Click 'Read Original' for details Source: Tech Planet (ID: tech618) "In the future, we aim to create 5 SKUs that are number one globally; this is a historic opportunity for Chinese consumer goods." At Genki Forest's headquarters in Beijing's East Third Ring Road, while sipping a newly developed, not-yet-released white liquor, founder Tang Binsen shared his inner goals with over 10 entrepreneurs on a study tour. During the meeting, Tang mentioned that Genki Forest would venture into new products like beer, white liquor, and yogurt, as well as explore internationalization. According to an entrepreneur present, the rarely seen Tang not only had a good tolerance for alcohol but also frequently made witty remarks: "Anxiety is to force the body to change its mechanism," "China has an oversupply of platforms; good products are the platform," and "Feeling comfortable is problematic; you need to constantly seek discomfort." Just over a month before this speech, Genki Forest had apologized for its "0 sucrose" claim for its milk tea product, but the controversy in the market has not subsided. Similarly, Nongfu Spring's Fukushima white peach sparkling water faced questions about the authenticity of its ingredients, which also trended on social media. Two new beverage companies in the industry were embroiled in marketing controversies, bringing the internet-famous drink track under public scrutiny. In fact, this track has been developing quietly for five years. When Genki Forest was founded in 2016, Tang Binsen managed the company through an investment holding model for four years. In 2018, before the industry exploded, Qiu Jie and Sun Zhiqiang, the 5th and 6th employees of Genki Forest, left to start their own new beverage company, "Qingquan Chushan." In 2020, the domestic beverage market exceeded one trillion yuan. Realizing that Genki Forest was gaining momentum, Nongfu Spring launched its "Soda Sparkling Water" in the sparkling water segment, and Wahaha's beverage brand Kellyone introduced "Shengqi Bobo" to counter, while countless startups flooded the track to grab a share. "This track is indeed very hot; we receive about 2 business plans from startups every week," Wu Shichun, founder of Plum Ventures, which invested in Qingquan Chushan, told Tech Planet. "Now we screen quality companies to talk to." "I believe a batch of national champion drinks will emerge here, and we should see clear results within two years." Before the industry structure stabilizes, this is the most intense and chaotic period of market competition. All sparkling waters are labeled as 0 sugar, 0 fat, but issues with raw materials and origins frequently arise; capital-driven marketing wars have also begun, with online livestreams by influencers like Li Jiaqi and offline billboards; after a new product becomes popular, others quickly copy it. The most concerning issue for internet-famous drinks is trust, but unfortunately, many in the industry believe these issues will fade over time. What deserves more attention is: who will be the next Coca-Cola or Nongfu Spring? Who will be the next richest person, Zhong Shanshan? Blindly sprinting has become the theme. Overnight Success "I had heard of Genki Forest, but early on I only saw it in Beijing convenience stores and didn't have much interaction." Li Xing, a former regional head at Wahaha, told Tech Planet that the market has long been dominated by Coca-Cola and Pepsi in sugary sparkling water, while Nongfu Spring and Wahaha competed from purified water to tea and functional drinks, with overall market shares relatively stable. Internet-famous drinks were only popular in certain regions. The change came in 2020 when Genki Forest, after years of online marketing, began pushing offline channels. Tang Binsen mentioned in an interview that he would put 80% of revenue into marketing. For this full-force offline push, Tang naturally wanted to "play big." An offline advertising company that could reach various consumption scenarios became a key target for Genki Forest's advertising. "At that time, Genki was investing heavily and was our top client," Zhao Feifan, a salesperson at this company, told Tech Planet. "Genki Forest invested tens of millions of yuan monthly for five consecutive months." During that period, Genki Forest's 0 sugar, 0 fat ads could be seen on street lamp billboards and elevator screens in many cities, along with TV ads on "Sisters Who Make Waves" and Bilibili. By June, when beverages started selling well, Genki Forest suddenly became famous. (Genki Forest Baidu Index in 2020) With the continuous expansion of convenience store channels, Genki Forest's sales also rose. In February, sales were over 74 million yuan; in March, over 120 million; in April, over 170 million; and in May, sales reached over 260 million, equivalent to Genki Forest's entire marketing