The sparkling water track is highly coiled, and the carbonic acid market is back in the wind

Image source @ Visual China

Text | Morgan Channel

The sparkling water market is like a besieged city, the players outside want to enter the city, and the players inside want to go out of the city.

The market is always not short of followers, 0 sugar 0 fat 0 calorie Yuanqi forest success, Nongfu Mountain Spring, Wahaha, Master Kang, Yili, Xicha, Nai Xue and other giants have followed up to launch 0 sugar sparkling water, and even there is news, "two music" (Coca-Cola and Pepsi) also put "harsh words" inside, ready to "dry" Yuanqi forest. In addition, there is also the emergence of a new force of the Oriental Giant Crane.

Within the siege, Yuanqi Forest is further expanding its business lines, launching categories such as milk tea and mineral water without carbonated ingredients, and even involved in the coffee field, the purpose of which may be to break the dilemma of a single category and improve diversified revenue capabilities. However, the competition in the sparkling water market is becoming more and more fierce, the suppliers are under pressure from Coca-Cola Pepsi, the channel sinks and confronts Nongfu Spring, and the Yuanqi Forest seems to be hostile on all sides.

There is a view in the market that Yuanqi Deep Forest is "besieged" because of its high-cost erythritol sugar substitute, which has lifted the table of the bottled beverage industry. Previously, many industry players such as Unification and Master Kong also followed up with the use of high-cost erythritol substitute sugar, increasing the cost of raw materials, and the overall cost of the industry has risen, making the pricing strategies, production costs, and marketing costs of beverage giants need to be adjusted accordingly.

But from another point of view, the domestic beverage giants layout sparkling water category, may not be drunk in the meaning of wine, the core purpose is still to spy on the "base camp" of the giant of carbonated drinks "two music", Yuanqi Forest is more like the fuse of this carbonated beverage battle outbreak.

Perhaps the domestic beverage giants do not care about how many 0 sugar sparkling water market can eventually be conquered, and more importantly, they will break the inherent impression of carbonated beverages in the consumer market and open up the carbonic acid market in the traditional sense of "two pleasures" with sparkling water categories, thereby expanding the business scope of beverage giants and increasing the vitality of the entire enterprise.

So can traditional beverage companies such as Yili and Nongfu Spring succeed? Can the new way of thinking brought about by the "catfish" of Yuanqi Forest be turned into gold by the old beverage giant and burst out into greater potential?

01 The Great Bird of the East - New Forces Emerge

Rigid traditional beverage enterprises, brand innovation is trapped in "self-restraint"

After the success of Yuanqi Forest, many people regard it as an industry standard, trying to replicate its success by analyzing Yuanqi Forest, and new marketing methods and channel expansion are considered to be the main reasons for the success of Yuanqi Forest. But that reason doesn't explain why it's Genki Forest that's succeeding on bubble water, rather than traditional companies that are entrenched in the beverage market.

In fact, almost every giant will rearrange the selling points of its main products every year, launch "new products" to test the water, and once the product has the trend of becoming a hit, it will increase promotion. The rising star's Yuanqi Forest is also such a logic in promoting new products, observing whether its new products have a spokesperson, to a certain extent, you can see whether the brand has the potential to become a blockbuster, and before this stage, it is an endless small-scale market to test the water.

According to common sense, the deep-rooted traditional beverage giants have tried almost all the category innovations that can be involved, and the reason why they can break out of a forest of vitality may be that the rigidity (non-pejorative) of the traditional beverage enterprise system has led to the solidification of thinking, thus limiting the imagination of innovative (research and development) personnel.

Although beverage giants invest more in product innovation every year, the larger the scale of enterprises, the easier it is to present a rigid state in the system, which is almost a common problem shared by all large enterprises and difficult to change, including Internet companies that symbolize eclecticism.

In fact, the other side of the rigid system can also be called the main line of enterprise success, for example, the success of ByteDance is inseparable from the main line of algorithm, but the advantages of algorithms actually limit the multi-dimensional business expansion of ByteDance.

