On a Friday in mid May, the monthly “vitality universe conference” of vitality forest was held. Because of the epidemic, this internal event was held online. According to insiders, “Yuanqi universe conference” is one of the internal activities that Tang Binsen regularly attends every month. The reason why Tang Binsen attaches great importance to it is that “Yuanqi universe conference” is actually the product innovation project initiation meeting of Yuanqi forest.
The annual beverage sales peak season starts from the second quarter and ends in the third quarter. The second quarter of this year is especially special for the vitality forest.
On the one hand, it was a sudden epidemic, which almost shut down the East China market, an important beverage sales town; On the other hand, the bubble water of Yuanqi forest is facing the market squeeze, and the voices of “lack of a second growth curve” and “a single explosive product is difficult to sustain” continue to appear. The future path of Yuanqi forest seems unclear.
The monthly “vitality universe conference” seems to be both the bottom support of the rapid iteration products of vitality forest and the horn of its rejuvenation under the epidemic.
Before that, the close combat with the beverage giants has been made clear. Under the dilemma of “encirclement and suppression”, Yuanqi forest has frequently encountered the crisis of supply interruption, and the star product bubble water is also facing the market squeeze. Some people believe that the supply chain of Yuanqi forest is weak and the crisis of supply interruption still exists.
In fact, the supply chain crisis and the stall of main products are only obvious problems, and Yuanqi forest should have foreseen this for a long time. On June 1, Yuanqi forest will usher in its sixth year of establishment. Compared with the obvious problems, how to find and solve the potential problems is the key to whether Yuanqi forest will continue to be a “net star” in the future.
But more importantly, what Yuanqi forest has encountered now is likely to reappear in the future development of China’s new consumer brands.
A campaign of encirclement and suppression and counter encirclement and suppression that has continued to this day
“This year, it is necessary to eliminate the bubble water in the vitality forest!” At the beginning of the year, it was rumored that both Coca Cola and Pepsi had issued an “ultimatum” to vitality forest. But in fact, this “encirclement and suppression” campaign came earlier than the Manifesto on the surface.
As early as 2018-2020, Yuanqi forest has experienced several “supply interruption” incidents of the OEM, because many old players have given an ultimatum to the OEM. At the same time, the giants have entered the bubble water track one after another. Coca Cola, Pepsi Cola and Nongfu mountain spring have quickly followed up and launched bubble water products. At the same time, they have launched a crackdown and “sniping” on the channel of Yuanqi forest.
It is reported that in September 2021, Coca Cola launched a war plan with the theme of “Mongolian war vitality”, which shows that it has strategic measures such as “removing vitality products from its own freezer”, “seizing vitality freezer” and “displaying packages for attack”.
From the upstream production plant to the terminal display container, Yuanqi forest company is in a storm.
Under the heavy pressure of encirclement and suppression by the giants, some people believe that the vitality forest is losing its “vitality”. The reason lies in the lack of supply chain moat in Yuanqi forest, and the supply interruption crisis may still occur in the future. At the same time, the competition in the bubble water race track intensifies, and the growth of fist products stalls. At the same time, the second growth curve has not been seen by the market for a long time.
But the truth seems unlikely.
Before 2019, Yuanqi forest products were mainly produced by the beverage factory. After several times, the person in charge of the factory received a personal call from the boss of an international beverage giant, asking him to inform his agent factory to immediately terminate the cooperation with Yuanqi forest, “even if we break the contract with them, we must stop production!” Only then did Yuanqi forest realize that the hand of the supply chain crisis had been stuck in its neck.
Liguoxun, vice president of Yuanqi forest, once said frankly: “before 2019, we have always been a new type of fast moving consumer goods company that prefers the Internet. However, after 2019, we realized that without a moat and a security system for the entire food safety, it would be difficult for the enterprise to do long-term, so we began to learn from traditional enterprises.”
