Author | Yang Yafei
Interview | Yang Yafei Qiao Qian
Edit | Qiao Qian, Yang Xuan
"If the performance is not real, you have to leave class."
On July 9, in a hotel in Nanjing, facing the sales backbone of more than 200 people in the audience, Tang Binsen, the founder of Yuanqi Forest, spoke in a serious tone. Some of the regional leaders at the bottom of the performance were gloomy, and they repeatedly beat their subordinates. They had just received a military order for the new quarter: a string of sales figures and a bright red battle flag.
For this cutting-edge company, which has been created by the Internet and the new wave of consumption, this is a sales conference that has been interrupted for 3 years due to the epidemic, and the timing is special and significant.
In the first half of this year, Genki Forest just finished a small turnaround: the main product sparkling water stabilized the situation, and the new brand "Alien" grew into the second curve. But no one really breathed a sigh of relief. The peak season is still there, and the third quarter at that time still determines life and death. Tang Binsen urgently needs to unite people and inspire fighting.
In 2022, Tang Binsen and Genki Forest had an exceptionally painful year.
Ye Licheng, the head of the original marketing center and head of the sales system, who had been in office for less than a year, was removed on suspicion of corruption, and Tang Binsen, who pulled him up, was also hit. A person familiar with the matter told 36Kr that when he invited the senior management team to dinner during the Spring Festival this year, Tang Binsen scolded himself three times in a row, saying that he "chose the wrong person."
This fuse exposed Genki Forest's inability to manage the sales force in previous years. "Tang Binsen's strategic ability is good, but he doesn't know sales, and he didn't spend much time in this area in the past few years." A person close to Tang told 36Kr.
For a fast-moving consumer goods company, when the flywheel of "sales" is stuck, production and inventory, distributors and channels, all aspects will get out of control. According to 36Kr, when the target was set at the beginning of last year, the confidence of the whole forest was high, but soon, the danger of high inventory and declining share of sparkling water followed.
After 7 years of entrepreneurship, Genki Forest is like a reckless teenager, with the methods and beliefs of the Internet into an extremely traditional industry, "breaking tradition" used to be a label and a medal. But after stumbling, the proud Tang Binsen finally realized that traditions are not all bad, and there is even much to learn.
On the second day of the Nanjing sales conference, Tang Binsen rushed to another city to visit He Boquan, the founder of Le Bai's. He Boquan experienced the protracted "water war of the century". In the past few years, he has also had a striking label: "Heytea Angel Investor".
The two generations of entrepreneurs talked happily, and Tang Binsen asked this senior for advice "in every detail".
"They talked from six thirty p.m. until 11 p.m." A person close to Mr. Tang said.
Trust in institutions, not people
The storm began with an executive corruption incident.
Yip was the Marketing Director of COFCO Southwest Region and joined Genki as Head of Sales for Southwest Region. Due to the outstanding performance of the region, at the end of 2021, Ye began to be in charge of the entire sales team of several thousand people, reporting directly to Tang Binsen.
At the beginning of 2022, Tang Binsen allocated a "special fee" to Ye Licheng to recover the backlog of goods in the channel. At that time, a former Genki Forest dealer noticed that it was obviously a new product sent by Genki, but it was about to pass 1/3 of the expiration date, which was close to the limit of the shelf life acceptable to retail channels.
This large amount of money was sent from the headquarters to the region, but the problem was not solved, and the used goods have been circulating in the market. There is only one truth: the money is being spent elsewhere.
"Gradually, the data of some third-party platforms can see that something is wrong, and Tang Binsen has also seen this in the internal communication community." A person close to Mr. Tang said.
By the time the East Window incident occurred, it was already June. According to 36Kr's understanding, Ye Licheng's amount of money involved is tens of millions.
Like most FMCG companies, Genki Forest's sales system originally adopted a "regional system". However, after Ye Licheng took over, on the grounds of higher efficiency and more favorable growth, he persuaded Tang Binsen to abolish the level of regional headquarters, and the headquarters directly faced each province and region, but the result of the "provincial system" was that people's personnel and financial power were more concentrated in him.
Another background to the corruption turmoil is that Genki has been recruiting people to break into traditional channels as quickly as possible, "expanding a group of people who are with him." Yu Mingqiu, the financial director of a number of FMCG giants, told 36Kr. These people often bring a group of "their own people" to join, laying hidden dangers for corruption in the local market later. At its peak, Genki's national sales team reached 6,000 people.
