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, the new word of Internet plus, will be put back first. The core rule of the consumer goods industry has never changed: the best product, the strongest channel, and the consumers who spend the least money will affect the most.
In September this year, the outside world began to notice that the brand name “Yuan Hong”, a brand of sugar free beverage brand named “net red” label, quietly changed the “gas” of official account, public number and logo of the flagship store of electric power to the “gas” in simplified Chinese. At the same time, the company’s star product, soda bubble water bottle, the words “made under the supervision of the forest of Japan Co., Ltd.” have also disappeared in recent product batches.
For Yuanqi forest, which has just stepped out of the “cold start” period of the brand for four years, it is obvious that there is an irresolvable contradiction between the “fake Japanese” image to create the texture of the product and the brand story to continue to write as a new national product.
Beverage is one of the most traditional FMCG industries, which has not changed for decades: most of the companies that can enter the first-line brand camp and occupy most of the retail shelf space have a deep industry background, and they will invest a lot of money to maintain the popularity of product marketing every year.
Founded in April 2016, Yuan Qi forest (Beijing) Food Technology Group Co., Ltd. (hereinafter referred to as “Yuan forest”), describes itself as a “Internet plus gene beverage company”.
It’s not a long time ago. All the old employees still remember what the vitality forest looked like around 2017: a team of dozens of people crowded into an office space of Founder Tang Binsen when he used to do online game business. The research and development of beverage products requires a laboratory, so we directly rented a nearby residential building for renovation. After a few months, a pile of beverage samples were put on the shelf, which were judged as “failure”. There were all kinds of drinks, including beer.
Starting from this starting point, when we recombine the key links of the entrepreneurial course of the forest of Qi, we find that this brand new consumer brand can successfully tear away the beverage industry that has been solidified for many years, and not Internet plus, which is still in the metaphysical stage. It is based on full respect for the experience of the industry and at the same time it benefits from the mature supply chain. Service system.
The secret of sugar substitution
In October 2017, ye Suping entered Yuanqi forest, which has just been established for more than a year, as the director of product research and development. The first project she participated in was bubble aquatic products which became the online red two years later. At that time, the company had already stepped out of the laboratory to get mass production opportunities, with only two fruit flavored drinks and a sugar free oolong tea, burning tea.
In the fifth month of the company’s registration, Yuanqi forest launched two flavor drinks with the theme of slimming and beautifying, named “Mingming not fat” and “Shifen Meili”, and marked “lady’s drink” on the outer package, with a price of 6.5 yuan. “Clearly not fat” is lemon flavor and added with L-carnitine – many weight-loss foods or drugs will add this kind of amino acid, claiming to have the effect of burning fat, but some food nutrition and safety experts have pointed out that the effect of L-carnitine on fat reduction has not been clearly verified. “Shifen Meili” is a pomegranate juice. The anthocyanins in pomegranate fruit have been used by many cosmetics companies to tell the marketing story of “antioxidant”.
“Clearly not fat” and “Shi Fen Mei Li” both belonged to the “near water drinks” which had already had a sense of topic in the domestic beverage industry at that time. With the high appearance value and low calorie functional value as the selling point, the near water beverage first appeared in Japan, which is a kind of mixed beverage type between drinking water, juice, soda and functional beverage. Because its translucent color and light taste are close to water, it is also called light taste drink. Suntory’s “qinning water” and “Tongyi HaiZhiYan”, which began to be sold in China around 2015, are also near water drinks. Once they are put on the market, they are rapidly becoming popular, and their prices are obviously higher than those of Coca Cola and ordinary drinking water, so there is also an opportunity to realize a higher premium.
Yuanqi forest, two early generation products with a strong sense of purpose, failed to please the vertical users it targeted. This series of products was later renamed as “Yuanqi forest fruit daily tea”. The functional formula and the saying of “lady’s drink” were removed, but the sales situation was still not ideal, and the production was finally announced in March this year.
However, since the first generation of products replaced sucrose with “low calorie crystalline fructose”, the iteration of “sugar” in the ingredient list is the focus of Yuanqi forest product innovation. In December 2016, the burning tea with “0 sugar” as the selling point was put on the market, which became the first product of Yuanqi forest to attract market attention, and further strengthened the direction of sugar free for the company.
