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Genki Forest: a Chinese soda brand planning to tackle Coca-Cola

Founded in 2016, Genki Forest is a Chinese soft drink brand that specializes in sparkling water and instant tea. Due to the increased health awareness among Chinese people, Genki Forest’s relatively healthier products that are “low calorie” and less sugary have successfully catered to a substantial target market in China.

Genki Forest announced its plans to become the “Coca-Cola” of China in 2020. Its total sales from secondary dealers in 2021 amounted to 7.3 billion RMB (1.15 billion USD), following years of high-speed growth. In 2022, Genki has set a sales return target of 10 billion RMB (1.49 billion USD), assuming the growth rate will be slower than in previous years.

Based on 2021’s Single’s Day sales data, the Chinese soda brand ranked 1st in the soft drink category both in Tmall and JD. In this case study, we investigated how Genki Forest, an only 6-year-old brand, gained phenomenal success by looking into its market strategy and challenges.

Genki Forest’s major achievements
Source: Daxue Consulting and Double V. Training & Consultancy; F&B market in China report, timeline of Genki Forest’s major achievements

Genki Forest’s China market strategy

Compared to soft drink magnates in China like Coca-Cola and NongFu Spring, Genki Forest doesn’t have many advantages regarding production, distribution channels, or brand reputation. The reason behind its success is its marketing strategies, which include the packaging design and pyramid promotion strategy.

Genki Forest has an aesthetically pleasing, Japanese-style packaging

The target customer group of the Beijing-based soda brand is the young generation who values product appearance. Japanese products, which are known for being high-quality while aesthetically pleasing, are very attractive to these consumers.  Despite Genki Forest being a Chinese soft drink brand, it opted for neat Japanese-style packaging to induce customers to think that it is a Japanese brand. Though misleading, this tactic of trying to pass as Japanese is common in China, another case is the Chinese retailer Miniso.

Genki’s neat, Japanese style packaging.
Source: Genki Forest; Genki’s neat, Japanese-style packaging has led to issues with copyright infringements.

To enhance this “Japanese image”, it also invited KOL Natto Grandma (纳豆奶奶) who lives in Japan and usually endorses Japanese ready-to-drink tea products. However, after Genki Forest gathered a considerable following, it gradually stopped using these misleading methods as it was criticized for false advertising. The Chinese brand was also accused by many, including China’s CCTV news, of false advertising of a ‘zero sugar’ product. The company issued an apology statement and changed its advertising to “low sugar” instead. Moreover, doctors have initiated online conversations on the effects of artificial sweeteners, so netizens have become more suspicious of the ingredients in Genki’s drinks.

Strategy 1: Cooperating with different levels of influencers

Genki Forest works with different tiers of celebrities, KOLs, KOCs, and top celebrities, to boost the popularity of its soft drinks.

Pyramid-Promotion-Strategy
Source: Daxue Consulting and Double V. Training & Consultancy; F&B market in China report, Genki Forest cooperating with different tiers of influencers

China’s two-top KOLs, Li Jiaqi (李佳琦) and Weiya (薇娅), have both featured Genki Forest products in their live streams. Influential bloggers have also shared content about the Beijing-based brand and its products on Xiaohongshu (小红书) and Douyin (抖音), thereby reaching a huge pool of potential customers who closely focus on their well-being and are conscious about their health. At the top of the pyramid, there are top celebrities who are actors, idols, and singers. Genki has worked with Zhang Yuqi (张雨绮), who is considered to be a top-tier actress in China, and this partnership has created momentum and huge traffic.

Search volumes of Genki and Coca-Cola
Source: Baidu Index, Search volumes of Genki Forest and Coca-Cola

KOCs

At the bottom of the pyramid, KOCs, who are everyday consumers, share trustworthy and authentic feedback. Since they are everyday consumers, KOCs are relatable and their feedback is reliable to other everyday consumers. They are able to penetrate niche consumer segments and are usually deemed more credible than KOLs despite their smaller follower base. On Xiaohongshu (RED), the beijing-based brand has over 20k posts.

KOLs

Genki Forest benefits from KOLs high-quality content and large following. The brand cooperated with the internet star Li Jiaqi to promote its milk tea and sparkling water through live-stream broadcasting

Top Celebrities

The Chinese soft drink brand signed with Eileen Gu before the 2022 Beijing Olympics. After she won two gold medals and became an international sensation, Chinese netizens referred to the Beijing-based brand as the “biggest winner of the game” on social media. Brands have started to prefer signing with athletes over entertainment stars in China since they are deemed empowering and inspiring faces of the brand, as well as being more reliable. After the Kris Wu sex scandal, domestic and foreign brands are cautious about who they are signing with since PR crisis are common in China and can cause huge damage.

daxue-consulting-olympic-athletes-eileengu
Source: Genki’s official Weibo account, Eileen Gu (谷爱凌), Yiming Su (苏翊鸣), and Mengtao Xu (徐梦桃) promoting Genki Forest’s products

Strategy 2: Genki Forest’s brand promise to create healthy soft drinks

Genki Forest has a brand promise of creating healthy soft drinks. Based on its promise, the marketing message is “low sugar, low fat”.

