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Genki Forest: a Chinese soft drink brand planning to tackle Coca-Cola
28Dec2020

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

“>14 billion RMB, and announced its plans to become the ‘Coca-Cola of China.

Based on the 11.11 sales data, Genki Forest ranked 1st in the soft drink category both in Tmall and JD. In this case study, we investigated how Genki Forest, an only 4-year-old brand, gained phenomenal success by looking into its market strategy and challenges.

designed by daxue consulting, Genki Forest’s Development History

Source: Goulian Securities, designed by daxue consulting, Genki Forest’s Development History

GENKI FOREST’s China market strategy

Compared to soft drink magnates in China like Coca-Cola and NongFu Spring, Genki Forest has no advantages in the production line, distribution channels and brand reputation. The reason why it can occupy Chinese soft drink market share is because of its strong market strategy which includes packaging design and pyramid promotion strategy.

Packaging: Neat, Japanese style

The target customer group of Genki Forest is the young generation who values product appearance. Japanese products, which are known to be high-quality while aesthetically pleasing, are very attractive to these consumers.  So, the Chinese soft drink brand designed neat Japanese style packaging to lead customers think it is a Japanese brand. Though misleading, this tactic of trying to pass as Japanese is not uncommon in China, another case is the Chinese retailer Miniso.

To enhance the Japanese image, it also invited KOL @Natto Grandma (纳豆奶奶) who lives in Japan and likes to share her life in Japan to endorse their ready-to-drink tea product. However, after Genki Forest gathered a following, it gradually stopped using these misleading methods to avoid being accused of plagiarism.

Natto Grandma’s Weibo, Recommend one of the Genki Forest’s products”

Source: Natto Grandma’s Weibo, Recommend one of the Genki Forest’s products”

Pyramid promotion strategy: the key to Genki Forest’s success

Genki Forest’s Pyramid promotion Strategy

Source: Daxue Consulting, Genki Forest’s Pyramid promotion Strategy

The pyramid promotion strategy is the dominating part of Genki Forest’s market strategy and the key to its success. By sponsoring variety shows and cooperating with celebrities, KOLs and KOCs, Genki Forest makes the most the bandwagon effect. The image below shows that every time the Chinese soft drink brand used the pyramid strategy, there was a remarkable increase in public interests of the brand.

Search volumes of Genki Forest and Coca-Cola

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

Celebrities & Variety Shows

To lead trends and create momentum, Genki Forest invites A-list actors and singers. For instance, Yuqi Zhang endorsed it after finishing a variety show called Sisters Who Make Wave (乘风破浪的姐姐) which made a phenomenal success in the women over 30 market.

 Yuqi Zhang endorsed GENKI Forest

Source: Genki Forest’s Weibo, Yuqi Zhang endorsed GENKI Forest

In addition, to build brand awareness, the Chinese soft drink brand has sponsored 4 popular variety shows so far, which include Me to Us (我们的乐队), Let’s Exercise, Boys (运动吧少年), The Irresistible (元气满满的哥哥), Youth on Record (青春在大地). The target audiences are the young generation which aligns with Genki Forest. And they all have a lively style which fits the soft drink brand’s young, energetic and innovative brand image.

KOLs

In addition, by cooperating with KOLs, Genki Forest benefits from their high-quality content and word-of-mouth marketing. The brand cooperated with internet sensation Li Jiaqi to promote its milk tea and sparkling water through live-stream broadcasting

KOCs

Finally, with the help of celebrities and KOLs, the Chinese soft drink brand can take advantage of the bandwagon effect to get countless in-person experiences shared by common users. On Xiaohongshu (RED), Genki Forest has over 20k posts.

Genki Forest’s brand promise: creating healthy soft drinks

Genki Forest has a brand promise of creating healthy soft drinks. Based on its promise, the marketing message is “0 sugar, 0 calorie, 0 fat”. Genki Forest uses natural sugar substitutes like erythritol to control its soft drinks’ calories. Following the country’s economic development, Chinese people attach much more importance to their health. Genki Forest’s relatively healthier soft drinks meet the market demand caused by this trend.

