the 'fake sugar-free' incident did not end with Genki Forest's apology. This event not only raised doubts among consumers about whether other Genki Forest products are truly sugar-free, but also discounted the brand value, affecting the promotion of new products. The lukewarm market response to Manfen Microbubble juice is a reflection of the lingering effects of the 'fake sugar-free' incident. In fact, Genki Forest's launch of juice beverages is, to some extent, a reverse whitewash of the 'fake sugar-free' incident. Most fruits contain fructose, sucrose, and glucose, which means that Manfen Microbubble with '99% juice content' has a legitimate reason to contain sugar. In this way, the adverse impact of the 'fake sugar-free' incident on Genki Forest's brand image can be somewhat alleviated, while preserving brand labels such as 'natural' and 'healthy'. At the new product launch in September last year, Genki Forest emphasized that Manfen Microbubble juice uses NFC juice (not from concentrate), but New Entropy observed that the ingredient list of Manfen Microbubble juice series includes not only NFC juice but also several concentrated juices. Reconstituted juice is a product made by adding water to concentrated juice in an amount equivalent to the natural water lost during concentration. During concentration, some nutrients and taste are lost. In contrast to reconstituted juice is NFC juice, which is not concentrated or reconstituted, and is the biggest competitor in the market. After the 'fake sugar-free' incident, some consumers have become more wary of Genki Forest's marketing concepts. Under related Xiaohongshu notes for Manfen Microbubble, some users sharply pointed out that instead of choosing Manfen Microbubble, which contains concentrated juice and added vitamin C, it would be better to directly choose NFC fresh-squeezed juice. Besides '99% juice content', another major selling point of Manfen Microbubble is microbubbles. Using two or more subdivided concepts to create a new product is Genki Forest's consistent product methodology. But in fact, this methodology is also copied from foreign beverages. Before Manfen Microbubble, similar products already existed abroad, such as Bundaberg sparkling juice in Australia and Rosadoli sparkling juice in Bulgaria. Domestically, Manfen Microbubble also faces increasing rivals. In April this year, Hankou No.2 Factory launched its 99 Juice series, also touting '99% juice', competing head-on with Manfen Microbubble. In addition, many emerging domestic brands have also touted similar 'high juice content' sparkling water gimmicks, besieging Manfen Microbubble. In the face of a host of NFC juices and similar sparkling juices, Manfen Microbubble does not have a price advantage. The retail price of 300ml NFC juice on the market is generally around 7-8 yuan. In contrast, 380ml Manfen Microbubble juice retails for about 10 yuan. The unit price of NFC juice is still cheaper than that of microbubble juice. As for sparkling juices like Hankou No.2 Factory, due to the use of glass bottles, their cost and selling price are higher than Manfen Microbubble, but glass bottles also make the product easier to penetrate more scenarios. In bars and other occasions, glass-bottled beverages are more popular than plastic-bottled ones because they look similar to champagne and pre-mixed cocktails. As for Manfen Microbubble juice, its appearance falls short of Genki Forest's usual standard, lacking the grandeur of Ran Tea, the freshness of sparkling water, and the cuteness of milk tea. The overall appearance has no distinct memory point. Manfen Microbubble, which does not have Genki Forest's previous characteristics, seems unable to carry the banner of the fourth-generation hit beverage. Genki Forest, which has always prided itself on R&D speed and launch frequency, seems to have no better product to make consumers' eyes light up. On the Surface Creating Hits, Actually Building a Brand Matrix**** Few people notice that many Genki Forest products do not have obvious Genki Forest branding. Looking more closely, the trademark is not Genki Forest but a sub-brand of Genki Forest, such as Manfen Microbubble's brand is 'Manfen', and Alien Energy Drink's brand is 'Alien'. A professional in the FMCG industry told New Entropy: "On the surface, Genki Forest is constantly launching new products and creating hit products, but in reality, it is continuously launching sub-brands to build a brand matrix." Genki Forest replicates its own rise methodology on sub-brands, which is to first create a hit product, and then use that hit product to drive the development of the entire brand. Sparkling water made Genki Forest famous. Similarly, Genki Forest hopes that in subsequent generations of hit products, there will be a hit that can drive the development of individual sub-brands. For example, Manfen