In order to create healthy soft drinks that cater to the demand of consumers who are increasingly focused on health and weight control, Genki Forest utilizes natural sugar substitutes such as erythritol to control the sweetness and calories. At the time when Japanese brands launched low sugar products in the Japanese market, Genki Forest’s “0 sugar 0 calorie” marketing concept was already very developed. In fact, it was one of the first to use this marketing concept in China.

Furthermore, to prove its soft drinks are healthy, it cooperated with a KOL @Dad’s Test-Dad Wei (老爸测评-魏老爸) who used professional testing methods to produce scientific evidence to show Genki’s soft drinks are really “low sugar, low fat”.

Strategy 3: Investing in healthier and tastier ingredients

Many soft drinks emphasize scale and profit and would choose cheaper ingredients. For example, Coca-Cola uses aspartame instead of the healthier but costlier alternative meso-Erythritol. In contrast, Genki Forest stands out from competitors by investing in healthier and tastier ingredients. It replaces sucrose with meso-Erythritol and sucralose because these two ingredients contain 60-80% sweetness as sucrose does. Additionally, meso-Erythritol contains almost 0 calories.

Genki Forest vs Coca Cola
Source: Daxue Consulting and Double V. Training & Consultancy; F&B market in China report, Genki Forest emphasizes the quality of ingredients in exchange for a lower gross profit margin

From the comparison above, we can see that Genki Forest has a higher production cost, lower price of distribution, and in turn has a lower gross profit margin than Coca-Cola. The Chinese soda producer also has a list of ingredients that are carefully picked out, which are much healthier and tastier than those used by competitors. As a result, although Genki Forest earns less profit per bottle sold, its products have a high potential in a world where consumers are focused on the quality of ingredients.

Strategy 4: Distribution through both convenience stores and e-commerce

F&B market in China report
Source: Deloitte, designed by daxue consulting; F&B market in China report, the breakdown of retail sales of Genki Forest products sold in each channel

If we breakdown Genki Forest’s retail channels, we can see that offline retail such as convenience stores, and the sum of supermarkets, restaurants, school shops, vending machines, and so on, account for 35% and 39% of its total B2C sales respectively. On the other hand, e-commerce shops, including Tmall and JD flagship stores, account for roughly 25% of total sales.

Offline, the Chinese soft drink brand leverages the fast growth of chain convenience stores in China. Through convenience stores, Genki Forest becomes accessible to everyday shoppers like students and white-collar workers.

The advantage of chain convenience stores is that they have a standard management process allowing them to streamline purchasing and expedite offline marketing. Also, having products sold offline in chain convenience stores helps build a sound brand reputation, as customers become familiar with the product through frequently seeing it on the shelves. Only 1% of Genki’s sales come from large shopping malls.

In contrast, regarding its online distribution channels, Genki Forest establishes closed cooperation with Tmall. It joined Tmall’s marketing activities like Tmall HeyBox, a platform supporting their new releases.

Strategy 5: Overseas strategy

In May 2021, Genki Forest’s first canned sparkling water was introduced in the US. Being the birthplace of sodas, the US was in fact Genki’s first target for overseas strategy. White Peace and Lychee Fizzy have been Genki’s most popular flavors in the US. By December, the Beijing-based soda brand was included in the top 10 Amazon Best Sellers in Sparkling Drinking Water in the States. Additionally, it was included in the top 3 New Releases in Sparkling Drinking Water (the only Chinese soft drink brand to do so).

By 2022, Genki Forest’s products have entered 40 countries. The company has announced its plans to open overseas factories in the next 2-3 years and introduce foreign ingredients to the drinks – which could mean limited-edition flavors of drinks according to region. In addition, they have announced plans to carry out overseas mergers and acquisitions.

Genki Forest’s website reflects its aims to go global. The website features people of all colors and races enjoying Genki’s beverages, while the homepage during 2022 Pride Month features a rainbow flag and the slogan “Love is Love”. By using the code ‘PRIDE’, consumers are able to enjoy discounts off on “rainbow bundles”. Amidst this multicultural setting, one can immediately spot the Chinese origins of the brand from the slogan “Free Your Inner Chi. Explore a forest of flavor”, This pun encapsulates crucial elements of Genki’s branding. Chi, meaning positive energy or bubbles in Chinese and can be increased by consuming Genki Forest beverages.

