Zhang Yuqi, who was extremely popular in this summer’s popular variety show “Sister Riding the Wind and Waves”, was also invited to become the brand ambassador of Genki Forest Sparkling Water.
In September of this year, the outside world began to notice that the sugar-free beverage brand Yuanqi Forest, which was labeled as “net celebrity”, silently changed the “気” in the company’s official website, official account and e-commerce flagship store logo back to simplified Chinese. “gas”. At the same time, the words “produced by Genki Forest Co., Ltd., Japan” on the body of the company’s star product, soda bubble water, have also disappeared from the batch of products shipped recently.
For the vitality forest, which has just stepped out of the “cold start” period of the brand in 4 years, relying on the image of “pseudo-Japanese goods” to create a sense of quality is a shortcut to quickly enhance brand power, and to continue to write as a new domestic product Between the stories, it is clear that there is an insoluble contradiction.
Beverage is one of the most traditional fast-moving consumer industries, with an operating law that has not changed for decades: those companies that can enter the first-line brand camp and occupy most of the retail shelf space have deep industry backgrounds and invest huge amounts of money every year. To keep product marketing feverish.
Yuanqi Forest (Beijing) Food Technology Group Co., Ltd. (hereinafter referred to as “Yuanqi Forest”), registered and established in April 2016, describes itself as a “beverage company with Internet + genes”.
Time is not too far away. Old employees still remember what the vitality forest looked like around 2017: a team of dozens of people squeezed into an office space where the founder Tang Binsen used to be in the online game business. R&D of beverage products requires a laboratory, so I rented a nearby house for renovation. A few months later, a pile of beverage samples that were determined to be “failed” were placed on the shelf, in various categories, even beer.
Taking this scene as a starting point, when we reviewed every key link in the entrepreneurial journey of Yuanqi Forest, we discovered that this brand new consumer brand can successfully open a hole in the beverage industry that has been solidified for many years, not because it is still in the metaphysical stage. “Internet +”, instead, is based on full respect for the industry’s existing experience, while also benefiting from the well-honed and mature supply chain service system.
Revenue comparison of several mainstream brands in the domestic beverage market and Yuanqi Forest
Source: Compiled based on publicly listed information
The secret of sugar substitutes
In October 2017, Ye Suping entered Yuanqi Forest, which was established just over a year ago, as the director of product research and development. The first project he participated in was the bubble aquatic product that became an Internet celebrity two years later. At that time, the company had already stepped out of the laboratory and obtained mass production opportunities. There were only two fruit-flavored beverages and one sugar-free oolong tea-burning tea.
In the 5th month of the company’s incorporation, Vitality Forest launched two flavored beverages with the theme of slimming and beauty, named “Clearly Not Fat” and “Shifen Beautiful”, and marked “Ladies Drink” on the outer packaging4 The price is 6.5 yuan. “Obviously not fat” is lemon flavored and added with L-carnitine-many diet foods or medicines will add this type of amino acid, claiming to have the effect of burning fat, but food nutrition and safety experts have pointed out that external use of L-carnitine reduces The lipid effect has not been clearly verified. “Shifenmeimei” is a pomegranate juice. The anthocyanin in pomegranate fruit has been used by many cosmetic companies to tell the marketing story of “antioxidant”.
“Obviously not fat” and “Shifen is beautiful” belong to the “near water beverages” that have been quite topical in the domestic beverage industry at that time. With functional values such as high-value and low-calorie as the selling point, the near water beverage first appeared in Japan. It is a type of fusion beverage between drinking water, fruit juice, soda and functional beverages, because of its translucent color and lightness. The taste is close to water, and is also called a light drink. Suntory’s “Qin Ning Shui” and Uni-President’s “Haizhiyan”, which began to be sold in China around 2015, are also near water beverages. They quickly became popular as soon as they went on the market. The price is significantly higher than that of Coca-Cola and ordinary drinking water, so there is a chance to achieve higher The premium.