The so-called sugar free food refers to solid or liquid food in every 100 grams or 100 ml sugar content is not more than 0.5 grams. Food companies usually use sweeteners, i.e. sugar substitutes, to replace sucrose in their products. Therefore, it is necessary to balance the performance of different sugar substitutes in terms of sweetness, taste, cost and impact on human body.
Erythritol is used as a sugar substitute for burning tea. It is still a new thing in the beverage industry in China, but it has been popular in Europe and America for a long time, and it is also used by the American brand Bai, which focuses on the concept of “antioxidant beverage”. In Chinese food standards, erythritol is a “calorie free” sugar alcohol sweetener, which just meets the health semantics behind the sugar free label.
“Of course, there’s a lot of uncertainty about the safety of sugar substitutes, like genetically modified foods, but erythritol is extracted from corn starch, which is more reliable.” Ye Suping said.
According to the feedback from the market in 2017, neither fruit juice nor tea has been popular. Yuanqi forest continues to expand other categories along the direction of Zero sugar. Soda bubble water, also known as carbonated drinks, is the next category that can be easily noticed.
The project was approved in October 2017. In March 2018, Yuanqi forest launched the first cucumber flavor soda bubble water. According to Ye Suping, Yuanqi forest devoted almost all its resources and hopes to this large category.
As the R & D director, ye spent a lot of energy on the research of sweetener combination scheme: firstly, she found all the sweeteners that could be thought of, identified the characteristics of each sweetener separately, and then listed dozens of combination schemes to test one by one, continuously adjusted the dose ratio, collected feedback, and adjusted the compound scheme. It took more than three months before and after deciding the “erythritol plus sucralose” ”This combination. It is the closest to the natural taste of sucrose, and the dose ratio is in line with the acceptability of human stomach.
The standard products of bubble water in Yuanqi forest are Perrier, San Pellegrino and coke zero. Zero coke can be said to be the enlightenment product of sugar free beverage for domestic consumers, but it has not been widely recognized in taste and health. Paris water and San pellegroup, imported from Paris and Italy respectively, are positioned at the middle and high-end markets and have not really made a scale in China.
“About a month after our product was launched, the market feedback of consumers still felt that it was a little bit sweet, so we reduced the sweetness of the product in the later stage.” Ye Suping disclosed to Yi magazine that Coca Cola chose “aspartame” instead of erythritol as its sugar substitution scheme. One of the important reasons is related to cost control. “The cost price of erythritol is about 20 yuan per kilogram, and its sweetness is only 7 / 10 of sucrose, while aspartame is 200 times sweeter than sucrose, The cost of a sugar replacement formula is almost negligible. “
The flavor of sugar free products comes from flavors. Natural flavors are essential to natural flavor. The employees of Yuan forest visited a food product exhibition at a food trade exhibition. They found a cucumber flavor product from other enterprises. They found that the flavor of cucumber flavor was very good, and it was considered a new flavor in the bubble water products. So the cucumber dropped many ginger and passion fruit on PK, and was applied to the first soda bubble water in the forest.
Before joining Yuanqi forest, ye Suping had been engaged in research and development in large food enterprises for 12 years. In October 2017, the company had only more than 30 employees, but the technical R & D team and key operation links all came from traditional beverage factories. For example, the R & D director was from Nestle, the production director was from coca cola, and the sales director was from Nongfu Shanquan.
These employees with large factory background naturally know where to find the best resources in the beverage industry – raw material supply, OEM, logistics and channels.
“We try our best to find the best big companies for raw materials. The product quality is reliable, and the R & D strength is very strong, and we can also provide technical support.” Ye Suping said. The product plan produced by the laboratory will face various practical challenges in the production and landing 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, all the OEM factories for Yuanqi forest are used by big brands in the industry. The mature generation factory with excellent technical ability can help the brand to further investigate various product details in the production process, and also has various advanced equipment to adjust the product process with the brand at any time.
The first generation products of Yuanqi forest were produced by the joint venture factory of Toyo can Co., Ltd. and Japanese Beverage Co., Ltd. in Changshu. This Japanese factory has been OEM for Suntory, ITO garden and other Japanese brands, with advanced tea extraction technology.
The soda bubble water series was manufactured by Jianlibao, Huiyuan and Tongzhen’s factories in many parts of the country. Before the brand “Yuanqi forest” was not famous, many consumers habitually inspected the manufacturers on the product packaging and mistakenly thought it was a new sub brand of uni president or Jianlibao.
