Founded in 2016, Yuanqi Forest entered the sugar-free beverage market segment. In less than 5 years, its valuation exceeded 6 billion US dollars. On Double Eleven in 2019, the sales volume of Yuanqi Forest ranked second on the whole network, surpassing the two giant carbonated beverage giants Coca-Cola and Pepsi. Among them, most of the sales come from sugar-free sparkling water.
Explosive models have always been time-sensitive, and the low threshold for beverages has made the industry never short of imitators. When new and old players such as Coca-Cola, Wahaha, Nongfu Spring, and HEYTEA successively deployed sugar-free sparkling water, the taste renovation of similar beverage products accelerated. This forced the absolute star of the new consumption circle at that time to compress the competitive fresh-keeping period.
Even though Yuanqi has been innovating and creating new categories with new consumption ideas, involving yogurt, coconut milk, fruit tea, milk tea, plant tea, functional drinks, etc., in terms of current sales and post-purchase feedback, no one can match. The heat from sparkling water. It is generally believed that Yuanqi Forest accurately captures the new demands of Generation Z consumers, and the bomb-style omni-channel marketing drums up momentum for the brand. In the battle between old and new marketing thinking in the digital age, new consumer brands headed by Yuanqi Forest will destroy the entire market.
But is this really the case?
1 Break through the predicament
“The Red Sea is the Red Sea because it is full of competitive opportunities.”
In the choice of the track, Tang Binsen has a set of “Andy Lau’s track theory”. He believes that the probability of success = industry probability × team probability. No matter how strong the team is, it still cannot succeed in a poor industry. Therefore, in Tang Binsen’s view, FMCG has become his best choice. It is like a tropical rainforest, ancient and full of opportunities.
“The difference in life between the Chinese and the American public is not due to high technology, but consumer goods”, plus “geo-arbitrage” to bring foreign consumer goods and business models into China. Capital began to be keen to invest in online celebrity FMCG brands like Ramen Talk, Panda Brewing, Wang Xiaoluo, and Guanyun Baijiu, which of course also included Yuanqi Forest.
An interesting point is mentioned in the book “New Consumer Era”, “The development or breakthrough of a specific technology has an unpredictable speed and direction. This brings about the possibility of disruptive innovation in business. There are many new categories in business. So it was born. And new categories are fertile soil for new brands. This is a hot spot for entrepreneurship and investment in the consumer sector.”
This is a good description of the domestic beverage market at that time. The two forces are separated from one side, one is the foreign brands that have been deeply cultivated in the domestic market for decades, and their brands have been solidified, such as Coca-Cola and Pepsi. The other category is Wahaha, Nongfu Spring and other local beverage vendors with price advantages, but their new products are lackluster.
Vitality Forest became a game-breaker.
Before this, sugar-free drinks were not uncommon on the market. In 2011, Nongfu Spring’s sugar-free tea “Oriental Leaf” was not recognized by consumers due to its “advanced” taste, and was even listed as one of the top 5 worst drinks in China (the other four were Song Shashi, screaming red flavor, Laoshan white flower snake grass water). Later, old brands such as Coca-Cola and Pepsi also launched sugar-free sodas, but there were many disputes.
In 2017, Ye Suping joined Yuanqi as the product research and development director. Her first project was sugar-free sparkling water. Before that, the company already had two drinks, “Obviously Not Fat” and “Stone Fen Beauty”, which had the opportunity for mass production. They tell stories of weight loss and beauty for female consumers, but they are not recognized by vertical users. It was not until the emergence of a burning tea using “erythritol” that the sugar-free market was opened for Yuanqi Forest.
Japanese style, extensive distribution, and precise positioning have become the marketing password of Yuanqi Forest.
This is an era of hatred for sugar. Open the little red book, we can see that “quit sugar” and “0 calories” are repeatedly clicked. 100,000+ notes are a metaphor for people’s anxiety about sugar. Vitality Forest captures the psychology of young people, especially women, who want to be “healthy and low-sugar” without “compromising on taste” as a breakthrough. Although burning tea and fruit tea have not become phenomenal explosions, this does not prevent Yuanqi Forest from continuing to expand other 0-sugar categories along the direction of erythritol formula.
In 2018, Yuanqi Forest officially launched sugar-free sparkling water. The Japanese-style packaging, the gourd-shaped slender bottle, and the three labels of “0 sugar, 0 fat, 0 calories” were placed in the most conspicuous position of the bottle, which became the hottest style of that summer. This is not the end. Later, Yuanqi Forest used convenience stores as the main offline battlefield, and online social platforms were the mainstays, and fission was carried out through KOLs, short video advertisements, content marketing and other methods.
Tang Binsen, a game VC investor, brought the Internet gene to the forest of vitality.
There is a view that the game of vitality forest is not a traditional fast-moving consumer goods. Compared with traditional beverages, the logic of Yuanqi Forest is reversed, and the raw materials, packaging, pricing, and then invest in R&D and production along with the needs of consumers. Reflected in product testing, Vitality Forest chooses data-driven testing, which is also standard for Internet companies. The “A/Btest” (split test) that is often mentioned by big factories is also applied to Vitality Forest. Grouping generates different product strategies and based on user data indicators, an optimal strategy is finally selected to go online.
