Currently, if a consumer goods brand attempts to profile its target consumers, it will find it exceptionally difficult—if it still defines a consumer by labels such as age, gender, education, and income, it will likely only get a 'blind men and the elephant' result. Because in today's China, from first-tier cities like Beijing, Shanghai, and Guangzhou to fourth- and fifth-tier towns and rural areas, from the southeast coast to the northwest inland, from the post-95s 'Generation Z' to the 'silver-haired' elderly, frugality and luxury, showing off and practicality may be differences in consumption concepts among different consumers, or they may occur within the same consumer. Because we are experiencing an era of 'consumption folding,' where different cross-sections after folding reflect completely different consumption pictures, and there are also phenomena of communication isolation (consumption differentiation) and understanding isolation (value differentiation) between these cross-sections, providing more segmented market space for different types of enterprises, ultimately making consumption characteristics, channel connections, and innovation directions more diversified and personalized. Image source: Xiaohongshu user @洛洛

This means that industry development no longer follows the traditional 'cycle' pattern — those who gain 'channels' may not necessarily move products; blockbuster products no longer occupy the largest common denominator of the consumer market; brand marketing begins to 'empathize and communicate' rather than 'persuade and control' consumers... It can be said that after experiencing a period of rapid growth in the domestic beverage market, the current market structure has stabilized, consumer awareness has upgraded significantly, and the market environment is complex and changeable, with overall development showing a 'great transformation never seen before.' Whether on the supply side, manufacturing side, or consumption side, the beverage industry chain is entering a new period of change, with both opportunities and challenges, dividends and risks coexisting.

New consumers place more emphasis on 'life self-consistency' In an article studying the logic of 'consumption folding,' Tsingshan Capital once pointed out: 'If we simply divide the three-stage pursuit of life, we can divide it into 'survival, life, and existence.' If an activity can simultaneously satisfy these three pursuits (especially the latter two), then the utility it obtains may be greater, and business formats that can help people fold multiple utilities will also be more vital.' If we specifically apply this to the beverage industry, these different dimensions of pursuit often produce 'isolation' and 'conflict.' A few years ago, when the marketing department of a beverage giant brand communicated with the author, they complained: 'It is increasingly difficult to conduct consumer research now. In the survey samples, almost everyone said that 'sugar-containing is unhealthy' and they would pay more attention to new sugar-free beverage products, but when comparing sales results, sugar-containing beverages still sell better.' Image source: WeChat public account @农业数字化

Setting aside specific issues such as new product cycles and survey sample scope, this result of consumers 'saying no but being honest in their bodies' is precisely typical of the current consumption mentality—why can't we 'have both'? Health is a life pursuit, while the pleasure brought by sweetness is seen as a 'small blessing' that reflects the value of life. After all, in the information age, the development of the internet has eliminated the 'information gap' for us, creating an unprecedented environment of 'information equality,' which gives each person's 'life value' more diverse goals—although we cannot control the results in the pursuit of prestige, wealth, or fame, we can experience emotional 'self-pleasure' and spiritual 'self-consistency' in the consumption process, even viewing it as a concrete expression of pursuing a better future life. This is not a trap of new consumerism; it is a manifestation of consumption 'individualization' during the consumption folding cycle. Baudrillard, in 'The Consumer Society,' believed that the 'individualization' of consumption causes individuals to suffer from a consumption 'obsession,' and only by placing everything in consumption can people gain a sense of peace and reality. For example, in the past two years, when freshly made milk tea and coffee have become the 'small blessings' in the minds of young consumers and the 'hard currency' in the workplace, the value of consuming milk coffee is not simply about consuming a beverage. This is the 'lipstick effect' in economic psychology.

Image source: Xiaohongshu user @lyzshirley

The 'lipstick effect' is an abstract description of a typical economic phenomenon during the Great Depression in the United States in the 1930s, used to describe the phenomenon that during an economic recession, although the overall consumption level declines, the sales of 'cheap optional consumer goods' such as lipstick actually rise. When the economy is sluggish, people face greater pressure in work and life, and they tend to choose to buy some relatively low-priced products to satisfy their small pleasures, to obtain psychological comfort and happiness. For example, buying a lipstick to dress up, watching a movie to relieve mood, or buying a cup of milk tea to gain low-cost happiness. This consumption strategy of small cost and high return is also the result of many people's rational spending. However, it should be pointed out that the underlying logic of the 'lipstick effect' comes from consumers' active choice, not passive acceptance. As some industry insiders believe, 'Now making products is not about persuading consumers, but about moving consumers.' Because current consumers are more willing to pay for the value in their hearts, not the price—why has freshly made milk tea become the 'white moonlight' in the hearts of the new generation of consumers, rather than bottled milk tea? Why do consumers think that 'it's not that four-yuan beverages are unaffordable, but that large bottles are more cost-effective'? Why do consumers complain about the one-yuan price increase of Master Kong Iced Black Tea, yet frantically buy the eight-yuan seasonal limited edition 'Oriental Leaf' online?

Image source: Xiaohongshu user @你好呀

Obviously, professional concepts such as consumption upgrading, consumption downgrading, and consumption stratification have not affected young consumers' full display of their consumption personality. For the new generation of young consumer groups, they advocate self-pleasing consumption even more. They understand the finiteness of resources, so they save desperately where they should save and spend lavishly where they should spend. For the former, they are stingy; for the latter, they are generous, forming a split consumption habit. Therefore, the 'consumption folding' superimposed on the 'lipstick effect' has caused the current beverage consumption market to develop toward the trend of personalized and sovereign consumption awareness, and has exacerbated the uncertainty of brand owners regarding future marketing results.

