Image source @ Visual China
Text | Moment Business, author | Sisi, Editor, | Zhou Ye
This year is a critical year for the Yuanqi Forest, and it is also a year of challenges.
On April 15, the new consumer beverage brand Yuanqi Forest disclosed some performance data to the outside world for the first time. Revenue in 2021 is 2.6 times that of the previous year, but it has not reached the previous target of 7.5 billion yuan. Part of this is due to the "enemies on all sides" of the Yuanqi Forest.
Yuanqi Forest single-handedly used a bottle of sparkling water that grew in a spurt to make Coca-Cola, Pepsi Cola, Nongfu Spring, Wahaha and other old men "encircle".
There has never been a shortage of imitators in the market, and it is only a matter of time before the products in the beverage industry are homogenized.
2021 is the year of the bubble water melee. In April, Coca-Cola launched AH!HA! Small cosmic bubble water. In May, Wahaha launched the "Angry Gel" sugar-free sparkling water. In June, Nongfu Spring withdrew four consecutive fruity sparkling waters featuring 0 sugar. In July, Pepsi Also launched "Bubly Smile Fun Bubble".
If the yuanqi forest at the product level can still cope with the "internet speed", it can be described as a "stuck neck" at the channel and supply chain level.
The supply chain laid by a number of beverage giants for many years quickly began to set up a defensive line, Yuanqi Forest faced multiple raw material supply cuts in 2021, and offline channel laying also encountered "close hand-to-hand combat" such as Nongfu Spring and PepsiCo.
According to the late Post report, the milk tea of Yuanqi Forest has just begun to find a foundry of Master Kong's affiliated enterprises. However, Master Kong and PepsiCo have reached a consensus that they will support each other in the supply chain, because of this relationship, Master Kong's senior management immediately issued an order to ask the company to stop OEM for Yuanqi Forest.
The Nongfu Mountain Spring's set card on the Yuanqi Forest was placed directly on the surface. In addition to requiring their dealers not to represent the products of Yuanqi Forest, they launched the "sniper war" of "God of Wealth from Heaven" during the peak season of beverages, and also began to comprehensively upgrade the Nongfu Spring Freezer in the off-season, and strictly guarded the channel.
Under the internal and external attack of the giant siege and organizational turmoil, Yuanqi Forest has been forced to change from "light assets + heavy marketing" to "heavy assets" model, and the road ahead seems to be even more difficult to go.
01 Growth slows down and new products perform poorly
"Guaranteed 50%-60% annualized growth over the next three years is enough, I don't ask for two or three times a year."
Tang Binsen, founder of Yuanqi Forest in 2021, said in an interview with LatePost that in 2022, Yuanqi Forest will return to a traditional company. The sales collection target set in 2022 is 10 billion yuan, with a growth rate of only 37%, and the growth rate has slowed down significantly.
Yuanqi Forest's sales collection in 2021 amounted to 7.3 billion yuan, which did not reach its target of 7.5 billion yuan. Compared with the explosive growth rate of 300%, 200% and 309% in 2018-2020, the growth rate in 2021 is about 170%, which does not meet the expectations of high growth rate.
Industry insiders believe that there are two main reasons for the abrupt end of the high growth rate of Yuanqi Forest: one is a single explosion, and the other is that the target of 7.5 billion yuan is too aggressive.
Although Yuanqi Forest has begun to build its own product matrix, when it comes to Yuanqi Forest, consumers still think of sparkling water.
According to the late Post report, of the 7.3 billion yuan of sales collection in 2021, sparkling water, as a phenomenon-level product of Yuanqi Forest, contributed 4 billion yuan in sales, accounting for 55% of the overall collection. The sales of alien energy drinks and milk tea in other product lines are 1 billion yuan, and the overseas business is only 100-200 million yuan. Sales of burning tea, milk tea and alien energy drinks are not ideal.
Yuanqi Forest currently covers 9 series of products, and in 2022, it will jointly launch coffee products on pre-sale with Never Coffee and enter the coffee track. Among them, as the full score of juice drinks, functional drink aliens are constantly updated as the main new products.
