Why is the success of Yuanqi Forest difficult to replicate?

The vitality forest of “sweeping concepts” and “pseudo-Japanese” is still running wildly.
A few days ago, Yuanqi Forest Official Weibo issued an announcement stating that most of the milk tea produced from February 4th and all milk tea produced from March 18th have their packaging changed from “0 sucrose and low fat” to “low sugar and low fat” “. The belated “revision and upgrade” of Vitality Forest, which has always used “0 sucrose” as its selling point, has caused many consumers to question it. Up to now, the number of topics discussed on #元气森林因advertise 0 Canon Supplement# on Weibo has reached 19,000, with 270 million views.

But noncommittal, Vitality Forest is still shining brightly in the capital market. Nearly Yenqi Forest has just completed a $500 million financing, and its post-investment valuation is as high as $6 billion. So, why can the vitality forest run wild when it is questioned? Where is the secret of its success? Can it be replicated successfully?

The “sweetened” vitality forest can’t stop running wildly

Founded in 2017, Yuanqi Forest is an internet innovative beverage company. Focusing on healthy and delicious beverages for the younger generation, the main products include soda sparkling water, burning tea and milk tea, etc. The main selling points are “zero sugar” or “low fat” and “zero calories” in the new consumer market. Data show that in 2020, the performance of Yuanqi Forest will increase by about 270% year-on-year, and the annual sales volume will reach 3 billion yuan.

In addition, Yuanqi Forest is also the first water brand to land on Tmall Super Brand Day. On Tmall 618 in 2019, Yuanqi Forest sold 2.26 million bottles of beverages, taking the first place in the water and beverage category. In the same year, on Double Eleven, Yuanqi Forest ranked second in sales on the entire network, beating Coca-Cola, Pepsi, etc. Traditional beverage giant.

As a dark horse in the beverage industry, the rapid rise of Vitality Forest is heavily relied on by the capital market.

According to the company’s data, Yuanqi Forest has received 6 financings since its establishment, and the valuation after the latest round of financing reached US$6 billion. Compared with the $2 billion valuation after a round of financing in early 2020, the valuation is equivalent to three times in one year.

Screenshot from: 企chacha

In addition, after obtaining a new round of financing, Yuanqi Forest is accelerating its overseas expansion. It is reported that the Yuanqi Forest will be mainly used in four aspects, including opening up overseas markets to introduce more overseas high-quality products, and building domestic higher-quality and environmentally-friendly beautiful factories.

The logic of its capital blessing is also: Yuanqi Forest’s future potential is still full, and the company disclosed that 95% of its products have not yet been launched. In addition, it is also spending huge sums of money to build environmentally friendly factories and accelerate internationalization.

On the other hand, the product matrix of Yuanqi Forest is also constantly enriched. After tasting the sweetness of sugar-free sparkling water, Yuanqi Forest has successively launched a series of drinks such as milk tea, burning tea, milk tea and yogurt, completing the overall layout of the main soft drink categories.

On the whole, it can be seen that although the Yuanqi Forest is under questioning storms, it is still speeding up. So, what is the secret to the success of this emerging beverage brand?

What is the secret of the success of the Genki Forest? Grasp the three major “life gates” of the consumer goods industry

In the consumer goods industry, the success of a company depends on “products”, “channels” and “marketing”, and the success of Yuanqi Forest lies in its perfect grasp of these three aspects.

First of all, in terms of products, the “sugar-free” positioning of Yuanqi Forest is the first step to determine its success.In the new consumer era, people are pursuing good drinks that are “healthy and weight loss”, and their consumption behavior has gradually changed to “buy without looking at the brand, but looking at the formula.” According to data from the China Business Industry Research Institute, 80% of consumers in China pay attention to the ingredients of food and beverages, especially the proportion of sugar in beverages.

Therefore, different from most unhealthy drinks such as high-sugar cola sparkling water on the market, the “0 sugar and 0 fat” drink launched by Yuanqi Forest can be greatly favored by new consumer groups.

Secondly, in terms of channels, Yuanqi Forest cleverly avoided competition with beverage giants, and firmly grasped the consumption channels of generation Z users is the second step to promote its success.Yuanqi Forest specializes in online and convenience store channels, while in the online channel layout, because the traditional beverage giants are strong in the ability to distribute goods in offline channels, they are temporarily adapting to the Internet channels and have not formed their own scale advantages.

Therefore, Vitality Forest, which is born on the Internet, can take the lead in seizing online channels. Up to now, Coca-Cola has more than 700,000 Tmall fans, 940,000 Master Kong beverages, 840,000 Pepsi, and 1 million Nongfu Spring. Together, these four companies are far less than the 5 million fans of Vitality Forest.

In addition, Yuanqi Forest’s focus on offline convenience store channels has cleverly avoided the frontal competition with traditional beverage giants in the supermarket channels, which provides a “green card” for the subsequent sales of Yuanqi Forest. As of November last year, the offline channels of Yuanqi Forest had covered 30 provinces, 477 convenience systems and 53,000 convenience stores in China.

It is worth noting that the convenience store channel is a more imaginative track. According to data released by the China Chain Store and Franchise Association, in 2019, China’s convenience stores achieved sales of 255.6 billion yuan, an increase of 13% year-on-year, which is still higher than the growth rate of total retail sales of consumer goods of 8% in 2019.

It can be seen from this comprehensively that the channels chosen by Yuanqi Forest are exactly two geomantic treasures.