Seize new consumption demands to achieve innovation As we all know, beverages are a market with extremely high competitive concentration. After more than thirty years of rapid development in the industry, not only has a stable brand competition pattern been formed, but also a highly concentrated competitive situation has been formed in the mainstream category market. Even in consumer minds, some brands have become almost equivalent to the category—for example, herbal tea is to Wanglaoji, functional drinks are to Red Bull, and iced black tea is to Master Kong. These leading brands, with their super large single products with sales exceeding ten billion, push to millions of sales points daily, achieving 'strong dominance' in terms of sales scale and terminal coverage. So, is there still room for growth in these markets? The author believes it is affirmative. From a fundamental perspective, consumption folding is also a change, and change often means opportunity. Under the premise of economic development and rising per capita income, the direction of mass consumption has long-term logical support. This is the premise for current brand and product innovation. But we may need to be more cautious and professional about the path and direction of innovation. Image source: Xiaohongshu user @兴博源酒水哈

From the consumption direction, consumption is irreversible to some extent, that is, the 'ratchet effect' of consumption: once consumption habits are formed, they are irreversible, that is, easy to adjust upward but difficult to adjust downward. At the same time, consumption is also transitive; the consumption tendency of high-income groups will gradually become the average consumption tendency of the whole society. Therefore, consumer goods or brands with 'exceeding expectations' value are more likely to become 'challengers.' After all, the current domestic beverage supply chain is mature enough to provide a foundation for new consumer brands to innovate product strength. On the other hand, the demand for new consumption truly exists—as mentioned earlier, under the decision-making framework of 'consumption choices under life logic,' people need to allocate limited time, money, and even emotions between the present and the future at every moment to maximize the sense of life value. Image source: Xiaohongshu user @陈宵宵

As Peng Ying, co-founder of Original Wheat Hill, said, 'I can't afford the best car or the best house, but I can still eat the best bread, whether the economy is up or down.' When netizens post jokes like 'You can buy expensive, but you can't buy overpriced' and 'Four yuan is face, three yuan is life,' 'cost-effectiveness, emotional consumption, and experiential consumption' have become the external characteristics of people's consumption tendencies, driving consumers to make final consumption decisions. The '2023 Consumption Trend Observation' report released by CBNData shows that among various factors promoting consumption, as many as 93.69% of consumers tend to choose products with high 'quality-price ratio,' while only 4.75% purely pursue low prices. This has also led more and more beverage brands to actively participate in the 'dual-line' battle, rolling out scale in the 'old mainstream price band' while expanding momentum and profits in the 'new mainstream price band.' In the mainstream beverage market, the trend of 'quality-price ratio' is also blowing stronger—the rise of 1L large packaging, the strong emergence of sugar-free tea, and the upgrade of soda with 'more quantity for the same price' are all products of the 'quality-price ratio' consumption trend.

Find opportunities for 'same frequency' and 'aggregation' in the folding Mr. Kotler once said: 'Consumer demand = ability to pay + willingness to buy.' In the process of upgrading products or brands, enterprises often consider consumers' ability to pay more, but easily neglect deep cultivation of willingness to buy. In conventional understanding, the victory of brand premiumization lies in seizing middle- and high-income groups. However, the higher the premium market, the more product segmentation, the more extreme requirements high-end consumers have, and the more niche the circle, which also means limited market growth space. Because high-end consumers are destined to be a minority, if the market scope is too strictly defined, the target consumers will be strictly limited. For example, in the premiumization process of ice cream brands like Zhong Xue Gao, they ended up with the reputation of 'ice cream刺客' (ice cream assassin). Although they considered empowering with IP, aesthetics, and other concepts, due to factors such as channels and business models, they completely ignored consumers' willingness to buy, causing consumers to be reluctant to buy high-priced ice cream, ultimately having a counterproductive effect.

Image source: Xiaohongshu user @一只兔子

Therefore, from simply focusing on the consumption ability factors of high-end consumer classes to finding multi-dimensional cross-sections of consumers such as interests, identity, and sense of belonging, and from consumption stratification to opening up opportunities for 'same frequency' and 'aggregation' in the folding, and doing targeted concept empowerment, can be said to be the key to brand upgrading and product pricing victory. For example, Zhang Ye, co-founder of Tsingshan Capital, invested in the distinctive second-hand phone project 'Zhaoliangji.' He believes: 'Consumers who love the iPhone brand for new phones and consumers of second-hand phones may be closely aligned because of common spiritual traits, and the consumption ability stratification for new and second-hand phones naturally forms different folds, and the connection between the folds will form consumption aggregation.' Therefore, he said: 'Satisfying any cross-section, in a market as large as China, you can achieve a company of considerable size. Perhaps you cannot become a ten-billion-dollar or hundred-billion-dollar company, but you can still achieve a ten-billion-yuan or several-billion-yuan company.' Returning to the beverage industry, this logic still applies—perhaps Coca-Cola's formula cannot be easily changed, but Genki Forest still found a breakthrough from sugar-free sparkling water; although Master Kong Iced Black Tea is extremely strong in the category market, under the trend of 'low sugar, sugar-free' and 'simplified ingredient lists,' there is still room for upgrade, making it a product that 'can be redone' in the new consumption era, becoming the biggest reason for Genki Forest Iced Tea to lead market upgrades. It is based on this product thinking and trend insight that Genki Forest found a 'crack' that can be penetrated from 'asymmetric competitive markets.' Consumption is an eternal topic. Under changes in the economic cycle, a great transformation also means a new reshuffling process and the establishment of a new market order. This is undoubtedly a major test for brand owners. How to cross the cycle also depends on the strategic vision and innovative courage of the enterprise.

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