In September 2020, Yuanqi Forest aimed at the just needs of young people who are "delicious and nutritious", and launched a full score of "100% juice + micro bubbles". And in the Little Red Book, this product is pushed, but this product that claims that the juice content is 99% has a mediocre response on the Little Red Book, and even is positioned by some netizens as "the most difficult drink in the Yuanqi Forest".
According to a moment of commercial understanding, the full score uses a variety of concentrated juices, and the retail price of about 10 yuan per bottle is higher than most non-concentrated reduced juices on the market, and quality control is also difficult to guarantee. In the case that consumers do not buy it, in 2022, Yuanqi Forest also reduced the publicity of full scores on its Weibo, Xiaohongshu and other platforms.
Compared with the full score of the taste, the alien electrolyte water seems to be able to take on the responsibility of the "second growth curve" of the Yuanqi Forest.
The alien electrolyte water, which will be released in the spring of 2021, focuses on light sports and daily scenes, advocating drinking while exercising, working, studying, and playing. According to the "2022 Electrolyte Beverage Trend Report" released by Tmall, in the past year, alien electrolyte water ranked second in the list of Tmall functional beverage brands and first in the list of Tmall electrolyte beverages, which has surpassed the old brand Japan's BaominerLi Water Special and the United States' Gatorade.
However, the alien brand image of independent operation as Yuanqi Forest is still too young, with sales of 1 billion yuan in 2021, and it has not yet been able to stand alone.
It should be noted that the 7.3 billion yuan of sales collection amount that did not reach the target is only the amount that Yuanqi Forest collected from dealers in 2021, including discounts, bill terms and other factors, and is not the sales of the year 2021.
Food and beverage analyst Zhu Danpeng once revealed in an interview with the Observer Network that "the expectations of the capital side are very high, but the overall growth of Yuanqi Forest has not met expectations, so the overall performance pressure of Yuanqi Forest is very large."
According to the report of the Prospective Industry Research Institute, the overall domestic market size of soda water in 2019 is about 15 billion yuan, and it is predicted that it will reach about 32 billion yuan by 2025, of which soda sparkling water is one of the fastest growing categories.
The sparkling water market is already crowded. Since 2020, more than 30 sugar-free bubbles have come to the surface, including many leading enterprises in the beverage industry such as Coca-Cola, Pepsi Cola, and Nongfu Spring, as well as new tea brands such as Hey tea and Naixue's tea. The sparkling water market has been rapidly reorganized, which has also directly led to the high growth rate of Yuanqi Forest not reaching the expected high growth rate in 2021.
Blockbuster products are facing the risk of being copied, and new products are not yet on their own. In the face of the encirclement of giants and the strong and stable sales channels behind them, Yuanqi Forest is facing more complex market challenges than in 2021.
02 The dilemma of being encircled and suppressed, the challenge of expanding channels
"This year it is bound to eliminate the Yuanqi Forest Bubble Water!"
According to Sina Finance, Coca-Cola and Pepsi Cola jointly demonstrated in Yuanqi Forest. When the international giants spoke out, the domestic veteran enterprises Wahaha and Nongfu Spring also spared no effort to increase the size of the sparkling water track.
Where does the situation of "encirclement and suppression" in the industry come from?
In the product layout of Yuanqi Forest, it covers sparkling water, milk tea, mineral water, and energy drinks, and benchmarks more strong opponents in the market, such as Coca-Cola, Pepsi Cola, Nongfu Spring, Wahaha, and even Red Bull, Dongpeng Special Drink, etc.
As the catfish effect becomes more pronounced, when the chinese beverage market upstart Yuanqi Forest tears the mouth of the beverage market wider and wider, veteran players such as Coca-Cola, Pepsi, Nongfu Spring, and Wahaha quickly go down to open the siege.
"0 Sugar 0 Calorie 0 Fat" paired with "Happy Fat House Water", Coca-Cola with "the most important new product of the past decade" AH!HA! Small Universe has entered the Chinese market, and PepsiCo has also launched its first new sparkling water brand in the Chinese market - bubly smile fun bubble.
