In 2018, Genki Forest's sparkling soda water stood out among beverage products, breaking the 1 billion yuan single-product sales mark in just 1-2 years, creating a miracle in the red ocean beverage market in recent years, and suddenly bringing the sub-category of sparkling soda water into everyone's view, attracting industry reports and attention. In the following 2019-2020, both soda water and sparkling water categories saw new rounds of transformation and breakthroughs, with new products constantly appearing in our view, some focusing on soda water, some on sparkling water, and various sparkling soda waters. In such a new market for sparkling water, eager entrants saw the explosive consumption potential and tried to test the waters. This stage of a hundred schools of thought we call the 1.0 era of sparkling water. After more than two years of market cultivation and iteration, in 2021, whether it's soda water, sparkling water, or sparkling soda water, the entire market is gradually becoming more scaled and standardized with more attention and product innovation, and with it comes the second stage of intense competition, which we call the 2.0 era of sparkling water. In this stage, many brands that blindly followed trends have been eliminated, and the sparkling water market is relatively more mature, with some major brands entering, such as Coca-Cola and Nongfu Spring. On April 1, Nongfu Spring officially announced its new sparkling soda water. According to official disclosures, this product has been in development for many years and is another breakthrough in a new category following the still soda water launched in 2019. -01- Behind the Explosion of the Sparkling Soda Water Category is the Push of the Times Soda water and sparkling water are both imported products, and there is no unified standard in China. As mentioned in previous New Distribution reports, in European and American countries, soda water is called soda water, and sparkling water is called sparkling water; the two are essentially different. Soda water itself is non-carbonated; because it contains baking soda (scientific name: sodium bicarbonate), it is called soda water. Sparkling water, as the name suggests, is carbonated, with the main component of the gas being carbon dioxide. So, to distinguish soda water from sparkling water, at the first level, remember two core elements: does it contain sodium bicarbonate or carbon dioxide? If it has both, it is sparkling soda water. The market for soda and sparkling water products is mixed, and consumers generally cannot tell them apart. So, if you are holding a product with soda or sparkling water in its name, you can quickly determine its attributes based on the above two core elements. Why can sparkling soda water become popular? Digging into the reasons behind it, it is still because of the emergence of new consumer demands, and it just happens to meet the preferences of the new generation of consumers. It's not that the times have abandoned you, but that the times have created you. In a sense, the emergence of sparkling soda water is partly due to consumers' pursuit of healthy and natural products, and on the other hand, because its ingredients are the same as the carbonated components in carbonated beverages, with a similar taste, it has a certain consumer base and just fills a gap in the carbonated beverage market. In an era when soda water and sparkling water have not yet achieved consumer awareness like in European and American countries, we can tentatively believe that sparkling soda water has captured the innovation dividend of the sub-category of the carbonated beverage market. While consumers are still immersed in the world of happy fat house water, sparkling soda water initially relied on the important label of 0 sugar, 0 calories, 0 fat to quickly occupy consumer minds. -02- Nongfu Spring Enters at the Right Time, Precisely Targeting Young People The carbonated beverage market is mature, and the market, which was already growing slowly, has achieved growth due to the emergence of sparkling water. According to Nielsen statistics, China's sparkling water market has exceeded 20 billion yuan in scale, and sparkling water is also one of the fastest-growing categories in the entire beverage industry. In this regard, major brands like Coca-Cola and Nongfu Spring are relatively rational in entering at this time. Compared to the chaotic scene of the 1.0 era of sparkling water, they better understand the matching of this sub-category market and consumer demand, and behind the product, there is a relatively reasonable R&D and observation cycle, which also confirms the caution and confidence of major brands in their own strength. We see Nongfu Spring's gradual approach to entering the sparkling soda water category. According to some Nongfu Spring distributors I asked, the still soda water launched in 2019 was one of the many new products from Nongfu Spring in the same period that performed surprisingly well, and it is estimated that the first victory in the soda water field strengthened Nongfu Spring's determination to enter the sparkling water field. Just from the product itself, it doesn't seem