Genki Forest has hit the trend again. According to LatePost, sales of Genki Forest's “Self-Zai Water” products are expected to exceed 1 billion yuan in 2024. The product was launched in February 2023 and surpassed 100 million yuan in sales within four months, making it the fastest Genki Forest product to reach that milestone. 2024 marks the eighth year since Genki Forest's founding. In an internal letter for the eighth anniversary, founder Tang Binsen mentioned, “'Believing in good products' has been the foundation of Genki Forest since its inception. From the very beginning, we noticed that the younger generation of consumers places more importance on product quality, healthiness, and emotional value.” Since its founding seven years ago, Genki Forest has launched two major products with annual sales exceeding 1 billion yuan: “0 sugar, 0 fat, 0 calorie” sparkling water and “Alien Electrolyte Water.” Now, “Self-Zai Water” is set to become the third major product. Why does Genki Forest consistently produce hit products? Targeting Traditional Chinese Wellness, Creating the Third Hit Product As Genki Forest's third major product, Self-Zai Water continues to tell young people a story about “healthy” drinking. Self-Zai Water is positioned as a traditional Chinese wellness drink, currently offering three products: red bean and coix seed water, red date and goji berry water, and refreshing mung bean water. In terms of ingredients, red beans, coix seeds, goji berries, red dates, and mung beans are all common household ingredients with certain health benefits. For example, red bean and coix seed water helps reduce swelling and dispel dampness, red date and goji berry water aids digestion and calms the mind, and mung bean water relieves heat. Self-Zai Water uses processes like boiling and extraction to create traditional Chinese wellness drinks, marketed with selling points such as “healthy with zero burden,” “medicine and food homology,” and “drink water for wellness.” It is understood that the idea for Self-Zai Water came from a post-95s employee. At Genki Forest's product idea meeting, the “Genki Universe Conference,” she shared her understanding of “Eastern food therapy,” starting from her own needs. Because she doesn't like drinking plain water, she wanted to create a product that could replace water, hoping for a minimalist ingredient list with flavor, just like drinking water “without burden.” Many young people share this “difficulty drinking water” with her. For many workers today, “drinking water properly” is a challenge—they want to drink more water for health, but they “don't like tasteless water.” On Xiaohongshu, there are 7 million posts about “drinking water,” many of which discuss “how to drink water without pain” and “healthy and tasty drink recommendations.” This has led to the explosion of the traditional Chinese wellness drink category. Public data shows that in the first five months of 2024, sales of traditional Chinese wellness drinks increased by 94.5% compared to the same period in 2023. Additionally, a report from Qianzhan Research Institute indicates that the market size for traditional Chinese wellness drinks is expected to reach 1.4 billion yuan in 2024, with a projected compound annual growth rate of over 88% in the next five years, potentially exceeding 10 billion yuan by 2028. There is currently no clear definition of “traditional Chinese wellness drinks.” The industry generally refers to products based on “traditional Chinese wellness concepts” and using traditional “medicine and food homology” ingredients as the main raw materials, with typical examples being red bean and coix seed water, goji berry water, and tangerine peel water. The report also points out that the consumer group for traditional Chinese wellness drinks is concentrated between ages 18 and 36. The reasons consumers purchase these drinks include: weight loss, dampness removal, and blood nourishment; sugar-free and healthy; and clean ingredient lists. After the Self-Zai Water project was established, the product direction was set as “drink more water, drink healthy water.” In terms of bottle design, the team did not opt for the common tall, slim bottle on shelves but chose a “chubby bottle.” A product development team member explained that to align with the concept of “drinking water in big gulps,” the team also chose a larger 38mm diameter bottle opening. During research and development, the team studied the Guangdong market, which is most skilled in “drinking water for wellness,” and found that Guangdong has a habit of making soups and drinking herbal tea. “Returning to traditional food therapy” became the core logic for product development. The inspiration for the first flavor of Genki Forest Self-Zai Water—“Red Bean and Coix Seed Water”—came from an internal designer. According to reports, the R&D department learned that this designer's relatives often cooked red bean and coix seed water for their children to relieve eczema, which sparked interest in home-cooked ingredients. On