As Liangle and other domestic beverage industry giants began to launch sparkling water, the natural sugar substitute raw material erythritol involved in it also became the focus of contention. In the case that only a few enterprises in China can produce erythritol, the large demand for erythritol from other giants such as Coca-Cola, Pepsi Cola, Wahaha, and Nongfu Spring has led to a shortage of raw materials in Yuanqi Forest.
A beverage industry supply chain person once mentioned to Times Finance, "Since the beginning of last year, the supply of erythritol in Yuanqi Forest has been problematic, on the one hand, the market demand is too large, the production capacity is insufficient, on the other hand, it is related to the pressure of two le (Coca-Cola, Pepsi Cola) on suppliers." "Ternary Bio, the main supplier of erythritol in China, will stop providing services to Yuanqi Forest in 2021.
Compared with the supply chain system built by beverage industry giants such as "Two Music", Nongfu Spring, wahaha and so on for many years, many supply chain companies have signed numerous exclusive agreements with them, and the heavy dependence of these supply chain enterprises on the orders of industry giants makes Yuanqi Forest can only survive in the cracks.
In addition to being challenged in the supply chain of erythritol, Yuanqi Forest has also been hit in the supply chain of product preforms.
In May 2021, a beverage bottle preform factory refused to supply carbonated beverage preforms to Yuanqi Forest on the grounds that it was out of stock, and the manufacturer was the supplier of "Two Happiness".
In addition to the problems of products and supply chains that plague the Yuanqi Forest, it has also been encircled and suppressed by many parties in channel laying.
According to interface news reports, in early 2021, Xia Nongfu Mountain Spring launched the "Heavenly God of Wealth" activity and the Yuanqi Forest to engage in a head-on confrontation. Nongfu Spring issued promotional rules: dealers only need to display their own sparkling water in the refrigerated cabinet of Yuanqi Forest, and for each bottle, they will send a bottle of Changbai Snow mineral water priced at 3 yuan, capped with 48 bottles. Moreover, Nongfu Spring will allocate additional funds to subsidize the cost of this part of the promotion, which is not counted in the points of Nongfu Spring's cost to dealers.
According to nongfu spring's prospectus, as of May 2020, there were 2.43 million terminal retail outlets in nongfu spring, of which 1.88 million were in third-tier cities and below, accounting for 77%. Most of the Nongfu Spring dealers signed an exclusive cooperation, in the face of traditional brands such as Nongfu Spring and Wahaha, who have experienced in the sinking market and offline traditional channels, Yuanqi Forest began to lay smart cabinets in the second half of 2021.
According to the late Late Post report, Yuanqi Forest is ready to open up 100,000 smart cabinet points in 2022. According to vertical media FMCG reports, in the second half of 2021, Nongfu Spring spent 2 billion yuan to upgrade the terminal and fully promoted 4 and 3 freezers.
In the face of such an offensive, in december 2021, in the organizational structure adjustment of Yuanqi Forest, founder Tang Binsen said that he would put more energy into channels, sales management and product research and development. The founder personally grasped the products and channels, which also reflected that the life of the Yuanqi Forest was really not good.
Yuanqi Forest, which is under the siege of many parties, is intensively developing new products, building factories and laying terminal channels, trying to gain a firm foothold in the beverage market with independence. However, the heavy mode opened by the Yuanqi Forest, the pressure can be described as not small.
03 Heavy assets and heavy research and development, two legs walking pressure is not small
"The number of offline terminals is 1 million is the first step."
According to the surging news, Li Guoxun, vice president of Yuanqi Forest, mentioned in an interview that this figure means that the offline channel system covering the whole country of Yuanqi Forest has initially been completed.
In the face of a series of problems in the face of the supply of raw materials in 2021 and the termination of the factory, Yuanqi Forest began to build its own factory.