How Genki Forest compares with other soft drink brands on the market

Strengths

Being an “Internet brand”

Firstly, the Chinese soft drink manufacturer is considered an “internet brand”. An internet brand combines its brand culture with new technologies and takes full advantage of the internet development in China. It leverages the speed and breadth of information dissemination on the internet to improve its popularity. Also, it utilizes the internet of things, e-commerce, and big data to diversify its distribution channels. Genki Forest built its online distribution channel through Tmall and has a private WeChat domain– a Direct to Consumer (DTC) channel.

Genki Forest’s CEO, Tang Binsen was also the founder of the successful game “Happy Farm” with half a billion users. He transferred the skills acquired from his gaming company experience to Genki Forest and is behind Genki’s digital advantage and efficiency.

Strong PR

Secondly, Genki Forest has a strong public relations capacity which helped it build a great brand reputation and gain the trust of its customers. In 2021, the Chinese soft drink brand released a mini-sized milk tea but didn’t mention its volume when selling in bulk on its Tmall store. This event caused negative feedback on ratings on Tmall.

Luckily, the brand proved capable of managing the crisis by immediately apologizing on all official accounts and sending a free box of milk tea to each customer involved. As a result, the customers were satisfied with the handling of the mistake and accepted the apology, minimizing the loss for the Chinese soft drink brand.

 Genki Forest’s Weibo and WeChat Official Account
Source: Genki Forest’s Weibo and WeChat Official Account, the Chinese soft drink brand apologized for its mistake

Weaknesses

Inconsistent pricing system

The relatively high prices of Genki Forest products would potentially affect sales volume in Tier 3 and 4 cities. Additionally, the Chinese brand doesn’t follow a strict pricing system, the sparkling water is RMB 5 for 480ml while Coca-Cola is RMB 3.5 for 500ml. Its milk tea is RMB 9.8 for 450ml while the milk tea of Uni-President China is RMB 5 for 500ml. Additionally, it has been reported that customers found different retail prices of the same Genki Forest product in different convenience stores within a small geographical area.

Misleading campaigns

When Genki Forest launched its milk tea (乳茶), it claimed that the product doesn’t contain sucrose, while it actually does. Although its public relations team promptly apologized for the false product information, the damage to its reputation was done.

Additionally, the brand has been accused of misleading customers to think it is a Japanese brand and plagiarizing the packaging of Fujiya and LUPICIA. These irresponsible marketing behaviors are deceiving consumers and might significantly damage their brand reputation.

how long can Genki continue to go
Source: Xinhua News Agency, Genki Forest accused of plagiarizing Japanese brands

Opportunities

The Chinese Soft Drink industry is growing. In December 2020, China’s soft drink consumption accounted for 37.7% of the country’s GDP and it is predicted to reach 70% in the next ten years. The growth rate of the Chinese beverage industry was 5-8% in the past 3 years. In addition, projections show that by 2030, about 2/3 of Chinese adults will be affected by general obesity. Genki Forest’s low-sugar, low-calorie products will fulfill the demand for healthier soft drinks.

Threats: A business model very easy to replicate

The soft drink industry is already a competitive industry in China as it doesn’t have huge technical entry barriers, and any brand with sufficient capital can imitate the successful strategies of other brands and potentially succeed. Genki Forest itself imitated Luckin Coffee partly by having multiple rounds of financing in order to gain adequate capital for marketing promotions.

Furthermore, the Chinese soda brand will be facing fierce competition in the carbonated soft drink market. The soft drink giant Coca-Cola recently created a new sparkling juice drink called Appletiser, Yili Group has established their own sparkling water line and HEYTEA’s sparkling water has already entered convenience stores. The Beijing-based soda brand must come up with creative strategies to be able to compete in the sparkling water market and keep its market share.

What brands can learn from Genki Forest’s marketing strategies

  • The Chinese soda brand has successfully earned its market share by having aesthetically pleasing packaging, leveraging the strength of social media, working with different tiers of KOLs, as well as investing in healthier and tastier ingredients to match customer needs.
  • However, Genki Forest relies on a business model which can easily be copied, thus potential competitors could pop up sooner or later.
  •  In addition, its misleading campaign risk seriously damaging its brand image.
  • To improve, the Beijing-based soft drink manufacturer should consider coming up with unique recipes or packaging that can’t be easily duplicated and publishing correct ingredient information to save itself from future scandals.

Learn more about emerging Chinese F&B brands

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