Since 2019, the strategy of “super city cluster + self built factories” has been determined, and self built factories have been distributed throughout the country. It is really hard to imagine that such an “online Red enterprise”, which is good at marketing, would spend 1billion to build its own factory in its third year of establishment if it was not taught by the elders
In the following three years, five self built factories were successively built in Chuzhou, Anhui, Zhaoqing, Guangdong, Xiqing, Tianjin, Xianning, Hubei and Dujiangyan, Sichuan, with a total investment of 5.5 billion yuan.
But the encirclement and suppression on the commercial battlefield can only last forever. Recently, a media quoted an insider as saying: “in 2022, liangle will continue to snipe at their upstream supply chain, including not allowing bottle cap suppliers to supply.”
Interestingly, according to an internal speech of Yuanqi forest, since the end of 2021, Yuanqi forest has successively introduced bottle cap production lines in Zhaoqing, Guangdong and Xianning, Hubei. In addition, a bottle cap business department has been specially established to meet the capacity demand of its own factory 100% next year.
Obviously, the vigorous forest that has “cut off supply PTSD” has long predicted that this “encirclement” from foreign capital will only be the first shot in 2019. If the hidden dangers at the end of the whole supply chain cannot be solved in their own hands, their necks will always be pinched at any time.
The management of a leading beverage enterprise once commented: “I haven’t seen anyone who has spent billions to build a factory like this. Generally, they still compromise with the old suppliers and sign longer commitment contracts in exchange for production scheduling in the peak season. (Yuanqi forest) it’s a bit foolish for this new consumer ‘online celebrity’ to dare not accept the hidden rules. But it’s really kind.”
In the follow-up, “lengtouqing” seems to have a deeper consideration on the matter of building his own factory.
In October last year, Yuanqi forest announced that it would no longer add preservatives such as sodium benzoate and potassium sorbate to its bubble aquatic products. The fundamental reason for the realization of “zero preservative” lies in the introduction of an international standard sterile carbonic acid production line which is three times more expensive than the ordinary production line. In this way, the establishment of the factory not only allows itself to jump out of the encirclement of encirclement and suppression, but also means that the barrier of “0 preservative” for beverages has been built by the way.
Tangbinsen once said frankly in his internal speech, “The reason why Zero sugar, zero fat and zero calorie products have been recognized by consumers in the past two years is that everyone needs them. Now ‘zero preservative’ may not be needed in the market for the time being, but the biggest gain we have gained from going to sea in recent years is that we have learned from the beverage ingredient lists of many developed countries, and almost all of them have no preservatives. Therefore, it is necessary to ‘learn from foreign countries to improve ourselves’ in this matter. If one day domestic consumers also need it, we can confidently tell them Everybody, the drink of Yuanqi forest is four zeros. ”
Where is the second growth curve?
In October, 2021, Yuanqi forest disclosed that the company’s product R & D cycle averaged 5.5 months, and the R & D cost increased by 350% year-on-year. The total R & D cost accounted for the highest proportion among beverage enterprises of the same scale. According to tangbinsen, founder of Yuanqi forest, there are nearly 100 products in reserve at present.
But from the outside world, even if there are so many products, it is difficult for vitality forest to produce explosive products again.
Bubble water stalled after many peers entered the site. It is believed that Yuanqi forest has seen it, and it seems that Yuanqi forest is trying to find the second growth curve. In April this year, at a media communication meeting, the vice president of Yuanqi forest said that in addition to bubble water, the company will focus on the three products of mineral, fiber tea and alien electrolyte water in the future.
“Youkuang” and “Xiancha” are the layout of Yuanqi forest in mineral water and sugar free plant tea drinking circuit respectively. In fact, bottled water and tea drinks are indeed large sectors of the water beverage market. However, mineral water and sugar free plant tea do not account for a high proportion of their respective segments. They are still in the market cultivation stage and have not yet formed a broad consumption base.
