Spring is here, and everything is reviving. The beverage sales season is approaching. March and April are also the peak time for companies to launch new products each year, especially in the beverage industry. If new products are not launched now, when will they be? I took a look at the new beverage products introduced this year and was somewhat disappointed. There are functional expansions like beauty drinks, health drinks, and plant-based drinks; process expansions like solid beverages; and packaging expansions like bagged drinks. They are dazzling, but also cause concern. My concern is that they are good, but they may not live long. The designers of these products often have good intentions, with a pure heart and lofty ideals, determined to create good products that differ from traditional beverages and better meet modern health pursuits. However, I have gradually discovered that in our industry, truly good products often conflict with making money. If you can clearly understand the logic behind making good products and doing good business, you can roughly understand the meaning behind "good products conflict with making money." Soda is a good case in point.
Is soda a good product?
Before answering this question, let's look at how soda is defined. Although soda was not invented by the Chinese, the term "soda" (汽水) was created by us. The earliest concept of soda in China can be traced back to the late Qing Dynasty. At that time, the Dutch controlled global maritime trade, and soda was brought to China, where it was initially called "Dutch water" rather than soda. Baidu Baike defines soda as: Soda, a refreshing beverage. It contains carbon dioxide, with an appropriate amount of sugar, citric acid, flavorings, food coloring, etc. When carbon dioxide at about 2-3 atmospheres is sealed in sugar water, some of the gas dissolves in the water, forming carbonic acid, which gives soda its stimulating taste. In the soft drink category, it falls under carbonated beverages.
In the early 1990s, when Coca-Cola and Jianlibao were all the rage, it was the golden age of carbonated beverages. However, as times changed, people no longer pursued them enthusiastically. The emergence of tea drinks, juices, functional drinks, and other products gave people more choices, and carbonated drinks were no longer mainstream. When mentioned, they were often labeled unhealthy. The main reason for being unhealthy is the high sugar content in soda. Sugar is a happiness factor, an element that can be addictive and promote dopamine secretion, which is why cola is called "happy water for fat guys." Sugar itself is harmless, but in modern society, because sugar is too easy to obtain, excessive intake has triggered a series of diseases, leading people to fear sugar. Compared to products that align with mainstream health trends, soda is really not a good product.
Is soda a good business?
Soda is indeed a good business. People hate it as much as they love it. Look at Coca-Cola's financial reports. Recently, Coca-Cola released its full-year 2021 results, showing net revenue of $38.655 billion, up 17% year-over-year; operating profit of $10.308 billion, up 15%. In terms of product market share, there was growth in the non-alcoholic ready-to-drink segment, but the main revenue still came from the classic product—Coca-Cola. When discussing the Asia-Pacific region, the company also mentioned that growth was led by Coca-Cola trademark products and flavored sodas. Subsequently, Swire Coca-Cola's disclosed financial data showed that in terms of category revenue share, soda completely outpaced other categories, taking the lead.
Although Coca-Cola proposed an all-beverage company strategy early on and expanded many products that better meet modern health needs, consumers' bodies are honest, and financial data is objective. Coca-Cola has been around for 136 years, and the classic product still sells well today, remaining the foundation for Coca-Cola's sustainable development. It cannot be discarded, and others cannot take it away. Not only Coca-Cola, but the gradual recovery of domestic soda brands around us also proves this point.
Having escaped early foreign intervention, Beibingyang, Xi'an Bingfeng, Hankou No.2 Factory, Huayang 1982 have restarted, and new brands like Hongbaolai and Dayao Jiabin are active in the market and developing rapidly. Xi'an Bingfeng is planning to go public, and Beibingyang's parent company Dahao Technology is already listed. Others are content with their niche, quietly making big money. Existence is reasonable; from a business perspective alone, this is indeed a good business.
The logical rationality of soda's existence
Recently, I read an article by Mr. Kong Shou, which included a saying: "In marketing, we need to 'think like an outsider, execute like an insider.'" We should look at our products from the perspective of a novice user. When we stay in an industry for a long time, interacting daily with colleagues, peers, and industry insiders, we easily fall into an internal perspective, assuming consumers have the same information as we do and that they will make rational decisions based on a full understanding of products and their pros and cons, like professionals. But the reality is that consumer decisions are often random and irrational, especially in a category like beverages, which is highly immediate. What we see and hear is that carbonated drinks are declining, consumers prefer more natural and healthy products, and we need to make more differentiated products to sustain company growth. However, the first to die are the various new products that emerge every year, some disappearing before even reaching store shelves. In the soda category, have you seen new products? From a consumer perspective, changing packaging or flavor counts as a new product. But in terms of soda's basic attributes, it has never changed.
Take Genki Forest as an example. In recent years, the product that truly shook traditional soda is Genki Forest's sparkling water. But the underlying logic of Genki Forest's sparkling water is still selling soda; its essence is no different from traditional soda, just replacing sugar with sugar substitutes (sweeteners). In the book "Salt Sugar Fat" by American author Michael Moss, it is mentioned that the effect of sugar-free drinks may not be as good as you think. Because even if the drink contains no sugar, it can trigger our craving for sweets, leading us to consume more food, which still causes obesity. From another perspective, Genki Forest's consumers don't really care if the product has improved; they want a feeling, and if they think it's good, that's enough. How to make consumers feel the product is good is where Genki Forest's expertise lies. Would Coca-Cola see Genki Forest as a competitor? No. Sugar-free Coca-Cola was introduced long ago, but few consumers bought it. It wasn't until Genki Forest appeared that sugar-free cola regained vitality; Coca-Cola should thank Genki Forest.
In conclusion: Although carbonated drinks have been consistently viewed unfavorably, their future remains irreplaceable. A distributor in the beverage business told me that after trying tea, juice, functional drinks, and other products without much success, he suddenly found a breakthrough in soda, which made him reflect for a long time. Soda's competitiveness lies in its naturally inherent benefits: refreshing, thirst-quenching, and pleasant. This is also the unchanging gene in all soda products: the good taste of flavoring and the refreshing sensation of carbonation are both indispensable. Consumers' memory points for soda are only these. Expecting them to remember other things, such as emotional connections beyond benefits (usually only achievable by big brands), is just icing on the cake. In small shops without Coca-Cola, people choose Beibingyang or Bingfeng instead.
Coca-Cola sells well because of its capillary-like channel construction, making it visible and accessible everywhere. This is something that manufacturers wanting to do soda business must clearly understand. Returning to the theme of this article, why is soda a good business, and what does a good business have to do with "me"? Here are some actionable points for readers to consider:
1. For entrepreneurs entering the game: Big pond vs. small pond—choose the big pond. Whether from historical stability or the fact that carbonated drinks remain the largest category in the soft drink industry, the soda category is a big pond. From a business perspective, Duan Yongping's view is to be willing to be second, to enter tracks that others have already validated. The high proportion of soda products in large, successful companies and categories is the most practical evidence. Small and beautiful basically follows a narrow productism, differentiated markets, targeting niche audiences, and seeking recognition under a certain aesthetic premise. But when it comes to business, the validated mass market is where the real operational space lies.
2. For distributors, where are the opportunities in the soda category? I'll share the opportunity points that the distributor mentioned earlier found, for your reference. The channel layout of big companies like Coca-Cola still has many channels they cannot cover. In your market, pay special attention to the foodservice channel. Perhaps in your market, there are still market opportunities that big companies haven't served, which is a good action point.
Finally, if you have other thoughts on the soda industry, feel free to leave a comment below. We look forward to your sharing.
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