Source: Visual China
Author 丨 Ye Hao
Editor 丨 Kang Xiao
Produced by 丨Shenwang Tencent News Xiaoman Studio
Liu Zhen's departure once again put Yuanqi Forest on the cusp of public opinion. In December 2020, Former Vice President of ByteDance, Liu Zhen, officially joined Yuanqi Forest as the head of overseas business. Recently, Liu Zhen was exposed to have left his job in March this year, and Yuanqi Forest officially confirmed the news and said that Liu Zhen's departure was based on personal reasons.
According to the "Deep Web", Liu Zhen's departure may be related to the obstruction of Yuanqi Forest's overseas business development.
An insider close to the top level of Yuanqi Forest told DeepNet, "Because of the epidemic, the overseas business development of Yuanqi Forest is indeed more difficult. ”
"Deep Web" learned that Liu Zhen was previously responsible for the overseas business team of less than 100 people. At present, Yuanqi Forest has entered more than 40 countries and regions around the world, with sales of over 100 million yuan last year, but it accounts for a small proportion of the domestic revenue scale of billions.
"However, the company's founder Tang Binsen is still optimistic about the future of overseas markets, but also willing to use small costs to explore the laws of overseas markets, after Liu Zhen's departure, the strategic position of overseas business within the company has not changed." The person stressed that in a sense, the rapid iteration of organizations and products is the gene of this new consumer goods unicorn that started with the Internet.
For Liu Zhen's departure, there are also media analysis reports that the recent high-level shock within Yuanqi Forest, the company is laying off employees and slimming down.
In this regard, a Yuanqi Forest executive who did not want to be named denied to the "Deep Web", "The company has a number of co-founders and partners, in fact, the core management is relatively stable, and the rumors about layoffs and slimming downs are also very outrageous." Last year, the company's rapid expansion of employees brought great pressure to the organizational structure, and the optimization and integration of internal business lines have not stopped, but it certainly has nothing to do with layoffs. Because yuanqi forest has more than 2,000 people at the beginning of last year, it has exceeded 8,000 people at the beginning of this year, and new recruits are being recruited every month. ”
But it is worth noting that in the past six months, Tang Binsen, the founder of Yuanqi Forest, disappeared from the public eye. The last time Tang Binsen made a public appearance was in June last year, at the Yabuli China Entrepreneur Forum, he gave a speech, sharp words, and Sent Tang Binsen to the hot search.
"Since the second half of last year, yuanqi forest has deliberately reduced Tang Binsen's appearance opportunities. Because Tang Binsen himself is a straight man in science and engineering, hot search physique. A staff member next to Tang Binsen told the Deep Web.
However, Tang Binsen's "deliberate" low-key, placed in the new consumption cooling has been repeatedly mentioned in the past six months, it is inevitable that the industry will have a lot more speculation about this company. At the beginning of this year, it was rumored that Coca-Cola and Pepsi Cola had reached a consensus within it - "this year is bound to eliminate the Yuanqi Forest Bubble Water", and Nongfu Mountain Spring has been fighting with it for a long time.
Yuanqi Forest's failure to announce 2021 sales has also raised concerns about the star startup. According to the "Deep Web", last year's performance fluctuation was related to the "supply cut" of an important supply chain partner, Ternary Biologics, resulting in a loss of about 1 billion.
On the other hand, yuanqi forest, which previously relied too much on the success of single products such as sparkling water and is known for the rapid research and development iteration of products, also urgently needs to prove to the outside world that it has the ability to continuously build explosive models. Specifically, in 2022, Yuanqi Forest will most likely bet on the three categories of "aliens, fiber tea and mines".
The supply crisis, the encirclement and suppression of giants, and the manufacture of explosive models are the three major problems that need to be solved in front of the Yuanqi Forest in 2022.
This spring after Liu Zhen left, the former new consumer star companies have encountered growing pains, closing stores, laying off employees, and reducing prices. In this industry context, can the yuanqi forest, which is known as the disruptor of the beverage industry and the traditional consumer goods that uses the product logic of game companies, break through the giant siege and its own growth bottleneck?
Growth slowed
At the end of October 2020, Chuzhou, Anhui, autumn is high and refreshing. Tang Binsen, founder of Yuanqi Forest, held the 2020 dealer conference in the newly built new factory in Langya, and he made a bold statement to a group of dealers, "The sales target for 2021 will expand by two and a half times on the basis of 2020, directly to 7.5 billion." ”
Previous data show that the two categories of Yuanqi Forest sparkling water and burning tea account for nearly 90% of the company's sales, of which sparkling water accounts for about 60%, and tea burning accounts for nearly 30%. To this day, Yuanqi Forest Sparkling Water is still the head brand of the domestic sparkling water market, and in 2021, the sales of Yuanqi Forest in the Tmall Taobao platform sparkling water market account for more than 30%, and it is also on the Jingdong platform.