The rigidity of the traditional beverage giants is mainly reflected in multiple dimensions such as fixed costs, maintaining the existing price system and avoiding homogeneous competition. On the contrary, start-ups do not have too many rules and regulations, such as Oriental Honghu, whose brands and products are more malleable, which is conducive to catching up with consumer trends.

The rigidity of the giants has led to the solidification of thinking, and innovators are engaged in innovation under the rules and regulations, and the success rate of single product innovation is naturally difficult to compare with emerging enterprises that are almost unshackled.

In the case of erythritol, traditional beverage giants are well aware of the benefits of this generation of sugar, but they rarely use it. The reason is that the sweetness of this generation of sugar is only seven-tenths of that of sucrose, but the cost of one kilogram is about 20 yuan, and the cost is too high to naturally affect profits, and rushing to raise prices will affect the inherent price system and compete with peers, this decision is too risky and involves the whole body, not a matter that innovators can decide.

There seem to be only two options left for traditional corporate innovators: one is to continue to use low-cost sucrose or other sugar substitutes to combine new flavors; the other is to directly launch sugar-free products without entanglement. The result is also obvious, the soft drink market with serious homogenization competition has been quiet for a long time before the rise of yuanqi forest.

Drink three times to fall in love Why not let consumers get addicted to it the first time? Sugar-free is one of its selling points, why not launch two versions of sugar-free and sugar substitutes to give consumers a transition? Perhaps the high cost of erythritol is one of the reasons, of course, it is not excluded that Nongfu Spring did not launch a sugar substitute version in order to restore the taste of the tea itself. But the concept of complete sugar-free may be too advanced, and oriental leaves have not become a phenomenon in the first time.

The sparkling water of Yuanqi Forest and Oriental Bird seems to be more "catered to" the needs of consumers, providing sweet sparkling water through erythritol provides an excessive alternative to consumers' pursuit of health needs, and new forces pay more attention to digital operations, such as Oriental Bird, where more than 50% of its employees are Internet technology research and development personnel.

However, the new forces were also disliked by the traditional beverage giants, and Yuanqi Forest took the lead in popularizing the concept of erythritol, which lifted the table of the entire industry, making the traditional enterprises that seek change within the inherent system have to break the shackles to conform to the new trend.

For example, Yili launched a new product of 'Tea and Tea Seeking', focusing on "0 sugar + fruit tea + probiotics", using erythritol this generation of sugar. However, the product seems to be stacking buff, and it is possible to combine the dairy industry with the main selling points of bottled beverages.

In addition, Yili has worked harder on the packaging of new products, and it seems to be more Japanese than Nongfu Mountain Spring's 'auto tea': the name of 'Chayu Cha-ho' seems to be somewhat similar to Miyazaki's well-known anime "Spirited Away", and the production of this product has also been temporarily handed over to the Japanese company Toyo Beverage (Changshu) Co., Ltd. for processing. According to the Tianyancha APP, Toyo Beverage (Changshu) Co., Ltd., a joint venture between Toyo CanNing Co., Ltd. and Nippon Beverage Co., Ltd., is a pure Japanese company and has also oem genki Forest before.

Whether the suspected Japanese ingredients of Yili's new products are intended to replicate the success of Yuanqi Forest, we do not know, but it is enough to reflect Yili's emphasis on the new products, but at the moment of the rise of the national wind, can it still be accepted by consumers that are related to the Japanese system? This is something to consider.

Unlike Yili's 'Tea and Tea Seeking' 0 sugar, the 'steam tea' launched by Nongfu Spring seems to be slightly restrained in the use of sugar.

For consumers, low sugar is also sugar, even if its taste is unique, it seems that it is difficult to compete with 0 sugar drinks in the demand dimension of health. Low sugar is more like a pre-0 stage of 0 sugar than a follow-up supplement. The rise of the Yuanqi Forest, while throwing bricks and stones for traditional beverage companies, seems to have set up new obstacles, and the innovation of traditional beverage companies seems to be unable to avoid the label of 0 sugar.

However, the biggest success of Yuanqi Forest may not be to promote the label of 0 sugar, but to the success of sparkling water, breaking down the barriers of entry between beverage categories.