Yuanqi Forest’s two first-generation products with a strong sense of purpose failed to please the vertical users it targeted. This series of products was later renamed “Yuanqi Forest Fruit の Daily Tea”. The functional formula and the term “ladies drink” were removed, but the sales situation was still not satisfactory, and the production was finally announced in March this year.
However, starting from the first generation of products using “low calorie crystalline fructose” to replace sucrose, the iteration of “sugar” in the ingredient list is the focus of Yuanqi Forest’s product innovation. In December 2016, Burning Tea, which was directly sold with “0 sugar” as its selling point, was launched, becoming the first product of Yuanqi Forest that has attracted the attention of the market, and it has further strengthened the company’s sugar-free direction.
The so-called sugar-free food refers to the solid or liquid food containing no more than 0.5 grams of sugar per 100 grams or 100 milliliters. Food companies usually use sweeteners, or sugar substitutes, to replace sucrose in their products. For this reason, it is necessary to balance the performance of different sugar substitutes in terms of sweetness, taste, cost, and impact on the human body.
The sugar substitute solution used in burning tea is “erythritol”, which is still a new thing in the domestic beverage industry, but it has long been popular in Europe and America. The American brand BAI, which focuses on the concept of “antioxidant beverage”, also uses it. In China’s food standards, erythritol is a “calorie-free” sugar alcohol sweetener, which just satisfies the health semantics behind the sugar-free label.
“Of course, there are many uncertainties regarding the safety of sugar substitutes, just like genetically modified foods, but erythritol is extracted from corn starch, which is more reliable.” Ye Suping said.
According to market feedback in 2017, neither fruit juice nor tea has made a phenomenal explosion. Yuanqi Forest continues to expand other categories along the direction of 0 sugar. Soda sparkling water is also carbonated drinks, and the next one is easy. The categories that have been paid attention to.
The project was established in October 2017. In March 2018, Yuanqi Forest launched the first soda sparkling water with cucumber flavor. In Ye Suping’s view, Yuanqi Forest devoted almost all its resources and hopes to this big category.
As the director of research and development, Ye Suping spent a lot of energy researching sweetener combinations: first, he found all the sweeteners imaginable, identified the characteristics of each sweetness individually, and then listed dozens of combinations to test one by one. It took more than 3 months to adjust the dosage ratio, collect feedback, and then adjust the compound plan before and after the “erythritol plus sucralose” compound combination was determined. It is closest to the natural taste of sucrose, and the dosage ratio is also in line with the acceptance of the human stomach.
The sparkling water of Yuanqi Forest, the benchmark products are Perrier, San Pellegrino and Coca-Cola Zero. Coke Zero can be said to be a sugar-free beverage enlightenment product for domestic consumers, but it has not been widely recognized in terms of taste and health. The Paris Water and Saint Pellegrino imported from Paris and Italy are positioned in the mid-to-high-end market, and have not really made a scale in China.
“About a month after our product went on the market, consumers still felt a bit sweet in market feedback, so we reduced the sweetness of the product in the later period.” Ye Suping revealed to China Business News that the Coca-Cola Company’s Coke Zero I chose “Aspartame” instead of erythritol as its sugar substitute. An important reason is related to cost control. “The cost of erythritol is about 20 yuan per kilogram, and its sweetness It is only 7/10 of sucrose, and aspartame is 200 times sweeter than sucrose. The cost of sugar substitute formulations is almost negligible.”
The flavor of sugar-free products comes from flavors, and if you want a natural flavor, you must use natural flavors. When the employees of Yuanqi Forest participated in a food industry exhibition, they tasted a cucumber-flavored product from another company and found that the natural flavor of cucumber is very good, and it is considered a very new flavor among sparkling water products. Melon PK lost many choices such as ginger, passion fruit, etc., and was applied to the first sparkling water of Yuanqi Forest.
Memorabilia of Yuanqi Forest Marketing and Financing
Source: According to public information
Before joining Yuanqi Forest, Ye Suping had been engaged in research and development work in large food companies for 12 years. In October 2017, the company had only more than 30 employees, but the technical R&D team and key operations are all from traditional beverage manufacturers. For example, the R&D director is from Nestle, the production director is from Coca-Cola, and the sales director is from Nongfu Spring.