In the early days, as a new brand with little reputation and small production scale, it was difficult to communicate with Yuanqi forest and mature large-scale OEM factories. Fortunately, there was financial support from investors behind. The cooperation that they wanted to reach was negotiated one by one. After the production quality inspection process, Yuanqi forest can save a lot of worry. These most experienced beverage manufacturers in China have strict requirements for the products delivered. They usually observe the changes of products in a more severe environment, supplemented by various testing standards and integrated production services, so that the brand side can rest assured of quality problems.
Yuanqi forest once wanted to make a relatively strong upgraded version of burning tea, but it has been observed that this product has a certain precipitation in the laboratory research and development stage. In the OEM process, the factory does not allow such products to leave the factory, and finally all the products are destroyed.
The disadvantage is to adapt to the production schedule of the other party. Since the summer of 2019, the sales volume of Yuanqi forest has increased, and it is difficult to meet the output only by OEM. In addition, these OEM factories will also serve the competing products of Yuanqi forest. The factory knows the process and formula of each product. Although both parties will sign various confidentiality agreements, they still can not eliminate the risk of formula leakage.
Therefore, after nearly four years of cooperation with domestic first-class generation factories, Yuanqi forest’s first self built factory was put into operation in Chuzhou, Anhui Province in July this year, and the construction of phase II plant was also started in August. “For this year’s sales target, this little bit of self built factory can not be satisfied at all.” Yuanqi forest chief quality officer Bingqian said. For North and South China markets, Yuanqi forest is also setting up its own factories in Xiqing, Tianjin and Zhaoqing, Guangdong.
Different from the idea that online Red brands such as perfect diary and three squirrels first focus on online channels, Yuanqi forest put its energy offline from the beginning. They believe that the freezers in chain convenience stores are the best place for their products to meet their target users – consumers aged 15 to 35 who are more concerned with food health and more interested in experiencing new products.
Wang Meng is a beverage distributor in a southern city. At present, it also acts as agent for many products of Yuanqi forest. Channel agent business people usually hold some retail terminal resources in their hands. Wang Meng’s channels are mainly convenience stores. In addition, there are special channels such as cinemas and schools. At the same time, he will also grant goods to some sub distributors, who will further spread the products to the capillary terminals such as husband and wife shops on the street.
Yuanqi forest’s offline dealer system, for each product will bid for a city general agent. The terminal network resources in Wang Meng’s hands are just in line with the standards of the general generation. The first time he heard about the brand of Yuanqi forest was in the winter of 2016. An old colleague of his many years ago went to Yuanqi forest as a regional manager.
For each city’s offline channels, Yuanqi forest has set up a team structure of “regional manager, business director and salesman”. The regional manager is responsible for finding dealers with wide local contacts, and then the dealers will introduce them to find the most influential chain supermarkets and convenience stores in the local area to discuss cooperation.
My old colleague went to Wang Meng four or five times in a row. With years of marketing experience, Wang Meng did not look up to the vitality of the forest at that time. In addition, it was nearly winter, which was not the best season for new products. “Most of the new products are sold in summer, but they fail, and they are withdrawn in large scale in winter.” Due to the relationship between acquaintances, Wang Meng later entered the “1000 boxes” of goods worth 450000 yuan. 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 the relatively good reputation of burning tea, if compared with the later bubble water, the speed of increase in sales is slow. “After all, tea drinks and carbonated drinks are still two categories, and the market capacity is not the same.” Wang Meng said.
In the spring of 2017, with the help of investment promotion at the national sugar and wine fair, tea burning began to gradually penetrate into the offline channels across the country. Because it is a new product without brand power, the whole process depends on the sales team, which is still a very traditional process of opening up the market.
Yang Rong, who is acting for many fast-moving consumer brands such as Master Kang, Nongfu Shanquan and Yili in Beijing, has the same impression on the early market sales of Yuanqi forest as Wang Meng: “the tea is not warm but not hot, the fruit tea is basically not pushed, and the sales of fitness light tea are even worse.”
Beijing market is the base of Yuanqi forest. Here, it first tried the hypermarket channel, but after three months decided to transform to convenience stores and campus supermarkets, where more young consumers gathered.
7-Eleven, which has more than 250 stores in Beijing and convenience bee with more than 500 stores, is the most powerful channel in Beijing. Yuanqi forest is determined to occupy the best channel of beverage freezer in each store. Brands usually have to pay “entrance fee” when they are overtime. The entry fees are different according to the position of the shelves. It is also a consistent way for fast-selling brands to spend a lot of money to enter advantageous channels, seize the best shelf space, and then lay other channels.