Source: Magic Mirror Market Intelligence
The success of sparkling water and tea burning has made Yuanqi Forest a hit.
In the past few years, Yuanqi Forest's sales have soared. In 2018, it increased by nearly 300% compared with 2017; in 2019, it increased by more than 200% compared with 2018; in 2020, it increased by about 300% compared with 2019, and in 2021, it is expected to increase by 170% year-on-year compared with 2020. According to the data of Yuanqi Forest's internal publication "Yuanqi Jiebao", sales in 2019 were 1 billion yuan, and sales in 2020 were 3 billion yuan.
However, the figure of 7.5 billion sales in 2021 has not been officially confirmed.
It is worth noting that in December 2021, Tang Binsen said in an interview, "It is enough to guarantee an annualized growth of 50% to 60% in the next three years - I do not require two or three times every year." Tang Binsen's sentence was interpreted as the myth of the high growth of the Yuanqi Forest no longer continued, and the relative growth rate of the Yuanqi Forest declined.
In this regard, a Yuanqi Forest insider told the "Deep Network": "Old Tang said that the downward revision of the growth rate of the Yuanqi Forest is because the Yuanqi Forest has almost touched the volume of 10 billion yuan, and the growth rate under this volume must be stable and steady. When the sales base of startups is small, it can increase several times, but when the base is large, it is normal for the growth rate to decline. ”
However, according to the "Deep Web", in 2021, Yuanqi Forest's decline in the supply chain has had a considerable impact on its performance.
Supply crisis
After the launch of the sugar-free sparkling water of Yuanqi Forest, it detonated the market, which is also a brand new battlefield opened up by Tang Binsen in the beverage track, represented by "0 sugar, 0 fat and 0 calorie". Official information shows that Yuanqi Forest first found 7-8% sucrose concentration drinks as the best taste through testing, and finally reduced the sweetness brought by sucrose through the ratio of erythritol + sucralose.
Tang Binsen has publicly stated, "I hope that everyone will think of yuanqi forest when they mention sparkling water, and it is yuanqi forest that brings concepts such as erythritol into the domestic beverage industry." In 2020, sugar-free bubble drinks represented by Yuanqi Forest quickly came out of the circle, which made the domestic demand for erythritol increase sharply.
On February 10, Shandong Sanyuan Biotechnology Co., Ltd. was listed on the Growth Enterprise Market of the Shenzhen Stock Exchange. Tsnary Biology is the earliest domestic industrial production of erythritol manufacturers, Yuanqi Forest established sales cooperation with Tsnynox in 2019, and entered the top three customer lists of Tsnwal Biotech in 2020.
Prior to this, sanyuan biotech's main customers came from overseas. From 2017 to the first half of 2020, the proportion of the company's overseas revenue to total revenue was 75.96%, 82.25%, 89.53% and 73.64%, respectively. Four of the company's top five customers are American companies, accounting for 50.94% of the total revenue.
"In fact, sugar-free beverages are a big category in the West, but in China, it started relatively late, China is more than a decade later than the West, and Old Tang also saw this trend to enter this segment." A person familiar with the beverage market told the Deep Web. It can also be seen from the speech of Nie Zaijian, chairman of Sanyuan Bio, at the roadshow on January 21.
Nie Zaijian said, "The company's erythritol and compound sugar products have successively established cooperative relations with Sharoya, THI of the United States, ADM of the United States, Yuanqi Forest, Coca-Cola, Pepsi Cola, Nongfu Mountain Spring, Unification, Jinmalang, Hankou Second Factory, Perfect China, Southern Black Sesame (000716) Paste and so on. ”
Yuanqi Forest brought fire to the sparkling water market. In recent years, Sanyuan Bio's revenue and net profit have achieved substantial growth, and from 2018 to 2020, its operating income was 292 million yuan, 477 million yuan and 783 million yuan, respectively, an increase of 144.35%, 63.95% and 64.27% year-on-year. Attributable net profit was RMB0.68 billion, RMB136 million and RMB233 million, up 260.98%, 98.71% and 70.62% year-on-year, respectively.