revenue in 2018. Throughout 2020, Genki Forest sold 190 million bottles of beverages. Not only did industry insiders know Genki Forest, but many consumers also purchased its products. Many people's first impression of Genki Forest is the concept of 0 sugar, 0 fat healthy drinks. In fact, Genki Forest was not the first to propose this concept. Coca-Cola had launched sugar-free drinks long ago, and Tang Binsen had also invested in a low-sugar, low-fat beverage company called "Youxuan Guben," but it was Genki Forest that popularized the 0 sugar concept. Genki Forest created the sugar-free sparkling water track, attracting more entrants. "Qingquan Chushan" does not deny learning from its former employer and has launched its own 0 sugar, 0 fat sparkling water, "Qingting." But designing a unique product was a challenge. Sun Zhiqiang, co-founder of Qingquan, told Tech Planet, "We thought of Sprite Fiber+ as a hit, so we decided to add dietary fiber to sugar-free sparkling water." This is why many people wonder about the difference between the two products, as they are similar in packaging and positioning. Insiders at Qingquan often say, "We add fiber, which is like eating an extra apple." For Nongfu Spring's sugar-free sparkling water, the design anticipated using its strength in water source marketing. From the earliest Qiandao Lake to Changbai Mountain and Emei Mountain, to the recent "Dawn White Peach from Fukushima, Japan," and Hyuganatsu oranges from Miyazaki Prefecture. However, after this marketing failure, Nongfu Spring repeatedly explained that Fukushima Dawn White Peach has been introduced for domestic cultivation, but some consumers remain skeptical. But the most lively sugar-free sparkling water is just a sub-track of internet-famous drinks. "Frankly, sugar-free sparkling water only accounts for 20% of the sparkling water market," Sun Zhiqiang told Tech Planet. Humans have a genetic preference for sugar, and sugar-free sparkling water will not overturn the market dominated by sugary sparkling water. But this category is a key tool to capture young consumers' minds. After opening the market, companies will use new tea drinks to occupy more market share. "New tea drinks are a hundred-billion-yuan market and the focus of future competition." Prelude to Crisis However, no billion-yuan blue ocean market appears out of thin air, and the internet-famous drink track is no different. The targets of internet-famous drinks are traditional beverage giants like Coca-Cola, Nongfu Spring, and Wahaha. "Happy Fat Guy Water" and "Poor Man's Favorite Iced Tea" are ridiculed online, but these products are still strong in distribution. "In 2019, Nongfu Spring spent 7 million yuan to secure the beverage sales rights at the Forbidden City," Li Xing told Tech Planet. Nongfu Spring's new products can be distributed nationwide within two weeks, from the Forbidden City to county towns, showing strong channel capabilities and remaining the main sales force. For emerging brands like Genki Forest, competing for channels is key to changing the industry landscape, and sufficient capital is the key to competing at the table. Genki's core strategy is to offer higher profit margins to distributors and convenience stores due to higher unit prices. Previously, Genki Forest's vice president Wu Hao publicly shared that Genki Forest's success is due to two factors: one is the discovery of erythritol. Using this sugar increases costs, making Genki Forest's products relatively expensive. Li Xing believes that selling at a high price is an advantage: "For example, for milk tea, our distributor price is 40 yuan, while Genki Forest offers 70 yuan. The 30-yuan difference gives distributors more incentive to promote." "Success comes from this sugar, and crisis also comes from this sugar." On April 10, a statement from Genki Forest about its milk tea began to question the classic slogan "0 sugar, 0 fat." According to Zhihu user KellyWeaver, who told Tech Planet, the issue first escalated from one of her debunking articles. As early as January, nutrition blogger KellyWeaver published an article on Zhihu titled "What? 