The employees of these large factories naturally know where to find the best resources in the beverage industry-raw material supply, foundries, logistics, and channels.
“When looking for raw materials, try to find the best large companies. The product quality is reliable and the research and development strength is strong. They can also provide us with technical support.” Ye Suping said. The product plan presented by the laboratory will face various practical challenges in the production process, and the final product may become completely different from the laboratory version. The production director from Coca-Cola, for the sake of safety and stability, found Yuanqi Forest all foundries used by major brands in the industry. Mature foundries with strong technical capabilities can help brands further investigate various product details during the production process. They also have a variety of advanced equipment that can adjust product processes together with the brand at any time.
Genki Forest’s first-generation products were produced at the joint venture plant of Toyo Can Co., Ltd. and Nippon Beverage Co., Ltd. in Changshu. This Japanese-owned factory has been OEM for Japanese brands such as Suntory and Itoen, and has advanced tea extraction technology.
The soda sparkling water series was manufactured by Jianlibao, Huiyuan, and Tongshi’s production plants in many places across the country, so that before the “Vitality Forest” brand was not well-known, many consumers habitually inspected the products. The manufacturer on the packaging once mistakenly thought it was a new sub-brand of Uni-President or Jianlibao.
In the early days, as a new brand that was not well-known and had a small production scale, it was difficult for Yuanqi Forest to communicate with mature large-scale foundries. Fortunately, there was financial support from investors behind it, and the cooperation that they wanted to reach was negotiated. After the production quality inspection process, Yuanqi Forest can save a lot of worry. These most experienced beverage foundries in China have always had strict requirements on the products they leave. They usually observe the changes of the products in a relatively harsh environment, supplemented by various testing standards and integrated production services. Brands are concerned about quality issues. You can rest assured.
Yuanqi Forest had wanted to make an upgraded version of a more concentrated burning tea product, but in the laboratory research and development stage, it has been observed that this product has a certain degree of precipitation. When it comes to the foundry link, the factory does not allow such products to leave the factory. The last batch The product was completely destroyed.
The disadvantage of handing over to the foundry for production is to adapt to the other party’s production schedule. Since the summer of 2019, the sales of Yuanqi Forest have increased, and it is difficult to meet the output of OEM. In addition, these foundries will also serve the competing products of Yuanqi Forest. The factory knows the craftsmanship and formula of each product. Although the two parties will sign various confidentiality agreements, they still cannot prevent the risk of formula leakage.
Therefore, after nearly 4 years of cooperation with domestic first-class foundries, in July this year, Yuanqi Forest’s first self-built factory was put into operation in Chuzhou, Anhui, and the second phase of the factory was also grounded in August. “For this year’s sales target, this self-built factory is completely unsatisfactory.” said Binggan, the chief quality officer of Yuanqi Forest. Corresponding to the North and South China markets, Yuanqi Forest is also deploying its own factories in Tianjin Xiqing and Guangdong Zhaoqing.
Different from the idea that Internet celebrity brands such as Perfect Diary and Three Squirrels first focus on online channels, Yuanqi Forest puts its energy offline from the beginning. They believe that the freezer of a chain of convenience stores is the best place for their products to meet the target users—consumers aged 15 to 35 who pay more attention to food health and are more interested in experiencing new products.
Wangmeng is a beverage distributor in a southern city, and currently it is also the agent of many products of Yuanqi Forest. Those who do channel agency business usually have some retail terminal resources in their hands. Wang Meng’s channels are mainly convenience stores, as well as special channels such as movie theaters and schools. At the same time, he will distribute the goods to some sub-distributors, who will further spread the products to the couple’s shop on the street. Class capillary terminal.
Yuanqi Forest’s offline dealer system invites bids for a city general agent for each product. The terminal network resources in Wang Meng’s hands happened to meet the standards of the total generation. The first time he heard of the Yuanqi Forest brand was in the winter of 2016-an old colleague of his many years ago went to Yuanqi Forest as a regional manager.