In October 2021, Yuanqi Forest announced that the strategy of "super city cluster + self-built factories" was initially completed, and 5 factories were completed by themselves, corresponding to the five major urban clusters in North China, East China, South China, Central China and Southwest China, focusing on beijing-Tianjin-Hebei, Yangtze River Delta, Pearl River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, Sichuan-Chongqing, and Central and Southern Lianghu Region, directly covering 700 million people.
Yuanqi Forest Factory, Photo/Yuanqi Blackboard Newspaper Public Number
This big step cost a total of 5.5 billion yuan, of which the total investment of the fifth self-built factory is 1 billion yuan, and the total annual production capacity of the factory after full operation is more than 5 billion bottles.
According to the official website of Yuanqi Forest, in March 2022, yuanqi forest's sixth factory in Taicang, Jiangsu Province, was also officially signed, introducing a world-leading fully automatic sterile carbonic acid production line.
As of March 2022, the number of self-built factories in Yuanqi Forest has increased from 2 to 6, and the number of suppliers has increased from more than 200 in early 2021 to 370. Li Guoxun said, "This marks the initial farewell of Yuanqi Forest to the embarrassing situation of the supply chain card neck. ”
To solve the production problem, Genki Forest began to fight back against the problem of sales. At the 2020 dealer conference, Tang Binsen proposed to launch 80,000 freezers and began to deploy quickly.
According to the Daily People report, in order to complete the expectation of putting 80,000 freezers by April 2021, Yuanqi Forest has increased its financial support to dealers, returning to take a 5-4-1 combination, that is, 50% of the qualified return, three or four months later, still qualified to return 40%, and finally the remaining 10% is offset with the deposit handed to the dealer by the retail terminal, and returned to the dealer after five years.
In addition, the motivation of personnel is also maximized. As long as a freezer is released, the salesman can get a reward of 200 yuan, and the supervisor can get a reward of 100 yuan.
In order to seize the traditional channels of supermarkets, convenience stores and mom-and-pop stores occupied by beverage giants, Yuanqi Forest promised to sell sparkling water at a price of 90 yuan per box, and the purchase price only needed 50% of the sales price.
Self-built factories and offline freezers have solved the problem of "card neck" in the Yuanqi Forest, but behind the bright layout is a huge capital investment.
According to the previous Yuanqi Forest in its official website mentioned that the 2021 revenue increased by 2.6 times over the previous year, and according to the 36Kr report, the revenue of the Yuanqi Forest in 2020 was between 2.7 billion and 2.9 billion yuan, and it can be concluded that the revenue of the Yuanqi Forest in 2021 is expected to be about 7.0-7.5 billion yuan, and the cost of a self-built factory accounts for about 13% of the annual revenue.
Faced with the situation of heavy assets and heavy research and development, Yuanqi Forest needs to focus on the problem of product homogenization.
According to its official website, Yuanqi Forest has also begun to gradually build a product matrix. At present, There are 9 series of products under Yuanqi Forest, namely sparkling water, milk tea, countermeasure lactic acid bacteria drink, alien electrolyte water, tea drink burning tea, plant tea drink fiber tea, plant milk Ao wood, mineral natural mineral water and Beihai pasture yogurt.
Li Bingqian, general manager of Yuanqi Forest Production Center, revealed to the 21st Century Economic News that as of September 2021, the research and development cost of Yuanqi Forest increased by 350% year-on-year, and the total research and development expenditure accounted for the highest proportion of beverage enterprises of the same size. In the past 12 months, more than 30 new beverage flavors have been added, and the product development cycle averages 5.5 months.
In the face of giant attacks, Yuanqi Forest can only quickly trial and error in various beverage categories, and rescue itself from the situation of difficult explosions. If the product matrix stays in the situation of high and low feet for a long time, it is bound to be difficult to go far.
Yuanqi Forest uses its own "Internet speed" to make multi-terminal breakthroughs, but heavy research and development, heavy investment and parallel also mean high risks. The fierce battle is still continuing, in the face of industry giants, Yuanqi Forest is only initially out of the situation of being controlled by people in terms of supply chain construction and channel construction. The Road to The Yuanqi Forest has only just begun, and it is far from time to celebrate.