In the revenue of Ternary Biologics, erythritol contributes the vast majority of revenue, and in 2020, the contribution of Yuanqi Forest, the third largest customer of Ternary Biotech, accounted for 6.97%. In the first half of 2021, Yuanqi Forest was promoted to the largest customer of Sanyuan Biologics, and the associated sales revenue was 185 million yuan, accounting for 23.50%, while Nongfu Spring was its fifth largest customer.
According to the "Deep Network", last summer, upstream manufacturers such as Sanyuan Biology suddenly cut off the supply of erythritol, resulting in Yuanqi Forest stopping production and supplying goods during the peak season of beverage sales, resulting in a loss of a small billion yuan.
After encountering this crisis, the cooperative relationship between Yuanqi Forest and Sanyuan Bio quickly dropped to the freezing point, and then Yuanqi Forest adjusted its supplier strategy and signed a number of new erythritol suppliers in China.
Not only that, the Yuanqi Forest has also encountered siege and interception in the field of sparkling water.
In April 2021, Coca-Cola released the Small Universe AHHA sparkling water; in May, Wahaha launched the "Angry" sugar-free soda sparkling water, endorsed by Wang Yibo; in June, Nongfu Spring launched 4 fruity soda sparkling water featuring 0 sugar, endorsed by Zhu Yilong; in July, Pepsi's "smile bubble" was baked.
In addition to these traditional beverage giants have launched the same products as Yuanqi Forest, there are also Nestlé, Wang Laoji, Jinmalang, DaliYuan and dairy giant Yili and milk tea brand Xicha Naixue's tea, etc., have launched sparkling water products and joined the sugar-free drinks to compete.
Of course, the price increase of erythritol raw materials is in short supply, which also brings cost pressure to Yuanqi Forest.
Sanyuan Bio once revealed in the announcement that the domestic market demand for erythritol continues to be strong, the supply of products is in short supply, and the price of products is growing rapidly. Bowling Treasure also issued an announcement that in 2021, the company's erythritol product supply and demand are booming, and the price of erythritol products has increased significantly compared with the same period in 2020.
Drink ceiling
All along, the growth of single-class products will always hit the ceiling, in the early stage of the barbaric growth of the market, this is not a problem, but into the mature period of the market, how can the brand continue to grow?
As an outsider in the food and beverage industry, Tang Binsen has brought the profound insight into human nature and demand in the game industry and the Internet product development model into Yuanqi Forest Company.
Tang Binsen
Tang Binsen believes that products should learn from game companies and value "data-driven". Compared with the 1 to 2-year research and development cycle of traditional companies, Yuanqi Forest compresses the time to 3 to 6 months, and on average, it does a drink taste test every day or two. The steps and indicators of the test are also processed and standardized, and after the internal test is qualified, it will enter the external test process.
The premise of rapid testing and rapid iteration is high standards. For example, the cost of erythritol, which is used in yuanqi forests, is 50-80 times higher than that of aspartame, which was previously common. Yuanqi Forest Tea Burning is the result of repeated testing of dozens of beverages on the Internet, but the pricing given by the tea marketing team is 6 yuan, which is rare in the previous beverage industry.
Pricing backwards costs has been a problem for the beverage industry. Yuanqi Forest's product development team joked, "Have you heard Google consider the cost of servers when designing a product?" "Traditional enterprises use pricing to push costs and then design products; but Yuanqi Forest is: first design products, and finally add profit margins, and then price."
The premise supporting this model lies in Tang Binsen's own strong financial resources. "If you change a startup, you may go out of business after paying the tuition in the early stage, but Yuanqi Forest has the conditions to trial and error." A senior beverage practitioner analyzed the "Deep Web".
Understanding this birth model of tea burning may be easier to understand the success of Yuanqi Forest Sparkling Water. In the spring of 2018, 4 flavors of Yuanqi Forest soda sparkling water were unveiled. In just a few months, sales of sparkling soda water have reached the level of more than a year of tea sales.
In 2020, Tang Binsen said that 95% of the products of Yuanqi Forest have not been launched, and 2021 will be the "product year" of Yuanqi Forest, with R& D expenses and R&D personnel will be 3 times that of 2020, and the publicity cost will be 700 million. An industry insider in the field of FMCG told the "Deep Web" that the next "explosive model" that is being developed in the middle of the year carries the high-growth mission of Yuanqi Forest.
Yuanqi Forest is also constantly introducing new products in new product research and development, such as milk tea, yogurt, electrolyte water, mineral water, etc., but each market segment has mature players. It can be seen that Yuanqi Forest has been actively looking for the next blockbuster, which can replicate the success of sparkling water.