"I trust people very much, the underlying logic of the Internet is also to trust people, I want to bring this trust to the beverage industry, but I didn't expect something to happen." On the evening of April 26, Tang Binsen reflected on the media at an event in Xianning. This made him realize the need to "manage people with systems".
In the beverage industry, there are many ways to corrupt people, and there are many ways for large companies to "manage people".
Cheng Dong, a former KA channel distributor of Yuanqi Forest, gave an example to 36Kr: the company wanted to achieve 10 million sales and allocated 10 points of marketing expenses, but in fact, it only spent 8 points, and the people who passed the hand earned 200,000 yuan by corruption. The trick is to call a "trusted" dealer account, who returns the money. This is the most common "inflated fee".
"Collusion" is also a means. For example, in a hypermarket, a certain explosive product is made into a group purchase order at a promotional price of 1.9 yuan per bottle, but the goods are resold to the dealer at a price of 2.2 yuan, and the cost of the latter's normal collection is 2.5 yuan. Sales, purchasing, and distributors colluded, and the goods didn't even enter the store.
Large, established companies, such as Coca-Cola, install positioning systems in logistics vehicles to track the movement of goods, but it is still impossible to prevent them - even if the system shows that the goods arrived at the delivery point accurately, the real scenario may be that the goods turn around and are transferred to another vehicle and shipped elsewhere.
"It's easy to be greedy for small money, but big money faces many hurdles." Yu Mingqiu told 36Krypton. "It can't be said that everything is meticulous, but there are many framework things, especially it will constrain the business boss to form interest groups with subordinates and distributors in the local area."
The rotation of regional posts and frequent organizational structure adjustments common to large companies are all to avoid "taking advantage of the mountain as king". "You can't let one person determine the operation of the entire sales network for a long time." A distributor in the beverage industry for many years told 36Kr.
One solution of Nongfu Spring is to regulate dealer access with a "bidding system": when it comes to dealer adjustments, it needs to be signed by the big boss, and the business needs to give "clear reasons".
There are also means, such as third-party intervention. Yu Mingqiu told 36Kr that at the beer company AB InBev, a large part of the pricing power is in the hands of finance, and first-line sales are almost "executors". However, among local FMCG companies, the business often has an absolute say.
After Ye Licheng was removed, the Yuan Qi Forest immediately returned to the regional system. "From HR to internal audit, to business, it took about a quarter to digest this matter internally," a Genki executive told 36Kr, "Old Tang still believes in people as before, but pays more attention to the system." Genki also deliberately added senior management positions responsible for internal audit and discipline.
Corruption is a persistent problem that plagues many FMCG companies. People in the industry understand that small corruption cannot be eliminated and does not need to be eliminated, the so-called "water is clear, there is no fish".
But when corruption permeates such a high level, the harm is not simply money.
Difficult inventory and product lines
What does the number one sales of a company do when he decides to profit for himself and not the company?
"After Ye Licheng came to power, he changed all the people from the region to the bottom, and all dissidents were emptied." A Genki Forest dealer said to 36Krypton. "One of the phrases he often hangs on his lips is that he will bring his brothers to get rich together."
Fan Jun, the current head of sales of Genki, who was in danger, also confirmed this to 36Kr: When the subsequent anti-corruption storm began, the people who were suspended for inspection involved multiple cities and provinces, and "suddenly there was a leg missing."
The chaotic sales system directly affects performance. According to 36Kr, although the vitality forest sparkling water is still the first in the sparkling water category in the fourth quarter of 2022, its share in the soda category has fallen by nearly 2 points.
The chaos in the core link of sales has also aggravated the "inventory crisis" that was already fermenting.
The source of the metaverse inventory problem can be traced back to 2021. Before 2020, Genki Forest's products were manufactured by third-party OEMs. Soon, the high growth of sparkling water triggered the encirclement and suppression of giants, and the upstream collective shortage of sweeteners, preforms and other upstream collectives made Yuanqi Forest taste all the hardships and accelerated the pace of self-built factories in the second half of 2021.
At the end of September of that year, the fifth factory in Dujiangyan, Sichuan Province broke ground; At the beginning of October, the Hubei Xianning plant entered the installation and commissioning of equipment - at a cost of 5.5 billion yuan in two years, Yuanqi completed the preliminary layout of five self-built factories in one go.