02 The barriers of entry between carbonated and non-carbonated beverages have been crossed, and major enterprises are trapped in a corner

In fact, after more than 30 years of development, the soft drink industry has already entered a mature period, and it is no longer the production process and channel that plagues the traditional giants to develop, but the barriers to entry between different categories of products, the most typical barrier of which is that there is a high wall between carbonated beverages and non-carbonated beverages that is difficult to overcome.

For example, when you think of carbonated drinks, you think of Coke or Sprite, but there are pros and cons to this inherent label.

The advantage is that the "two music" divides the carbonated beverage market, and the disadvantage is that the "two music" is difficult to enter the non-carbonated beverage market. The success of fruit orange and fruit grain milk is more due to the relatively blank market of these two types of products at that time, seizing the opportunity; secondly, the success of these two types of brands did not rely too much on the brand effect of Coca-Cola, but opened the market through the new logo of 'Beauty Juice Source'.

For the "two le", the disadvantages of the barriers of entry between beverage categories are not obvious, because the market size of carbonated beverages is large enough to support the development of "two le". But for companies operating non-carbonated beverages, the insurmountable barriers between categories may make them desperate, and many beverage giants have gathered here to compete fiercely to divide the "limited" non-carbonated beverage market.

For example, when it comes to green tea or iced tea, consumer choices are not fixed, and unity and Master Kang seem to be able to do it. After Nongfu Spring succeeded in its sudden success through tea π, other giants followed up or increased their weight to split the fruit tea market. Unlike the two major players in the field of carbonated drinks, there are many players among the non-carbonated drinks, and in a certain segment, everyone can grab a bite. And between the products of major non-carbonated beverages, the flat effect is obvious, and the competition in the industry is more intense.

The Yuanqi Forest sparkling water breaks this barrier, in fact, the sparkling water is essentially a carbonated beverage, only under the marketing concept bonus, weakening its carbonic acid properties. But for consumers, whether it is sparkling water or Coke Sprite, it is "with gas", and in some scenes, the two can be equalized.

It is also true that according to the 2021 Nielsen Brand and Consumer U&A Survey Report, the sales scale of carbonated beverages in China will be 58 billion yuan in 2021, with a growth rate of 11%. Among them, non-traditional carbonic acid categories (sparkling water, new carbonated drinks other than Coke, Sprite, Fanta, etc.) accounted for 18%, there is still a large room for growth, and the future market of Yuanqi Forest and Oriental Bird is still very broad.

To a certain extent, a large part of the sparkling water market comes from the carbonated beverage market blocked by the "two music", and now, Yuanqi Forest has broken the barriers of entry between beverage categories, and non-carbonated beverage companies have since been able to enter the carbonated beverage market in the name of sparkling water.

The overall approach of traditional beverage companies to enter the carbonated beverage market is erosion, not aggressiveness. The specific policy is to increase the concept of sparkling water on the basis of their own areas of expertise, and gradually expand the business scope of the entire enterprise while subtly conducting market education.

Now that the concept of sparkling water has been accepted by the public, Nongfu Spring has made a comeback to launch the "tea + juice + carbonic acid + low sugar" 'steam tea'. However, only from the product description, the product is also like the product of stacked buff, both the shadow of the tea π and the leaves of the Dongfeng tree, and the addition of sparkling water.

In fact, whether it is Yili's 'tea and tea search' or Nongfu Spring's 'steam tea', it seems that the successful experience of the Yuanqi Forest has changed the traditional innovative thinking, and it is more bold in the use of sugar ingredients and innovation, but it seems to continue the original old road of innovation: there is no independent creation of new categories.

Such an outcome could lead to a new pattern of category entry barriers in the beverage industry with sparkling water, carbonated beverages and non-carbonated beverages. The traditional beverage industry's current exploration of the two labels of 0 sugar and sparkling water may strengthen the binding relationship between the Yuanqi Forest and the sparkling water, and it still takes time to verify whether this result is good or bad for the Yuanqi Forest.

But it is worth affirming that the new force of sparkling water, Oriental Honghu, can also take advantage of this shareholder wind to soar. As for traditional beverage companies, although the current exploration of sparkling water may add a new revenue curve for themselves, it may be difficult to achieve phenomenal success and break the existing pattern of the industry.