An insider of Yuanqi Forest told the Deep Web that milk tea had been placed high hopes, but the controversy caused by the 0 sugar incident did not rise in sales. In 2022, yuanqi forest will most likely bet on the three categories of "aliens, fiber tea and mines".
"Alien" is electrolyte water, can supplement the human body electrolytes, this category is very popular in Western countries, but the domestic related products are not mature; fiber tea is corn whisker tea, from November 2021 listed to March 1, the official said that fiber tea for 8 consecutive weeks won the Tmall sugar-free tea beverage repurchase list; "there are mines" is the new mineral water brand launched by Yuanqi Forest, the main "soft mineral water" category, from March this year, Yuanqi Forest officially launched in East China, South China and other markets to launch offline channels.
For Yuanqi Forest, in addition to looking for the next explosion like sparkling water, strategically, the overseas market may also carry Tang Binsen's greater expectations, after all, Tang Binsen's first bucket of gold comes from overseas markets. Tang Binsen, graduated from Beihang Airlines, in 2008 Tang Binsen established Zhixingtong Technology Co., Ltd., in 2009 began to start the overseas game community plan and online game overseas agency distribution business, after three years, the company's overseas business has reached tens of millions of yuan of profits, becoming an internationally competitive online game publisher.
Yuanqi Forest has entered more than 40 countries and regions around the world. In August 2020, Yuanqi Forest obtained the Singapore HCS Health Preferred Label and officially entered Singapore. A senior person in the FMCG industry told the "Deep Web" that it is much more difficult for FMCG to go to sea than the game to go to sea, and there is no successful precedent for consumer goods companies, wahaha and Nongfu Spring.
Liu Zhen Source: Visual China
However, at the end of December 2020, Tang Binsen hired Liu Zhen to take charge of the international business of Yuanqi Forest. In the second half of 2020, when Liu Zhen joined, Yuanqi Forest set up a separate overseas business department. A year before Liu Zhen joined, Tang Binsen shouted out the slogan of internationalization.
Liu Zhen is a fierce general who has expanded his territory. Liu Zhen, a lawyer and the niece of Liu Chuanzhi, the founder of Lenovo Group, graduated from Renmin University with a law major, went to the University of California, Berkeley to continue her studies, and then joined a law firm in Silicon Valley.
One of Liu Zhen's clients is Uber founder and CEO Travis Kalanick, who joined Uber in April 2015 to focus on Uber's localization strategy in the Chinese market, and a year later, Uber's share changed from 2% to 1/3.
In August 2016, Didi announced the acquisition of Uber China, and Didi and Uber held shares in each other's global shares, becoming minority shareholders of each other. Liu Zhen, who has proven her business ability through Uber, joined ByteDance in 2016 after leaving Uber to take charge of the international business.
In byte's more than three years, Liu Zhen changed his high profile at Uber and became low-key and pragmatic. Today's headlines come from Sequoia Capital, CCB International and other $1 billion Series D financing, Flipagram and Musical.ly's wholly-owned acquisitions, 2017 financing and overseas acquisitions have flashed Liu Zhen's figure.
In June 2020, Liu Zhen left ByteDance, and it can be seen that Liu Zhen's overseas business capabilities are very prominent. Nowadays, Liu Zhen has only worked in Yuanqi Forest for one year and three months before saying goodbye. And Yuanqi Forest's overseas business, if you look at the current meager sales, is only a front war, just started.
Pay tuition to the traditional
Four years ago, Tang Binsen, who achieved wealth freedom by playing games, founded Beijing Haofan Technology Co., Ltd. (the predecessor of Yuanqi Forest). Tang Binsen said in an interview with Zhenghe Island, "China is rising, and China is the core driving force of global economic growth, and there should be 3 Chinese companies in the top 10 companies in every industry in the world." ”
In the choice of track, Tang Binsen has a big premise to fully compete in the Great Red Sea Circuit. The reason why the Red Sea has become the Red Sea and the Blue Ocean is still the Blue Ocean is precisely because the Red Sea has a high probability of corresponding to a good industry with a large market space, even if there are many players involved, it is still profitable.
After research, Tang Binsen felt that there was a huge opportunity in the field of consumer goods, and he chose the beverage track, and Coca-Cola in the beverage industry had a market value of 100 billion.
But the drink consumption track has become crowded in the past two years, and thousands of troops have crossed the canoe bridge.
Recently, AOYAMA Capital, an angel investment institution for consumer investment, released an article saying that the common problems faced by consumer entrepreneurs at present are: the flow dividend has peaked, capital has tightened its money bag, the inner volume and the Red Sea, and so on.