However, it is easy to ignore after-sales service after the new brand takes a good shelf position. In this regard, Wang Meng believes that the regional sales team of Yuanqi forest has strong executive power, and they will provide point-to-point service for key customer channels. A salesman is responsible for multiple stores, daily handling of new products or promotion landing matters at any time, and has a close contact with the terminal.
Among the many beverage brands that Yang Rong has been in contact with, she thinks that Nongfu mountain spring is the best after-sales service. Nongfu Shanquan has been implementing the amoeba business model since 2018 (the organization is divided into small groups, and then it is operated through an independent accounting system linked with sales). In addition to the distribution of goods, the sales staff should also make statistics on the sales of products in each store. “The salesmen have to fill in countless forms every day.”.
Dealers are beginning to feel that Yuanqi forest’s products are “getting better” in 2019. This product is really promising. After micro-blog, Xiao Hong and jitter, it became tiktok of the beverage network. It helped build up brand power in the forest.
Wang Meng found that many retailers began to ask him for goods. Dealers can earn 5 yuan by selling one box (15 bottles) of Yuanqi forest bubble water. However, it is not easy for Master Kang and Tongyi to earn one to two yuan per box. This is one of the reasons why dealers are willing to promote Yuanqi forest products to the terminal. By the end of 2019, Yuanqi forest has fully covered China’s first and second tier cities, has entered more than 400 convenience systems, more than 80000 high-end supermarkets and convenience stores, and has covered core e-commerce platforms such as tmall and Jingdong.
Among the FMCG products, beverage is a business with high gross profit margin. For example, the gross profit margin of Nongfu mountain spring is about 60%. However, dealers all over the country generally feel the strength of controlling the price of Yuanqi forest. The price of bubble aquatic products in all retail terminals should not be less than 5 yuan, and they never do “buy one get one free” promotion. This style of work is relatively rare in traditional beverage brands.
By the summer of 2020, the popularity of Yuanqi forest in terms of sales volume has almost doubled compared with last year. Dealers have no longer hesitated to get a new product from the city’s general agent. Instead, they are worried about the competitive situation of breaking through the head.
Yuanqi forest has also raised its requirements on the purchase quantity of agents. For the newly launched lactic acid bacteria bubble water this summer, the dealers need to pay first, and the purchase quantity at one time should not be less than 3600 boxes, and then Yuanqi forest will place an order with the agent factory. The larger the number of centralized orders, the more equal the cost.
According to the official data released by Yuanqi forest, in May after the impact of the epidemic weakened, the company realized a monthly sales volume of 663 million yuan, which has exceeded the total sales volume of Yuanqi forest in the whole year last year. Some dealers also disclosed another data version to yimagazine: in 2019, the total sales of Yuanqi forest reached 870 million yuan, 70% of which came from soda bubble water, and the total sales target of Yuanqi forest in 2020 was 2 billion yuan.
in 2019, 70% of the sales of Yuanqi forest come from soda bubble water.
What are the opportunities for a new brand
According to Tianyan investigation, Tang Binsen, the actual controller of the company, currently holds 53.63% of the equity of Yuanqi forest by controlling several institutional shareholders. However, in the company’s industrial and commercial information, he is only a director. A source confirmed to “first finance and economics” magazine that instead of Ma Sen, chairman of the board and Li Bingqian, general manager, the company recruited professional managers as “front desk roles”.
Before 2020, Yuanqi forest has been keeping a low profile in front of the media. This attitude has unintentionally exacerbated the contrast between the entrepreneurial story of this consumer goods company and another piece of information. The cornerstone of Tang Binsen’s investment in Yuanqi forest comes from his past commercial success in the online game industry.
Tang Binsen is a layman in beverage making, but he did stage a story of laymen successfully leading insiders and finding a foothold for new brands in the consumer goods market which is regarded as the Red Sea.
Tang Binsen has repeatedly mentioned that Yuanqi forest wants to be China’s Coca Cola in terms of scale and brand influence, but he still has an idol grade consumer goods company in his heart – Maotai. His favorite consumer goods investor in China is Duan Yongping, who not only invested in two top five mobile phone brands in domestic market share, but also invested in Maotai and apple.
Duan Yongping had a media interview. Tang Binsen said that he had heard it more than ten times, and two words had far-reaching influence on him: if the consumer goods company attaches too much importance to marketing and does not attach importance to products, there must be no future; if the consumer goods company takes the cost-effective route, it will not have a good future.