Finally, in marketing, Yuanqi Forest used the “net celebrity” brand to tag itself with the “Japanese” label to cater to the Generation Z consumer groups and open up a wider market for itself.Yuanqi Forest is also known as “Yuanqi frame protection and rendering, small netting, nasty and dysfunction, scarring, scarring, etc., by Xiwa bar, drunk, suspicion of rank and dysfunction, and appearance, both acquaintance and pancreatic dysfunction.

With the rise of station B, Japanese culture is becoming more and more popular under the younger generation of Z. The Japanese style of Genki Forest has greatly improved its brand exposure and quality. At the same time, Xiaohongshu has vigorously promoted on mainstream community platforms and various trendy variety shows, such as “Our Band”, “Big Brother Full of Vigor”, etc., all of which have attached “net celebrity, trend” to the brand. “The label has harvested many young audiences.

In summary, the above three aspects are the foundation for the success of the vitality forest.But there is also a solid foundation behind the vitality forest.

In terms of research and development, Yuanqi Forest customized research and development beverages based on market demand. In 2015, Yuanqi Forest established a research and development center, and it took two years to launch products. It can be seen that “slow work and meticulous work” can be a hit on the market. Today, 95% of the company’s products have not yet been launched, which also reveals that the company’s R&D capabilities cannot be underestimated.

Regarding the production model, after harvesting the market, Yuanqi Forest quickly converted the foundry model that established faster initial production to the self-built factory model, and gradually improved the strength of the rear supply chain. It can be seen that its strategic plan has always been purposeful, fast and stable.

Therefore, in general, the success of Yuanqi Forest lies in its grasp of the three trump cards of “product”, “channel” and “marketing” in order to win a territory in the beverage industry where the strong are gathered. Behind the success is the steady R&D and gradual improvement of the supply chain strength of Yuanqi Forest. Therefore, the future vitality forest is still running wildly. So, can its model be replicated?

The “Sugar-Free” racing competition has started, why is it difficult for everyone to replicate the success of Yuanqi Forest?

According to data from Zhiyan Consulting, the market size of China’s sugar-free beverage industry has increased from 1.66 billion yuan in 2014 to 6.72 billion yuan in 2018, with a compound annual growth rate of 41.85%; by 2019, the size of China’s sugar-free beverage market will reach 9.87 billion yuan Yuan, an increase of 46.88% year-on-year. It can be seen that the development potential of sugar-free beverages is very huge.

Under the entire beverage industry with weak growth and serious homogeneity, the success of Yuanqi Forest undoubtedly makes beverage giants particularly jealous. Furthermore, recently Jianlibao, Wahaha and Xicha have launched their own sugar-free drinks, such as Jianlibao’s “Micro-bubble Water”, Wahaha’s “Angry Bobo” and Xicha’s “Xiaxiaocha”.

however,Can they really replicate the pattern of the vitality forest?

Or difficult to copy.

first of all,Take traditional beverage giants as an example, they have a wide range of businesses and it is difficult to change their business models and thinking in a short period of time.

Therefore, it is difficult to imagine the way of Genki Forest, which is based on market demand and devotes all to research and development to create explosive products. Because most of the giants deduct input costs (channels, advertising, supply chain, etc.) based on their own revenue, and use the remaining profits to invest in R&D projects.

From the perspective of 95% of Yuanqi Forest’s products, the proportion of research and development can be seen before they are launched. The focus is on customizing research and development products according to the market, and then it uses the remaining profits to invest in self-built factories or business activities such as territory expansion.

Secondly,It is too difficult for small startups to imitate the model of Genki Forest.After all, this is a money-saving track. Channel launches and marketing advertising are all large-scale investments, and most small start-ups have difficulty in supporting them.

But Yuanqi Forest happens to have this advantage. First of all, the founder Tang Binsen started as a game. After selling games such as “Happy Farm” developed by the team to Tencent, he accumulated a certain amount of funds for reserves. Moreover, playing games is also a developmental thinking that places more emphasis on channels, so Yuanqi Forest’s advantage in channel placement is slightly better than that of its consumer products counterparts.

Furthermore, if start-ups still use the concept of “sugar-free”, it will be difficult to surpass the vitality forest.

Then,It seems that this model cannot be copied by others in the short term, so can the vitality forest sing all the way?

Or not.

After all, there are a lot of problems in the vitality forest. The positioning of zero sugar has been changed. The pseudo-Japanese marketing is frequently questioned by the market. The public seems to be taking off the false coat of the vitality forest. According to the black cat complaint data, the number of complaints from Yuanqi Forest reached 37, most of which were “false propaganda” and “quality problems”.

Once the zero sugar positioning and Japanese packaging are lost, the future sales of Yuanqi Forest will be affected to a certain extent.

What’s more, it is worth noting that the foundry model of Yuanqi Forest has been criticized all the time, and now it is speeding up the pace of self-built factories, which is also questioned by many consumers. It is reported that the annual output of the Anhui Chuzhou production base of Yuanqi Forest can exceed 450 million bottles, and this huge production volume also makes everyone feel that the quality of the drink is guaranteed.

So it can be seen that the rushing vitality forest should slow down at this time to deal with its own problems. But no matter how you say it, the current vitality forest may not stop running wildly, and its internationalization process will not stop there. After all, under the increasingly competitive sugar-free track, the day when it is “besieged” by everyone has arrived, and what Yuanqi Forest has to do is to speed up the improvement of its own barriers, reach a position that others cannot surpass, or have no worries.

Author: Yexiao An

Article source: Songguo Finance, please indicate the copyright for reprinting.