Based on the geographical arbitrage theory of being a “happy farmer” in his early years, Tang Binsen is well versed in the method of information asymmetry. “Global selection, local transformation” to guide the category expansion path of Yuanqi Forest. Burning tea is benchmarked against Japanese Suntory Oolong tea, Alien is benchmarked against Monster, Red Bull, and corn silk tea. There are also similarities between “Bodybuilding Light Tea” and “Shuang Jianmei Tea”. Identifying competitors and abandoning their weaknesses, “copy first and then change” has become a common method of vitality forest.
2 Change
When the new consumption is hot, many people regard the vitality of the forest as the norm.
“New products, new demands, new crowds, new marketing, and new channels” have become the standard for new consumer brands. Looking at the new consumer brands in recent years, it can be said that they have emerged one after another, but most of them are short-lived and become popular for the sake of explosion. From the perspective of the relationship between people, goods, and markets, in the past, “goods” were always in a passive position and were sought and consumed by “people”. And new consumer brands are more inclined to take the initiative to meet the personalized needs of “people”. Products are demand-driven. “Fields” are at the core of providing trading venues, but profits in this case are compressed by various costs and scenarios. Under the new consumption model, whether it is a trading field or an information field, the role of the field has become to serve “people”.
The core of new consumption is biased towards “people”, which is consistent with Tang Binsen’s view that “the spirit of the Internet is good for users”.
In other words, the “new” of new consumption comes from changes in consumers. Traditional consumer brands could not meet new demands, so they forced new consumption. But the problem is that, from the perspective of changes in the amount and amount of financing in the primary market, starting from the second half of 2021, the amount and amount of new consumer financing have declined significantly. According to incomplete statistics from Xinmu, in August 2021, 27 financing projects of 100 million yuan have been announced in the new domestic consumption field, a decrease of 35% compared with 42 in July.
Tang Binsen, the former new consumer “leader”, once said, “I am straight male marketing, which is hard and wide, and it is a traditional way of playing. In the past few years, it was word-of-mouth communication, and later I did focus and penetrating marketing communication.” Trying to get rid of Internet celebrity brands Tag of.
The vitality forest after that is indeed looking for new growth points. On the one hand, it develops soft drinks and diversified product layouts, and also extends its tentacles to other fields such as liquor, beer, coffee, and catering. On the other hand, offline freezers were put into convenience store commissaries, which confronted Nongfu Spring, and gradually moved from “asset-light” to “heavy-asset” enterprises that built their factories.
3 Challenge
At the dealer conference two years ago, Tang Binsen once raised the vitality forest flag in a high-profile manner, but the outside world is mostly seen as bad.
At that time, Yuanqi Forest was caught in the “pseudo-Japanese” public opinion storm. Yuanqi Forest’s explanation for this is that after several rounds of product-market testing, it was found that the Japanese style is more popular. This topic was pushed to Rashomon for a while. What Tang Binsen didn’t expect was that one side was the slogan of advancing vigorously, and the other side was the siege and interception from inside and outside.
Vitality Forest once said that it will put 80,000 smart freezers in, and the sales data of each bottle will be fed back to Vitality Forest in real-time. However, giants such as Nongfu Spring and Coca-Cola have adopted offline freezers to increase their terminal share of commodities. The move of Yuanqi Forest is undoubtedly the cheese of the giant. Then Zhong Suisui launched the “God of Wealth from Heaven” sniper battle and used real money to besiege the Primordial Qi Forest. As long as the store owner puts the products of Nongfu Spring in the freezer of Yuanqi Forest, they can get the same amount of Changbaixue mineral water.
With the intensification of product homogeneity, the situation of Yuanqi Forest can be imagined. At the same time, the fading of popularity has also made the three axes of vitality forest (zero sugar positioning, advertising, online and offline channels) gradually weak. “I can guarantee an annualized growth of 50%-60% in the next three years – I don’t ask for two or three times every year.” Tang Binsen believes that vitality forest is gradually returning to traditional enterprises, and the era of high growth will eventually slow down.
To ensure the supply of production capacity, Tang Binsen decided to build his factories, and deployed 5 factories in more than a year, 3 of which have been completed and put into operation. At the time, it seemed like a helpless move under pressure, but in the long run, this is likely to be the inevitable outcome of new consumption. The asset-light operation model of new consumption is difficult to handle the instability of the supply chain. The anti-risk capability of OEM production is also weaker than that of traditional ones, which can easily lead to uncontrollable production processes and quality and exacerbate supply-side fluctuations.
At this point, the second half after the cooling of new consumption is very likely to return to tradition. But whether it is a channel or a supply chain, the ultimate direction is the product. As Duan Yongping said, “If a consumer goods company pays too much attention to marketing and not products, there will be no future.” Whether it is a new consumer or a traditional brand, the quality of the product fundamentally determines whether or not the brand will ring and how long it will ring.