Therefore, Tang Binsen’s pricing idea for Yuanqi forest is to continuously test whether users really like a product with more expensive prices.
“If the price is too high, even if the sales volume will be eliminated, only 10% of the original will be left. Then use this cruel reality to force the product team to seriously do the product.” Tang Binsen once explained at an industry closed door exchange activity in the winter of 2019 that the premise of high pricing is that the product must be good enough, and to make a good product, one must dare to invest. He also cited an example. The bubble water R & D team once proposed that the product should be as “full of gas” as Coca Cola. However, this plan would put forward higher requirements on logistics and transportation conditions – it might explode during the transportation. Tang Binsen’s attitude is: “since we want to make soda, we should make enough gas.” Therefore, the annual logistics cost of Yuanqi forest bubble water has increased by 5 to 6 points.
In addition, in Tang Binsen’s view, Yuanqi forest has seized two “opportunities of the times”: one is to connect consumers more effectively through the two “emerging channels” of chain convenience stores and e-commerce platforms; the other is to realize an important change in the marketing strategy of consumer goods, that is, to activate the Koc (key) on the social platform compared with spending heavily on purchasing traffic (that is, purchasing “new users”) Opinion consumer is a more effective and cost-effective marketing path, so brands should spend more energy on “retained users”, use good products for good reputation, and cultivate more Kocs.
In many of the new brands that have been successfully labeled as “Internet red”, we can see similar playing methods. For example, perfect diary, in making full use of the mature supply chain, new e-commerce channels and social marketing system, is juxtaposed with Yuanqi forest. The two are almost like the “shadow” of each other.
The challenges to be faced by Yuanqi forest in the next four years will never be more relaxed. There are few technical barriers to the innovation of beverage products. This summer, a batch of new bubble aquatic products have been packed into the beverage freezers of Dalian lock convenience stores, and they have been arranged in turn to the best location of the goods channel.
“It belongs to the research and development of application-oriented formula, and there is no special deep technical barrier.” Ye Suping admits that the technical barriers of beverage products are not high. As long as imitators see the ingredient list, they can quickly copy it after many experiments. Many mature beverage manufacturers in China also have surplus capacity and are willing to earn more OEM fees.
The biggest barrier seems to be who has the most skilled R & D talent, such as ye Suping, who joined another beverage venture last year to take charge of new product development.
More and more new and old brands are in the layout of 0 heat gas bubble water, and the taste renovation speed of beverage products is obviously accelerated, which will also compress the life preservation period of vitality forest products to a certain extent, forcing them to continuously use new products to maintain the market leading position. This year, the taste of Yuanqi forest bubble water has been expanded to six kinds. In September, the first fruit juice bubble water – “full score microbubble” was launched. Yuanqi forest is also launching new brands to continue to break through other categories. Following the launch of “Hokkaido Ranch” yoghurt in August 2018, this year it launched “alien” functional beverage and electrolyte water. However, which category can hatch the next blockbuster? None of these new products, launched in the last 12 months at least, have drawn the same steep growth curve as soda bubble water.
Faced with the continuous squeeze of new and old brands on the market space, Yuanqi forest has to compromise in marketing strategy. An industry person close to the company disclosed to Yi magazine that the 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 proportion has rapidly increased to 20% from the 2% mentioned by Tang Binsen last year. This is a common level of marketing expenses for traditional beverage brands.
Take a look at the whereabouts of the money: by June 2020, Yuanqi forest has successively named four TV variety shows and documentaries on station B. It has also participated in market activities where young people gather, such as China joy and first youth film exhibition; Zhang Yuqi has been invited to be the brand ambassador of soda bubble water, and has greatly increased investment in building elevators, subways and outdoor advertisements.
No surprise, Baidu Index shows that the search volume of “Yuanqi forest” as a key word 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 showed a rapid rise. And is this part of the marketing “illusion” that Tang Binsen once criticized?
When asked how long hot bubble water can still be popular, Wang Meng replied: “I think it can be sold for a period of time, at least this year.” In the future, the pressure of competition will only increase, and he is never unfamiliar with this kind of pressure, “so we must fight for every inch of land, and do not miss every sales opportunity.”
Author: Xie Yunzi, Wang Yiyue; source: yimagazine (ID: cbnweekly2008), reprinted with authorization.
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