For the offline channels of each city, Yuanqi Forest has set up a team structure of “regional manager-business director-salesman”. The regional manager is responsible for finding local distributors with extensive contacts, and then introducing them to find the most local Influential supermarket chains and convenience stores go to discuss cooperation.
The old colleague found Wang Meng four or five times in a row. With years of experience in distribution, Wang Meng simply looked down on the vitality forest at that time, and it was almost winter, which was not the best season for new products. “Most of the new products were sold in the summer, and failed, and they were removed on a large scale in the winter.” Due to the relationship with his acquaintances, Wang Meng later bought “thousand boxes” worth 40,000 to 50,000. In the first year of this cooperation, the situation was similar to Wang Meng’s pessimistic judgment. The first few products of Yuanqi Forest were not easy to sell. Even for Burning Tea, which has a relatively good reputation, the rate of increase in sales is relatively slow if compared with the later bubble water. “Tea beverages and carbonated beverages are still two categories after all, and the market capacity is different.” Wang Meng said.
Similar play styles can be seen on many new brands that have been successfully labeled as “net celebrities”. For example, Perfect Diary, in the full use of mature supply chain applications, new e-commerce channels, and social marketing system, observes it side-by-side with Yuanqi Forest. The two are almost like “shadows” of each other.
The next challenge Yuanqi Forest will face will definitely not be easier than the previous four years. There are almost no technical barriers to the innovation of beverage products. This summer, a batch of new sparkling water products have been squeezed into the beverage freezers of major chain convenience stores, and they have been arranged in turns to the best locations.
“It belongs to the research and development of applied formulas, and there is no particularly deep technical barriers in it.” Ye Suping admits that the technical barriers of beverage products are not high, and imitators can quickly replicate them after seeing the ingredient list after many experiments. The beverage manufacturers themselves also have surplus production capacity, of course they are willing to earn more OEM fees.
The biggest barrier seems to be who has skilled R&D talents, such as Ye Suping, who joined another beverage startup company last year to be responsible for new product development.
More and more new and old brands are deploying zero-calorie sparkling water, and the taste of beverage products is significantly accelerated. This will also compress the life preservation period of vitality forest products to a certain extent, forcing it to continue to use new products to maintain its leading position in the market . This year, the flavors of Yuanqi Forest Sparkling Water have been expanded to six. In September, the first juice sparkling water-“Full Score Micro Bubbles” was launched. Yuanqi Forest is also launching new brands to continue to break through other categories. Following the launch of “Hokkaido Ranch” yogurt in August 2018, this year it also launched “Alien” functional drinks and electrolyte water. However, which category can incubate the next explosive? None of these new products launched in the past 12 months have drawn a growth curve as steep as sparkling water.
Facing the continued squeeze of new and old brands on the market space, Yuanqi Forest also had to compromise on its marketing strategy. An industry insider close to the company revealed to China Business News that the total advertising and marketing budget of Yuanqi Forest in 2020 will reach 400 million yuan. Based on its annual forecast sales of 2 billion yuan, the cost ratio will be lower than that of Tang Binsen last year. The 2% mentioned to the outside world quickly rose to 20%—this is a common level of marketing expenses for traditional beverage brands.
Let’s take a look at the whereabouts of the money: As of June 2020, Yuanqi Forest has successively titled 4 TV variety shows and documentaries on Station B, and has participated in ChinaJoy, FIRST Youth Film Exhibition and other market activities where young people gather; invites Zhang Yuqi served as the brand ambassador for soda sparkling water, and invested significantly in building elevators, subways and outdoor advertising.
Not surprisingly, the Baidu Index showed that the search volume of “Vitality Forest” as a keyword in Baidu has remained at a low level for a long time in the past four years, until the second to third quarters of this year suddenly rose sharply. And is this part of the marketing “illusion” that Tang Binsen himself once criticized?
When asked how long the burst of sparkling water will last, Wang Meng replied: “I think it will be sold for a while, at least this year.” In the future, the pressure of competition will only increase, and he actually feels about this pressure. Never unfamiliar, “So we have to fight every inch of our land, and don’t miss every sales opportunity.”