Take mineral water for example. Its sales volume of bottled water in China accounts for only 16%, and the market is still dominated by purified water. In addition, bottled water and tea drinks are highly mature, and Chinese and foreign enterprises have been fighting for a long time. In Japan and some developed countries in Western Europe, the market share of mineral water is as high as 80%. It can be seen that “youkuang” and “Xiancha” are more like strategic products for the long-term layout of Yuanqi forest than focusing on the present.
According to relevant media reports, Yuanqi forest has set a target of 10 billion yuan this year. Under the heavy pressure, there are three key brands, and only “extraterrestrials” bear the goal of RMB 10 billion yuan of vitality forest.
Alien electrolyte water is the layout of Yuanqi forest in the electrolyte beverage circuit. The brand was established in 2020 and the product was officially launched in April 2021.
Electrolyte beverage belongs to the sub circuit of functional beverage category. According to the data of Castle Peak capital, the market scale of the whole functional beverage will be about 60billion in 2020. From the perspective of growth trend, tmall data shows that from April 2021 to March 2022, functional drinks are the category with the fastest year-on-year growth among all beverage categories on tmall platform – up to 38%.
Different from the above two sub circuits of mineral water and sugar free plant tea, in the sub circuit of functional drinks, electrolyte drinks achieved a year-on-year growth of 225%, surpassing the growth of vitamin drinks by 52% and protein water by 55%.
It is worth noting that, only two years after its establishment and only one year after its launch, aliens have quietly taken the absolute lead in the electrolyte drink circuit.
According to the electrolyte industry report released by tmall, alien’s Gmv (total commodity trading volume) has now surpassed the second ranked Japanese Gemini Ritter and the third ranked American Gatorade, reaching the top of the list of electrolyte beverage brands of tmall.
Under the larger category of functional drinks, alien Gmv surpassed international giants such as baokuang Lishui, pulsation and Pepsi Cola, and only ranked second in the list of tmall functional beverage brands after red bull, which has been deeply involved in the functional beverage market for decades. Recently, Yuanqi forest disclosed for the first time that the monthly sales of alien electrolyte water exceeded 100million yuan in the first quarter of this year, 2.5 times that of the same period last year.
Yuanqi forest once said that in Q1 this year, it did not put too much advertising on alien electrolyte water, and the first quarter of each year is also a low season for beverage sales. The data growth indicates that the product has initially accumulated certain brand potential and user reputation.
In direct proportion to the excellent performance of the external market, this product of alien has also been paid more and more attention in Yuanqi forest.
According to people close to Yuanqi forest, Tang Binsen has frequently appeared at the weekly and monthly meetings of the alien brand department since the first quarter of this year, and the last item he paid so much attention to was Yuanqi forest bubble water.
More importantly, there are many similarities between the growth trend of aliens and the bubble water in the first growth curve of Yuanqi forest.
Just as the bubble water of Yuanqi forest defines “0 sugar, 0 fat and 0 calorie”, the rapid growth has achieved the first place in the bubble water track; Aliens took the lead in building the concept of “electrolyte water” and its popular playing method, and quickly climbed to the top of the electrolyte drink track.
The 2022 electrolyte beverage trend report shows that alien brands rank first in the cognition of electrolyte beverages, and 38% of consumers know electrolyte beverages through alien brands. In a new track, strengthening positioning and seizing the user’s mind are undoubtedly the decisive factors for seizing the top spot of the track and sitting firmly.
Thanks to the expansion of the sports industry in recent years due to the development of national policies, the sports population continues to grow. With the rise of home-based fitness groups represented by “liuhuanghong girl” under the epidemic, people’s demand for sports and electrolyte drinks continues to increase.
Recently, the Japanese brand baokuangli, which has been in China for 19 years, launched a spokesperson program in China for the first time, and officially announced a well-known artist sought after by young people. Another thing worth pondering is that baokuangli first mentioned “electrolyte water” on the e-commerce page this year, which had never appeared before.
It seems to be the same as the plot of bubble water: the new forces “bet” on the entry of the track, the old giants suddenly realized it, quickly adjusted their strategies and followed up, and finally involved a group of players to turn the regional track into the main track, so as to achieve multiple wins.