'Sugar-free' milk tea makes you gain weight?" evaluating 18 beverages from supermarkets. She pointed out that she had tested "0 sucrose milk tea" and found that the entire category had similar issues (claiming "0 sucrose" but actually adding crystalline fructose), which drew an official response from Genki Forest. But the 0 sugar controversy only broke out widely after Genki Forest's voluntary apology in April. Similarly, Nongfu Spring's soda sparkling water ingredient origin issue also sparked heated discussion in May. The core competitiveness of internet-famous drinks—innovative products—whether they are as healthy and high-quality as advertised, began to be questioned by consumers and netizens. Just like the twists and turns of bottled water in the past, the water quality crisis changed the market landscape. In 2008, Kangshifu was exposed in a "water source gate" crisis, questioned that "mineral water is just tap water." At that time, Kangshifu's market share dropped by 5 percentage points, and its leading position was overtaken by Nongfu Spring. Today, although Nongfu Spring's market value has fallen by 320 billion Hong Kong dollars since the beginning of the year, it still stands at 437.4 billion Hong Kong dollars. In the view of Li Xing from Wahaha, in the past, Kangshifu, Nongfu Spring, Wahaha, and C'estbon all competed with each other, openly suing and secretly digging up dirt. Now, internet-famous drinks, without waiting for competitors to act, have faced brand crises one after another, mainly because they aimed too high to gain the upper hand. Summer 'Battle' Between Old and New Forces On July 27, 2020, Meituan founder Wang Xing posted on Fanfou, "Genki Forest is indeed fierce; the battle with Nongfu Spring should be exciting." In his view, a close fight between old and new forces is inevitable. Offline terminals have already seen sparks, as regardless of large supermarkets or mom-and-pop stores, beverage display space and quantity are fixed. Genki Forest's sales in 2020 were 3 billion yuan; to achieve 7.5 billion yuan in 2021, it must take more channels from giants like Nongfu Spring, specifically by securing more in-store positions. Now, despite the ongoing controversies in public opinion, it does not affect the fierce competition for every store, every freezer, and every shelf position. Tang Binsen's famous "Big Red Sea Theory" is least afraid of competition. Genki Forest plans to complete the placement of 80,000 freezers this year, subsidizing electricity and entry fees for merchants. According to Tech Planet, these freezers are directly controlled by Genki Forest, with sales data converging to headquarters in real time, allowing intelligent supply adjustments. This also means Genki Forest is advancing in "de-distributorization." High-end products + high pricing + efficient tactics form a closed loop that is Genki Forest's secret to challenging giants. Unlike Genki Forest, "Qingquan Chushan" avoided the spotlight from the start, heading to lower-tier markets. "We promote through small shops, schools, canteens, and even prisons," Sun Daqiang explained to Tech Planet. Although these resources are fragmented, competition is less intense, allowing small-town youth to first taste sugar-free sparkling water, and they will become a stable consumer base later. As new forces challenge from both high and low dimensions, Nongfu Spring is launching a comprehensive counterattack. It is reported that a recent campaign led by boss Zhong Shanshan, targeting Genki Forest's sparkling water, called "Tianjiang Caishen" (God of Wealth Descends), is being rolled out nationwide. According to the rules, if a store promotes Genki Forest products, for every bottle of Nongfu Spring sparkling water displayed, a bottle of "Changbaixue" (priced at 3 yuan) is given as a gift. Additionally, there is a measure of giving two boxes of purified water for every box of sparkling water sold. In this "Tianjiang Caishen" campaign, Nongfu Spring and distributors share costs at a 9:1 ratio, with Nongfu Spring bearing most of the costs. Moreover, this campaign is not counted in the distributors' expense points; it is an additional allocation. But in this summer marketing battle, Wahaha's sparkling water unexpectedly emerged. In February 2021, Wahaha launched a new product, Xiaoqingxun Soda Sparkling Water. In mid-May, Wahaha's "Shengqi Bobo" sparkling water invited celebrity Wang Yibo as spokesperson and, like Genki Forest, invested in offline advertising nationwide. ("Shengqi Bobo" may be the only sugar-free sparkling water with packaging not imitating Japanese style) These measures helped Wahaha's sparkling water top the sales charts during the "618" beverage battle. But the top spot is not stable; the brand name is hard to distinguish, and the results from marketing efforts may be short-lived, with costs ultimately borne by consumers. Sugar-free sparkling water is priced higher than cola, but high gross margins may not translate into substantial profits because consumers are "drinking ads." Following Trends, Gone with the Wind? Recently, Li Xiang, founder of Li Auto, mentioned in a WeChat Moments exchange with friends that countries with per capita GDP exceeding $10,000 are the biggest fortune for the rise of new national brands, citing the US in 1978, Germany in 1979, Japan in 1981, and China in 2019. From beauty brands like Perfect Diary and Florasis, to beverage brands like Genki Forest, Jiangxiaobai, and Meijian, to new-style milk tea brands like Heytea and Nayuki, these new national brands have