social media, consumer discussions about the product go beyond taste, focusing more on efficacy. “Who is the target audience for Genki Forest Self-Zai Water? It's me, someone controlling sugar intake.” “I've stocked up again. Red date and goji berry water is especially good; I mix it with warm water, and it's comforting. Boiling it myself is too troublesome.” Clearly, the three products in Genki Forest's Self-Zai Water series have precisely captured young people's preference for “drinking water for wellness,” leading to rapid sales growth. “0 Sugar+” Does Genki Forest Have a Formula for Hit Drinks? From sparkling water to electrolyte water to traditional Chinese wellness drinks, Genki Forest has almost every time successfully ridden the wave of young people's “health anxiety.” From an industry perspective, Genki Forest rose from the starting point of young people's admiration for the concept of “sugar control.” After the success of sparkling water, its subsequent drink series have been extensions of the “0 sugar” concept. In 2016, the fourth edition of the “Dietary Guidelines for Chinese Residents” was released, which for the first time introduced the term “sugar control,” emphasizing that “daily sugar intake should not exceed 50g, preferably below 25g.” At that time, Tang Binsen, who was in the internet gaming industry, keenly sensed the huge business opportunity behind the “sugar control” concept. He founded the beverage brand Genki Forest and began researching sugar-free tea drinks. In May 2018, Genki Forest's first “hit product,” sparkling water, was born. Different from traditional carbonated drinks, it became popular across the internet with the selling point of “0 sugar, 0 fat, 0 calories.” To better meet consumers' demand for drinks that are “tasty without making you fat,” Genki Forest sparkling water innovatively used erythritol, which is moderately sweet, low in calories, and healthier, replacing sucrose in sugary drinks and aspartame in traditional sugar-free drinks. It once became the new generation of “happy water” sought after by young people. In terms of market size, public data shows that in 2018, the domestic sugar-free beverage market began to rise rapidly, with sales nearly doubling in just five years. The growth of Genki Forest's sparkling water product line coincided perfectly with market development. From 2018 to 2020, Genki Forest's growth rates reached 300%, 200%, and 309% respectively. This continuous high-speed growth created a “myth” in the domestic beverage market. By 2021, Genki Forest's annual sales reached 7.3 billion yuan, and the company also secured two rounds of financing, with its valuation soaring to $15 billion. Tang Binsen once publicly stated, “I hope that when people think of sparkling water, they think of Genki Forest.” With “0 sugar,” Genki Forest quickly opened up the sugar-free sparkling water market, and its ambition also lies in replacing the domestic beverage industry's narrative about “sugar substitutes.” In 2021, Genki Forest entered the electrolyte beverage market, combining the “0 sugar” concept with sports drinks, launching the Alien Electrolyte Water series. In 2022, sales of Alien Electrolyte Water exceeded 1.27 billion yuan, and in 2023, sales were reported to exceed 3.5 billion yuan, becoming Genki Forest's second growth curve. Aggressively Launching New Products, Without Limits Capturing Young People The success of the three major products has given Genki Forest the external impression of “launching a hit every time.” In fact, Genki Forest follows a “0 sugar + N” strategy of mass experimentation. Tang Binsen once said in an interview, “If a product can succeed in one market, it also has the potential to be promoted to other markets.” He firmly believes in “product is king” and adheres to the power law: 0.99 and 1.01 are very close, but their 365th powers are vastly different. He believes that the side with the larger base will ultimately win. Since its founding, Genki Forest has had an internet gene. In new product development, Genki Forest has applied the approach used in game development to beverage product testing—using A/B testing to decide which product to launch, and using a horse-racing method to let the best solution emerge on its own, with low cost and high speed. Ye Suping, former R&D director of Genki Forest, once said, “Genki follows a fast trial-and-error R&D approach. Internally, we conduct beverage taste tests every one or two days on average, then quickly adjust. The R&D cycle is controlled within 3-6 months, and when fast, we can produce a product in 3 months.” Jiang Nanchun, chairman of Focus Media, once publicly mentioned that Genki Forest tested dozens of ideas in its early days before finalizing the Ran Tea product, and for sparkling water, they tested over 100 ideas, all within just over a year. Such a high frequency of new product launches also relies on the company's “no limits” approach to product development. The aforementioned “Genki Universe Conference” was established