In this way, a single product with unlimited internal expectations and gradually emerging external market demand seems to have taken shape in becoming the second growth curve of Yuanqi forest.
Through the cycle, the greatest reef crisis of Yuanqi forest
With the success of bubbling water, the sales growth rates of Yuanqi forest from 2018 to 2020 are 300%, 200% and 309% respectively. As a new company founded in 2016, it is inevitable that it will be surrounded and suppressed by giants under the rapid growth. “Supply failure crisis, growth stall” is obviously a predictable and clear difficulty for Yuanqi forest.
The clear difficulties can be dealt with, but the biggest crisis of Yuanqi forest may still come from itself, and it is also the biggest reef crisis in the future.
In order to cope with the clear difficulties, Yuanqi forest can only build its own moat, such as accelerating the construction of factories, rapid expansion of channels, and rapid product iteration to find growth. These series of actions make the vitality forest bigger and faster, but they all add a burden to the vitality forest.
Under the rapid expansion, the number of employees of Yuanqi forest has increased from more than 2000 at the beginning of last year to more than 8000. Yuanqi forest also confessed to the organizational pressure brought about by the rapid expansion of personnel. Liguoxun, vice president of Yuanqi forest, said that in 2022, Yuanqi forest will take the initiative to slow down the pace of organizational expansion. “The focus of this year’s work is to improve organizational capacity, build more stable business and processes, and further improve per capita efficiency and combat effectiveness.”.
But the internal organizational pressure is only a little. What is more important is that the human cost expenditure will increase nearly fourfold. At the same time, with the rapid construction of six self built factories, nearly 6billion yuan of funds will be consumed in a short time. The sharp rise in operating costs is also a great difficulty for Yuanqi forest.
Under smooth conditions, the vitality forest can form a double engine blessing of bubble water + electrolyte water in a short time. However, Yuanqi forest products still need rapid iteration to establish multi brand barriers. Take Nongfu mountain spring as an example. After natural water has established its market position, it has successively launched sugar free tea, sports drinks, fruit juice, soda bubble water and other products in recent years, forming a brand matrix barrier to stabilize the market.
Yuanqi forest also needs more products such as bubble water and aliens to form the third, fourth, fifth and sixth growth curves. But how many trial and error opportunities can the current rising cost pressure give Yuanqi forest? If the strategy is slightly careless, the vitality forest will face greater pressure.
There are still many such development problems. Yuanqi forest needs to be more careful to find and avoid as many potential crises as possible in order to smoothly move from the “growth period” to the “mature period”.
From “growth period” to “mature period”, it also means that Yuanqi forest will no longer have the opportunity to “win”.
In an interview at the end of 2021, tangbinsen said that Yuanqi forest would return to a traditional company in 2022. “It’s OK to ensure an annualized growth of 50%-60% in the next three years – I don’t require twoorthree times every year.”
Obviously, Tang Binsen also realized that after Yuanqi forest entered the long silent Chinese beverage market as a catfish, domestic and foreign giants began to realize the need to make more innovative products to “roll” together for consumers, so that when people no longer feel dead in front of the freezer in the convenience store, none of the next battles can be won easily.
In this “breakthrough war”, Yuanqi forest may or may not succeed. At present, the probability of success seems to be greater. However, for today’s new consumer brands in China, is it necessary to build their own supply chain? How to build a unique product system? How to balance walking steadily and fast? Yuanqi forest at least provides a sample worth studying for the latecomers, which is perhaps the most important significance of this enterprise to the industry.
As a brand whose development speed makes all predecessors feel heavy pressure, a Chinese brand that has broken the monopoly of international giants in a single category, and a “net red” brand that has been looked at and examined under the spotlight for unlimited times, Yuanqi forest will still be expected by the market in the future in various senses. As for whether to continue to be a “net celebrity” or retire early on this label, “the human world will only reward companies that are good to users”, tangbinsen seems to have reached a conclusion.
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