Microbubble, which Genki Forest is currently focusing on promoting, carries the heavy responsibility of driving the 'Manfen' sub-brand. Therefore, while creating hit products for sub-brands, Genki Forest also lays the foundation for the sub-brands' popularity and subsequent expansion. The mutual linkage between sub-brands within the brand matrix can ultimately become a moat for the parent brand. On Tmall, in addition to the Genki Forest official flagship store, Genki Forest has also opened Ran Tea flagship store, Alien flagship store, Genki Breakfast flagship store, and Manfen flagship store. Among them, except for Alien, the products of the other sub-brands are still sold in the Genki Forest official flagship store. The products of the Alien sub-brand are now completely independently sold, but when the sub-brand was first created, its products were also sold in the Genki Forest official flagship store. Currently, the Genki Forest official flagship store has a total of 8 products. Besides 7 products belonging to Genki Forest and multiple sub-brands, the remaining product is Duice lactic acid bacteria beverage. Duice lactic acid bacteria is a new product launched at the end of May this year and awaits further market testing. Once the market responds well, it is destined to follow the same path as other sub-brands: first set up its own flagship store, then break away from the Genki Forest flagship store, and like the Alien sub-brand, become completely independent. Ran Tea focuses on tea beverages, Alien focuses on energy drinks, Genki Breakfast focuses on soy milk beverages. Although the product strategies of the Manfen and Duice sub-brands are not clear, it can be speculated that they will focus on juice beverages and lactic acid bacteria beverages, respectively. In addition, Genki Forest also has a sub-brand, Beihai Ranch, which operates completely independently without relying on the parent brand, focusing on yogurt beverages. It can be seen that Genki Forest has been continuously entering different beverage categories. Creating different vertical categories as different sub-brands has two benefits. First, it can keep the brand tone of the parent brand Genki Forest distinct. Currently, the two products directly under the Genki Forest parent brand, Genki Forest sparkling water and Genki Forest milk tea, both have low sugar as their core selling point. However, the core selling points of tea beverages, energy drinks, lactic acid bacteria beverages, etc., are not low sugar, so it is necessary to set up sub-brands for these major beverage categories. The second benefit of establishing sub-brands is that it facilitates the expansion of more SKUs in each vertical category, thereby stimulating market consumption. Take Genki Forest's yogurt brand Beihai Ranch as an example. This brand, which launched its first product in June 2018, has launched 8 products in more than three years, including LP28, Daily Qingti, Cheese Pudding, etc., with each product having 1 to 3 flavors. In contrast, the Genki Forest flagship store currently has only 8 products in total. It can be seen that creating sub-brands can quickly expand into vertical markets and increase product diversity. But expanding into various verticals also means that Genki Forest is making enemies on all sides. In the yogurt field, Beihai Ranch has very limited living space. Yogurt is a typical high-profit category in beverages. Major dairy giants such as Mengniu and Yili have refined the yogurt category to the extreme, with a full range of products at various price points and categories. In the already saturated yogurt track, Beihai Ranch chose the sub-category of sugar-free high-end yogurt as its entry point. But with dairy giants having advantages such as their own milk sources and channels, breaking out is still not easy. Besides resource advantages, competitors in various tracks are also targeting the sugar-free market. Energy drink Dongpeng Special Drink and lactic acid bacteria beverage Yakult have both launched sugar-free or low-sugar versions, impacting the Alien and Duice sub-brands, respectively. There are even more sugar-free tea beverages competing with Ran Tea, as tea beverages themselves are a battleground in the beverage industry. Overall, in the process of horizontally expanding sub-brands and product categories, although Genki Forest has the halo of an internet-famous brand, it is still full of uncertainties. Hit Product Strategy Weak, Seeking New Growth Points**** The lack of buzz for Manfen Microbubble reflects the failure of Genki Forest's hit product methodology. Genki Forest has also stopped over-relying on marketing and is instead betting on multiple routes, trying to throw a combination punch. After completing its latest round of financing in April this year, Genki Forest clearly stated that the funds would be mainly used for four aspects: overseas