A Genki Forest employee told 36Kr that its internal expectations for sales in 2022 are optimistic, so the production line is running at full capacity and producing according to "relatively saturated demand."
The upstream "stuck neck" problem was solved, but downstream sales were not as optimistic as expected, and the balance quickly tilted to the other side.
The lockdown at the beginning of 2022 has made matters worse. An employee of Genki Forest told 36Kr that under normal circumstances, April is the peak season for channel orders, "but at that time, some dealers' warehouses had a lot of backlogs of old goods." ”
Inventory turnover in the beverage industry is generally within 30 days, and in peak season it is as low as 20 days. According to a piece of information obtained by 36Kr, the number of inventory turnover days in Genki Forest exceeded 40 days in June last year, and although it fell for a while, the winter situation deteriorated again.
At that time, hundreds of thousands of boxes of products were labeled "red and black" - these products that were almost declared obsolete or had only one month left to expire, accounting for up to 20% of the inventory.
"It's overwhelming." At the anniversary internal meeting held in June this year, Tang Binsen said with emotion.
Inventory is not only plaguing Genki Forest, but dealers are also suffering from it. In order to save themselves, some dealers choose to buy their own plastic film machine, disassemble the whole box of drinks into 6 bottles and throw them in the O2O channel, and some dealers are crushed by the inventory and choose to leave.
Having been a fast-moving consumer goods distributor for more than ten years, he has never seen a brand with such a speed, "We normally make a brand, with a maximum annual growth of 20%-30%, and the growth of vitality is 3-4 times." ”
But when this ultra-high-speed growth is no longer there, when "not available" turns into "too much inventory", the business risk index of dealers also rises sharply.
Da Zheng told 36Kr that dealers have an account period for the distribution of goods in the channel, such as three months for the whole family to pay for the goods. Dealers also have to prepare 50% of the inventory, and put part of the advance payment on the Genki Forest account, "Without the advance payment, the goods produced will not be sent in the first place." "A business of 8 million yuan requires about 40 million yuan.
"In 2022, dealers have a lot of goods on their hands, and the capital turnover cannot be opened, so they will lose some." Another Genki Forest dealer told 36Kr.
Dealers do new brands such as Genki Forest, and they value high profits. However, in the past few years, Genki has raised prices many times, and profits have continued to thin. "In the past, I earned 10 yuan a box, I will do it hard, I will do it if I earn 5 yuan, and if I earn less, I can do it or not." Da Zheng said.
Da Zheng bluntly said that he is grateful to Genki Forest, but in 2022, he is determined to "get together and scatter" with Genki Forest.
Entering the third quarter, inventory problems have burned eyebrows. Throughout the fourth quarter, from sales to products, everyone struggled to "destock".
"The hardest thing is to sell the goods, and you can't lose too much." Fan Jun said frankly. He led the sales team to recycle goods from traditional channels such as mom-and-wife stores to modern channels such as convenience stores and supermarkets that sell well, and spread them to Internet cafes and chess and card rooms.
It is not easy to convince dealers to "sacrifice part of the profits" in the process. But everyone knew that "instead of spending until it expires, it is better to deal with it first, and then earn back the business later." ”
Reviewing this crisis, the inventory problem of Genki Forest is due to the inaccurate sales forecast caused by "choosing the wrong person", and the second is due to the imbalance of product structure caused by excessive pursuit of innovation.
Inventory management is a systematic task for FMCG companies. Promotions, locations, weather, and billing periods can all make sales forecasts "inaccurate."
Traditional large companies will spend a lot of money to train salesmen, go to the front line to collect real sales data as much as possible, and also hire third-party consulting companies. Yili, Coke, and PepsiCo used to spend tens of millions of dollars on data procurement every year.
Another important lesson is to respect the market and "not blindly introduce new products". Coca-Cola's decision to switch from "fat can" to "thin can" alone has been nearly 10 years from discussion to landing, and they are worried that subtle changes in the product will make consumers unaccustomed to it and not buy it.
Product structure imbalances also "fuel" inventories. "Can you imagine, sparkling water has a maximum of 15 flavors, and it's all sweet, and the inside fights." Fish, head of the Genki Forest sparkling water brand from Procter & Gamble, said to 36Kr. Long-tail flavors encroach on the channel resources and exposure of the main flavors, but it is difficult to carry sales.