New consumption is cold, capital is retreating, and some investors have turned to the direction of ARVR, meta-universe and biotechnology. According to the statistics of Tsingshan Capital, in the first quarter of 2022, there were only 170 consumer track investment events, down 56% from the previous quarter.
New consumer investment cooled down, the stock prices of many star new consumer companies in the past fell and fell, the unlisted were exposed to layoffs, price cuts, and the former star companies were pulled off the altar. In this industry background, the rumors of "slimming down and laying off employees" in Yuanqi Forest and the departure of Liu Zhen have also attracted a lot of speculation.
According to the "Finance and Economics" weekly, Yuanqi Forest has a number of departments that have been abolished or adjusted, such as the Growth business department under the business center was merged, its information flow delivery and live broadcast business functions were adjusted to the digital marketing department; the innovation incubation center was abolished, and the WOW business department was transferred to the core business segment.
In terms of management style, Tang Binsen himself greatly appreciates ByteDance, so Yuanqi Forest changed the nails used for internal communication to Feishu, adopted OKR management, and held monthly review meetings. Internal management is very similar to the game company, many teams are racing horses, and good data will get resources.
"For a company like Yuanqi Forest, the core is more Internet-based, and the adjustment of the organizational structure is actually very frequent, in order to improve human efficiency." For example, e-commerce, before each product has its own e-commerce team, repeated construction, this year feels that the efficiency is not high, they have done e-commerce middle office together. A Yuanqi forest manager told the Deep Web.
Yuanqi Forest is still sought after by capital. The time node for the cooling of new consumption is August 2021, and in November 2021, Yuanqi Forest raised $200 million, with many old shareholders following suit, with a valuation of $15 billion. On March 31, 2021, Yuanqi Forest completed a strategic financing of US$500 million, led by Warburg Pincus Investment, L Cattertoon and Sequoia China, and followed by Temasek and Gao Rong.
An investor told the DeepNet that when the entire industry encounters a crisis, it is easier for the industry's top companies to obtain financing because capital has to hedge. These two rounds of financing by Yuanqi Forest have made it "surplus grain at home". Yuanqi Forest officials said that the amount of this round of financing will also be mainly used for product research and development, self-built factory investment and overseas market expansion.
Before 2020, Yuanqi Forest has been adopting an asset-light model, entrusting to Toyo, Jianlibao, Unification, O.R.G. and other foundries to produce products, but with the rise in sales, it has been "stuck neck" by several big brands in terms of production capacity, so in 2019, Genki Forest decided to build its own factory.
Yuanqi Forest's self-built factory began in October 2019, and has successively built its own factories in 5 places, including Chuzhou in Anhui, Zhaoqing in Guangdong, Xiqing in Tianjin, Xianning in Hubei and Dujiangyan in Sichuan, corresponding to the five major urban clusters in East China, South China, North China, Central China and Southwest China. It is reported that the five self-built factories cost 5.5 billion yuan. At the end of March 2022, Yuanqi Forest's fifth self-built factory in Dujiangyan, Sichuan Province, was put into trial operation, with a total investment of about 1 billion yuan. The sixth factory will also be in Taicang, Jiangsu Province, and six production lines are expected to be planned.
After full production, the annual production capacity of Yuanqi Forest will reach 5 billion bottles.
It can be seen that this new consumer company that is good at Internet playing is getting heavier and heavier, and must learn and evolve on its original shortcomings in production, supply chain, and channels. After the production capacity is not stuck in the neck, the importance of the channel is once again highlighted in the current Yuanqi Forest and the structural adjustment.
According to the weekly magazine "Finance and Economics", a number of departments of Yuanqi Forest have been abolished or adjusted. In this structural and functional adjustment, the importance of channels has been emphasized again. Under the middle and back office business section, a new first-level department "Intelligent Terminal Division" was set up to be responsible for the development, operation and maintenance of commercial terminal equipment; the marketing center set up a number of new departments to be responsible for channel business.
At the dealer conference held in December 2020, Yuanqi Forest revealed to dealers that the company is developing a set of "logistics-warehousing-store" management tools; 80,000 smart freezers facing channel terminals will be completed in April 2021 at the latest, and the goal of 2022 is to open up 100,000 smart cabinet points.
A Yuanqi forest management source told the "Deep Web", "The offline channel is indeed in the early stage of exploration for the Yuanqi Forest, and it is still at the level of the first grade of primary school. In the past few years, Yuanqi Forest has also been learning from traditional enterprises, whether it is a factory or a channel, it is from 0 to 1, bumping and bumping, and the interior has long been accustomed to nature. ”
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