to encourage employees to propose ideas. According to company employees, this meeting is held monthly, mainly attended by the innovation department, but all employees are encouraged to participate. At the meeting, participants can share their recent observations and insights about the market, as well as brainstorm creative ideas for products. When an idea is proposed, Tang Binsen almost never sets limits: “As long as you have a reasonable argument, I will agree to let you try.” A product manager at Genki Forest once mentioned: “Even if you are a newcomer, as long as you thoroughly understand the ins and outs of a new product or flavor and it passes the project committee, then it becomes your own product, your 'child.'” It is said that Genki Forest does not prioritize seniority in product development; the youngest product lead is from 1999, and her product sold like hotcakes. “Liking the new and disliking the old” is a consumption concept for many young people. They love trying new things and have low loyalty to brands and products. The logic behind Genki Forest's approach is to let young consumers feel the innovation and change of products all year round, “which means they can have freshness and even surprises all year round.” At the product development stage, Genki Forest focuses on user needs, using user experience and feedback as the sole criterion for measuring products. Through college student internal testing, e-commerce testing, convenience store testing, and information flow advertising testing, they collect data and feedback, letting first-hand data speak. Intensifying Competition, Facing Downward Pressure in Channels Now, “0 sugar, 0 calorie, 0 fat” is no longer a new concept, and the trend toward healthier eating has become widespread. According to the “2024 Q2 Consumer Potential White Paper,” as consumers' awareness of food health and safety increases, both the beverage and dairy markets are accelerating toward health-oriented trends. In Q2 2024, healthy drinks such as fruit and vegetable drinks and sugar-free beverages were widely favored, with attention to 0 sugar, 0 fat, and 0 additives continuing to grow. Overall, the health trend is dominating market development, driving brands to innovate continuously in this area. Genki Forest, which started early, has undoubtedly become one of the “top players,” holding a relatively high market share. According to iiMedia Research data, among many sugar-free beverage brands, Genki Forest, Coca-Cola, and Oriental Leaf are more favored by consumers, accounting for 32.1%, 30.2%, and 29.1% respectively. However, it cannot be ignored that as the health drink market, represented by sugar-free beverages, gradually grows, competition is becoming increasingly fierce. Although Genki Forest has carved out a place with major products like sparkling water, its market share is gradually being squeezed by numerous competitors. In the market, not only have established brands like Suntory, Ito En, Master Kong, Uni-President, Coca-Cola, Wahaha, Nongfu Spring, and Dongsheng Beverage already entered the fray with various “0 sugar” drinks, but emerging health drink brands like Guozishule, Rangcha, and Chaxiaokai are also beginning to make their mark. Competitors also include freshly made tea drinks from street shops. Brands like Chagee and Heytea have been continuously reducing the sugar content of their products, launching healthier and more cost-effective tea drinks, which will further compress the market space for soft drinks. Currently, the main pressure Genki Forest faces is the “old story” of channels. Genki Forest's consumer base is mainly concentrated in first- and second-tier cities, and after eight years of deep cultivation, it is gradually reaching its ceiling. For lower-tier markets and the millions of sales terminals across the country, Genki Forest is still a relatively unfamiliar face. A reporter from Cankaojun visited a chain convenience store and a supermarket near a residential area in a third-tier city and found that only one store sold Genki Forest sparkling water and Alien Electrolyte Water, with only three SKUs. When asked about sales, the owner shook his head and said, “Not selling well.” Distributors in lower-tier markets also seem to trust traditional established brands more. Previously, media reported that a Genki Forest salesperson in a third-tier city in the south said, “There aren't many powerful distributors specializing in Genki Forest; many of them mainly distribute C'estbon and Nongfu Spring, and sell Genki Forest as a side business.” According to a white paper released by Frost & Sullivan, the size of China's lower-tier retail market reached 17.6 trillion yuan in 2022, about four times that of high-tier cities, and overall growth is faster than in high-tier cities. If Genki Forest wants to continue scaling up, it cannot avoid competition in traditional channels. How to sell healthy water to more young people in lower-tier markets is a significant challenge for Genki Forest. Recommended Reading