From October to December last year, the core topic of the Genki Forest Strategy Conference was "adjusting the product structure". "The product line under a brand of a large traditional consumer goods company will be divided into core and more, core is the basic product, stabilize the large market business, more is the new layout, serve new demand." The sales contribution of the two is almost 8 to 2. Fish said.
Coca-Cola's core is a classic cola, more corresponding to diet cola, fiber+, vanilla flavor and lychee flavored cola; The core of Haifei is an anti-dandruff series, and more corresponds to oil control models, scalp hydration models, etc.
Now, Genki Forest Sparkling Water also has its own core and more. The proportion of the four basic flavors (white peach, summer black grape, caman orange and cola) increased from 50% last year to 70% this year.
Whether it is a conventional sales forecasting method or a conservative and cautious new product strategy, it is not the path of the "overnight rich" vitality forest habit. In a way, it took off by getting rid of these paths.
Managing product lines and inventory is a lesson that Genki Forest learns from tradition. After a series of adjustments, the inventory turnover of Yuanqi decreased from 31 days at the end of last year to 25 days in June, and the proportion of "red and black cards" reached a record low of 0.3%; By May this year, Genki Forest's market share had also recovered.
But this is perhaps the easiest lesson.
A more difficult sales system
In the end, the product is still the longboard of the vitality forest, and it needs to fight the fire more than sales.
In fact, Tang Binsen had previously realized that Genki's sales system was weak, but the early business ran too fast, covering up the problem. In July 2021, he approached Fan Jun, who was still managing sales at the online educational institution VIPKID, and invited him to join.
After Fan Jun came, he found that the management of this company was more extensive than he could imagine. "The sales talent development and performance appraisal system is very imperfect and reckless." Fan Jun told 36Kr.
This makes it difficult for Genki to retain people for a long time at that stage. According to a material obtained by 36Kr, in March and July 2022, the monthly voluntary turnover rate of Genki sales personnel reached 7.46% and 5.64% (the normal level should be within 3 points). The loss of front-line sales wastes a lot of work and makes dealers feel insecure.
Cheng Dong told 36Kr that in 2021, the business representative of Genki Forest changed three people within four months. "Newcomers don't recognize old debts, and sometimes the money we spend has nowhere to reimburse."
Since the middle of last year, one of Fan's core goals has been to "revitalize the organization" - to build a real "consensus-based" promotion and elimination mechanism for the sales team, "rather than to see whether a sales boss likes him or not."
It's not enough to manage your own team. The Chinese market is vast and the channels are complex, and the FMCG business is "cooked but not raw". The difficulty for the sales team is to manage the relationship with the distributor.
And this is the strength of traditional big companies such as Coca-Cola and Nongfu Spring in China for many years. How to divide labor, how to motivate, how to save costs, each link has a trick.
Coca-Cola has a highly rigorous distribution system in China. "Coke follows the 'Rule of 28,'" a former Coca-Cola employee told 36Kr. "Take the best 20% of the country's outlets in your own hands and leave the rest to distributors and wholesalers." Which store these 3.6 million outlets are delivered to, and what is the surname of the boss's wife, Coke knows. ”
Coca-Cola's canning business in China is divided between Swire and COFCO, and there are nearly 60 canning plants across the country. Coca-Cola has detailed data on the corresponding production and logistics costs in each region, and the market performance is good or bad. "This even allows them to give different prices to dealers in each region." The aforementioned Coca-Cola distributor told 36Kr.
Because the brand is strong enough, Coca-Cola only needs to use its "own" business personnel to dock channels, and dealers are more "reduced" to the role of distribution. In the COFCO system, distributors are more directly called ODPs, or "order delivery partners".
But Coke is Coke after all. Local beverage brands that are still in the climbing period can only rely heavily on distributors if they want to make big business quickly.
Before Genki, Wahaha and Farmer were representatives of the two-generation dealer model.
Wahaha adopts the "joint sales system", that is, it is handed over to the large distributor to be fully responsible. Nongfu Spring spent more than ten years exploring another way: dealers still recruit salesmen, but the salary was divided into two according to the basis and performance, and distributed by dealers and Nongfu Spring respectively. Such an "intermediate state" not only replicates the execution of cola, but also saves costs.
Today, Genki Forest is vigorously learning from farmers in the dealer model, whose product power and channel power are recognized as strong in the industry.
In November last year, Fan Jun, the head of sales of Yuanqi Forest, led the launch of a project codenamed "Ark Joint Construction" - Beijing, Shanghai, Guangzhou, Shenzhen and core provincial capitals, which are still deeply cultivated by Yuanqi as a channel; Third- and fourth-tier cities subsidize dealers to recruit co-construction personnel; In cities of the fifth tier and below, package and hand over to dealers for operation.