M&A and introduction of overseas products, building factories, increasing R&D investment, and continuous internationalization. For Genki Forest, building factories and R&D are crucial. As an FMCG brand valued at $6 billion, without its own factories, the brand is like a castle in the air. R&D helps Genki Forest continue to expand its audience. Currently, Genki Forest's products generally follow the sugar-free (or low-sugar) route. In low-sugar products, instead of sucrose, erythritol is used as a sweetener, but the poor taste has always been criticized by consumers. After several iterations, Coca-Cola's sugar-free version has approached the taste of the regular version, further winning over sugar-free beverage consumers. How to overcome the poor taste of sugar-free beverages through R&D is a long-term challenge for Genki Forest's R&D. Regarding continuous internationalization, Genki Forest's vice president Zong Hao publicly revealed the brand's overseas expansion progress at the end of last year. On Tmall Overseas, Genki Forest has sold to 40 countries and regions worldwide. But for overseas consumers, Genki Forest is more like a brand to try occasionally. After all, Genki Forest's production lines are still in China, and the volume of products shipped overseas through e-commerce platforms is always limited. In terms of overseas promotion, Genki Forest's performance is not as smooth as at home. On Instagram, there are currently only about 1,000 posts with the Genki Forest tag, and interactions are mostly in the tens or single digits. Genki Forest's data and posts on Instagram At present, overseas M&A and introduction of overseas products are the fastest ways for Genki Forest to achieve a second brand explosion. After Genki Forest's products are launched, they usually undergo a period of market testing. Only those with good market response are retained and vigorously promoted. This shows that Genki Forest's products have a certain time cost in testing. In the context of the brand's difficulty in continuously creating hit products, acquiring brands that already have a market foundation is undoubtedly a shortcut. Genki Forest was rumored to acquire Dongpeng Special Drink and Lele Tea this year, but both were denied. Overall, in terms of acquisition strategy, Genki Forest is still wait-and-see about acquiring domestic brands, but it is not resistant to acquiring overseas brands and introducing overseas products. Searching for 'sugar-free beverages' on e-commerce platforms like Taobao, among the top-selling products, besides Genki Forest, most are domestic and foreign brand products. It can be said that in the sugar-free beverage track, Genki Forest's main competitors are still a host of overseas brands. These overseas brands form a defense line, hindering Genki Forest's continuous breakthrough at home and abroad. From this perspective, Genki Forest's M&A options are actually limited. Among overseas brands with better sugar-free beverage products, big brands like Nestlé and Coca-Cola are strong, and overseas small and medium-sized brands with internet-famous characteristics are the best choice for Genki Forest's M&A. But the reputation of some overseas small and medium-sized brands is unstable. For example, Chang Soda Water, which sells well on e-commerce platforms, was exposed for having excessive carcinogens due to process issues. Therefore, in terms of overseas M&A and introduction of overseas products, Genki Forest's options are limited. The implementation of R&D, going overseas, and M&A all require time and money. In the context of the failure of the hit product methodology and the obstruction of brand matrix building, Genki Forest, which has been running fast and growing rapidly, has to enter a slow era. PS: From September 23 to 25, 2021, the 2021 (4th) China FMCG Conference hosted by New Distribution will be held in Shanghai. Focusing on industry trends + practical cases + growth connection as the core, 3,000 FMCG practitioners will gather at the event. 10 themed forums covering new retail O2O, community group buying, short video live e-commerce, distributor transformation, rise of new consumer brands, interpretation of new alcoholic beverages, distribution B2B supply chain, omni-channel marketing, B2B2C new technology applications, etc., with operators from various segments bringing the latest case studies. Some of the confirmed heavyweight guests so far include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, global expert partner at Bain & Company, former vice president of marketing at Coca-Cola China; 4. Chen Xiaodong, senior vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, vice president of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, e-commerce general manager of Gold Hong Ye Paper Group ..... A grand event for FMCG professionals, you must be there! Are you 'watching' me?