to be Nongfu Spring's usual style. From the packaging, the new sparkling soda water is very youthful and personalized, which is in sharp contrast to previous products. It is worth noting that as a national beverage, Nongfu Spring's packaging has always been grand, and it rarely appears in such a "unconventional" style. According to official sources, this packaging design was finalized after more than ten rounds of repeated polishing with internationally renowned illustration designers. The styles of girls and boys, ladies and gentlemen, as well as the corresponding product flavors and scene atmospheres, are all presented in illustration form, and the fresh patterns further narrow the distance with young people. In terms of flavor design, it also keeps pace with the trendsetters of the new generation. The three new flavors launched this time are: Dawn White Peach, Hinata Summer Orange, and Mojito. At first glance, the names give off a literary and fresh vibe, while also clearly indicating the characteristics of each flavor: one white peach, one orange, and one mojito. Unlike other products, Nongfu Spring's sparkling soda water has a slightly sweet taste. The low sweetness combined with fine bubbles makes the product more refreshing and pleasant. It is worth mentioning the Mojito flavor. Mojito is a cocktail born during the Cuban Revolution, made from five ingredients: rum, mint, soda water, sugarcane juice, and lime juice. It has become very popular among young people in recent years. After several years of research, Nongfu Spring's R&D team finally recreated the romantic taste of this divine drink on a non-alcoholic basis. Through the design concepts of packaging and flavor, coupled with the product slogan "Soda with gas, light and fun," it is not difficult to interpret that the overall tone of Nongfu Spring's sparkling soda water is biased towards youth, fun, and individuality. If the previous still soda water was generally conventional, this time Nongfu Spring uses this product to complete emotional communication with young consumers, breaking the previous dull image through fun and interesting concepts and designs, getting closer to young consumers' preferences, and making it easier to win the favor of young people. In addition, Nongfu Spring still maintains its usual rigor and high standards in its products. The new sparkling soda water is sourced from Nongfu Spring's natural water source, Qiandao Lake. Compared to ordinary purified water, natural water contains a large amount of mineral elements needed by the human body. At the same time, in the product formula, it is 0 sugar, 0 fat, 0 calories, and 0 potassium sorbate (potassium sorbate is a food preservative widely added to food to extend shelf life). Nongfu Spring chooses not to add potassium sorbate, which on the one hand makes the product formula simpler and healthier, and on the other hand shows its confidence in the aseptic production line. Nongfu Spring has always been with young people and knows how to play. From bottle marketing, IP collaborations, national trend revival, and variety show sponsorships, it has achieved successful experience and results. Notable operations include "Music Bottle" and "Forbidden City Bottle," and it has successfully bet on hit variety shows like "The Rap of China" and "Idol Producer," earning the reputation of a design company and advertising company delayed by selling water. As a product aimed at young people, Nongfu Spring's sparkling soda water not only has outstanding taste but also resonates emotionally with young people who pursue individuality, health, fun, and interest. It can be seen that Nongfu Spring is fully prepared and determined to win in the sparkling water market. -03- The Sparkling Water Market Needs the Joint Efforts of the Industry to Promote Sparkling water first rose in European and American countries and has now become one of the mainstream drinks there. However, in China, sparkling water still has a difficult road of category promotion ahead. In the 2.0 era of sparkling water, not only is the sparkling water industry changing, products are changing, and consumers are changing. On the one hand, we see the huge growth potential of the sparkling water market; on the other hand, we also see that Chinese consumers still need time and brand education in product awareness. The entry of major brands is necessary and essential. On the one hand, major brands can strictly control product quality, and on the other hand, in the promotion and publicity of the category, major brands can do continuous promotion and consumer education, which will play a positive role in growing and strengthening the market and further promoting the development of the entire sparkling water industry. As a healthy beverage trend, the development of sparkling water will not be a flash in the pan. I believe that with more and more brands entering, the 2.0 era of sparkling water will not last too long, maybe 3 years, maybe 5 years, and when the next 3.0 era arrives, it will be the time when the leader of the sparkling water industry emerges and rises comprehensively! Once the tip is adopted, a reward of 400-2000 yuan will be paid.