indeed risen rapidly, some even listing on capital markets. But in the internet-famous drink sector, due to a broader market, lower entry barriers, and weak product differentiation, competition is even more chaotic. Setting aside Nongfu Spring's "origin gate" that exposed its origin marketing tactics, Genki Forest's 0 sugar milk tea concept is not just "a two-year joke with consumers about 'drinking without gaining weight'" but also means the representative "0 sugar, 0 fat" innovation of internet-famous drinks is being doubted by consumers. Zhihu user KellyWeaver told Tech Planet: "Although more manufacturers now use non-nutritive sweeteners like sugar alcohols, aspartame, and sucralose to replace nutritive sweeteners like sucrose, fructose, and high-fructose corn syrup, reducing sugar content in internet-famous drinks significantly, the current use of terms like 'no' and '0' is very casual. They should spend one-tenth of their marketing budget on hiring nutrition professionals for compliance and stop fooling consumers." Issues in marketing and promotion are being addressed and changed as public opinion evolves. Deeper is the unsolvable problem of involution in the beverage track. Currently, all sugar-free sparkling waters have nearly identical packaging, with a unified Japanese-style design making it hard to distinguish. Various copycat brands are rampant, and consumers cannot tell them apart. Moreover, this phenomenon is not only prevalent among startups; giants also imitate each other. Tang Binsen, in the aforementioned entrepreneur exchange, mentioned "copying homework from giants," also known as the "geographic arbitrage" theory. From Genki Forest's burnt tea and milk tea, corresponding products can be found in Japan, where sugar-free tea is mature (Ito En and Suntory launched sugar-free tea long ago). Sugar-free sparkling water, on the other hand, is a comprehensive product follow by many beverage giants to Genki Forest. Apart from strong players like Genki Forest that can build their own factories, new entrants in the internet-famous drink space are even more chaotic. After a certain hawthorn drink brand became popular, many hawthorn drinks copied everything from packaging to taste, making it hard to tell which is the real internet-famous drink. According to an employee of the original hawthorn drink company, the sanitary conditions at the OEM factory for this internet-famous drink are worrying. (Photo provided by an employee of an OEM factory for a certain internet-famous hawthorn drink) Blue iron barrels hold raw materials, leaked additives are left unattended, and syrup pipes are picked up from the ground and placed into mixing tanks. Working overtime for meager wages, this former beer factory now ships 1,000 tons of beverages monthly. It is actually a brand that has seen some success among internet-famous drinks, but in the employee's view, they use money saved from low wages and cheap raw materials for marketing, lacking core competitiveness, and will disappear when consumer trends change. This is the fate of most internet-famous drinks: they come with trends and go with the wind. For Genki Forest, which has been on this track for five years, growth inevitably encounters setbacks. As for who will become the next billion-yuan "Coca-Cola" in the battle between old and new forces, time will sift out the truly strong players. PS: From August 24-26, 2021, the 2021 (4th) China FMCG Conference, hosted by New Distribution, will be held in Shanghai. Focusing on industry trends + practical cases + growth through connections, 3,000 FMCG practitioners will gather. 10 thematic forums cover new retail O2O, community group buying, short video and livestream e-commerce, distributor transformation, rise of new consumer brands, new alcoholic drinks, distribution B2B supply chain, omnichannel marketing, B2B2C new technology applications, etc., with operators from various segments presenting the latest case studies. Confirmed heavyweight guests so far include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings; 3. Lu Xiuqiong, global expert partner at Bain & Company and former vice president of marketing at Coca-Cola China; 4. Chen Xiaodong, vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 5. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; 6. Yang Hongbin, vice president of Junlebao Dairy Group; 7. Guo Xulin, assistant to the president of Hema Fresh; 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 ... Gain excellent practical cases at the conference, make new industry friends, and expand new horizons. 3,000+ industry attendees, 1,500+ brand executives, 1,000+ new e-commerce platform and regional distributor leaders. The latest trends, models, and business opportunities are all here! A grand event for FMCG professionals—you must be there! Are you "watching" me?