This means that the sales team will have limited energy and resources to lean towards the core cities. Fan Jun also used daily, weekly, and monthly meetings to stabilize the army's morale. According to 36Kr, the turnover rate of the Genki sales team fell back to about 2% this year, and the average revenue of front-line sales and executives increased by 25% quarter-on-quarter.
At the same time, clean up "low-quality outlets", rather lack than abuse. By the end of the first half of the year, Genki's active network rate exceeded 60%, a record high in recent years. Channels with "deviation" in previous results, such as mom-and-wife shops, have also returned to positive growth.
Some positive signals are finally being released.
Luck, or ability
Vitality can be revived, and there is also a great element of luck.
At the end of last year, the Yangkang tide after the unblocking made the alien electrolyte water sell, bringing a steep second growth curve from the sky to the vitality. "The aliens saved the Genki Forest." A person close to Genki executives said bluntly to 36Kr.
Part of this luck was also snatched by Tang Binsen.
The original initiative to make electrolyte water came from Uki, co-founder of Genki Forest, who insists on exercise and understands the needs of sports people. But three years ago it was still a niche product, and even the first place on the track was only sold well in the southern provinces. There are also internal objections to the project.
But Tang Binsen still voted in favor. After noticing the surge in electrolyte water searches, he immediately made several phone calls to Li Bingqian, the general manager in charge of production, and quickly vacated the factory's production line. The decision to build their own factory two years ago also gave them a head start at that moment.
The curve continues to rise. In the planning for the second half of this year, aliens share more than 30% of the growth of vitality. According to 36Kr learned that if there is no accident, the total sales of aliens this year will reach 2.5-3 billion, more than double last year.
But the story is not without regrets.
China's sugar-free tea market is growing at an alarming rate. In the past 12 months, the performance of Nongfu Spring's Oriental Leaf has soared by 114% year-on-year. Suntory China's main monolith, oolong tea, achieved 200% growth in the first half of this year. They are both in the billions range.
A Nongfu Spring dealer told 36Kr that this year, Nongfu Spring has formulated a separate achievement bonus and excess bonus for Oriental Leaves, "let everyone rush up", and many sales have increased their revenue by more than 50%. Due to the skyrocketing sales, another distributor received a notice from the farmer to sell at least 90,000 bottles a week in a single channel before providing poster resources. The voices of out-of-stock in the channel are even more up-and-forth.
In contrast, the original explosive product launched by Genki Forest in 2017, the sugar-free tea brand "Burning Tea", is a little lonely. To this day, whether it is revenue contribution or growth rate, this seed player with great potential has always lacked a sense of presence, and it is said that it has not met Tang Binsen's own expectations.
However, Tang Binsen is still optimistic about the cards in his hand.
Three years ago, when the Yuanqi Forest sparkling water was in full swing, there was a lot of internal tearing about whether new products such as milk tea could hang the brand name "Vitality Forest", and Tang Binsen was not sure at that time.
Now he has a clear answer - many successful beverage companies have only one brand, such as Pulse, Six Walnuts, Dongpeng, Wang Laoji, etc., even if not many new brands have grown, "Vitality Forest" and "Alien" alone have a huge space. He made an analogy at the Nanjing sales meeting, "The logic of a mother with multiple children is true, and it has been tested by the market." ”
He also shared a story of farming: the key to growing a good tomato is to adjust the land, find the right seeds, adapt to the sun, at least for three or five years. "We are the same, what this land sells, when to sell, the relationship with the shop owner, I hope everyone wants to understand, this is a slow job, we must do the land well."
On the second day of the Nanjing sales conference, the tense atmosphere immediately spread to the dealer Gu Yue. The regional manager came directly to the door and nearly doubled the sales expenses in the third quarter, "several million yuan immediately arrived." In the store, promotional activities such as "add 1 yuan more than one bottle" and "9 yuan two bottles" all have green lights.
"Rush to death." Gu Yue told 36Krypton. The sales team's intent could not be clearer: "Make sure you're alive first." ”
Genki Forest also wants to ensure that it can live longer and better.
Learning from tradition is not a bad start.
(Yu Mingqiu, Cheng Dong, Da Zheng, and Gu Yue are pseudonyms in the text.) ）