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 data to show its soft drinks are really “0 sugar, 0 calorie, 0 fat”.

Genki Forest’s distribution channels: the combination of offline and online

Genki Forest decided to develop both offline and online distribution channels from the beginning.

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

In addition, chain convenience stores have a standard management process. This streamlines purchasing and expedites the launch offline marketing. Also, having products sold offline in chain convenience store can creates a reliable brand reputation to customers, as they become familiar with the product through frequently seeing it on the shelves

For online, Genki Forest establishes a closed cooperation with Tmall. It joined Tmall’s marketing activities like Tmall’s Black Box, Super-Promising New Brands. It launches new products through the click-through rate and conversion rate in Tmall.

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

Strengths

Firstly, Genki Forest is considered an “internet brand”. An internet brand combines its brand culture with the internet and takes full advantage of the internet development in China. It uses the speed and breadth of information dissemination on the internet to improve its popularity. This is the basis of Genki Forest’s pyramid promotion strategy. Also, it uses the derivatives of the internet, the e-commerce and big data, to diversify its distribution channels. For Genki Forest, it builds its online distribution channel through Tmall.

Secondly, Genki Forest has a strong public relations capacity which can help it build great brand reputation and gain the trust of its customers. Recently, the Chinese soft drink brand recovered from a big mistake on its Tmall store. It published mini-sized milk tea but didn’t mention its volume when selling in bulk. At first, this caused a lot of negative feedback on ratings on Tmall.

Luckily, the brand had great crisis management by immediately apologizeing on all  official accounts and sent a free box of milk tea to each involved customer. 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, the Chinese soft drink brand apologized for its mistake

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

Weakness

Outsourcing production is one of the biggest weaknesses of Genki Forest as it can’t control the product quality and will have a higher production cost. Although it began to build its own factory in September 2019, it still can’t satisfy the market demand.

Secondly, it has not formed sophisticated pricing system The sparkling water is ¥5 for 480ml while Coca Cola is ¥3.5 for 500ml. Its milk tea is ¥9.8 for 450ml while the milk tea of Uni-President China is ¥5 for 500ml. The relatively higher prices of Genki Forest will have a negative influence on its sales in Tier 3 and 4 cities in China, potentially costing a great number of potential customers. On top of this, the retail prices of its products are unstable. Customers can find different prices in different convenience stores within a small area.

Lastly, Genki Forest 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 treated as deceiving consumers which might significantly damage its brand reputation.

Xinhua News Agency, daxue consulting design, how long can Genki Forest continue to go

Source: Xinhua News Agency, daxue consulting design, how long can Genki Forest continue to go

Opportunities

Genki Forest chose the right product lines, sparkling water and instant tea. Although the growth of Chinese soft drink industry became subdued in recent years, its market segment of sparkling water is still of the second largest volume. And its market segment of instant tea is full of opportunities. It will get an even bigger volume gradually as the result of Chinese people’s growing attention to health.

Chinese soft drink industry study

Source: Bexcel Management Consultants, Chinese soft drink industry study

Threats

The success of Genki Forest is perfectly imitable and substitutable. The Chinese soft drink industry doesn’t have obvious technical or market barriers to entry, and any brand with sufficient capital can imitate the pyramid promotion strategy of the Chinese soft drink brand. Even Genki Forest itself imitated Luckin Coffee partly by having multiple rounds of financing in order to gain adequate capital for marketing promotions.

In addition, Genki Forest is going to facing a fierce business competition in the sparkling water market. Chinese soft drink magnates and popular brands are starting to expand their product lines in sparkling water. For instance, Coca-Cola recently published a new sparkling juice drink called Appletiser; Yili Group established their own sparkling water; HEYTEA’s sparking water already entered convenience stores. Compared with Chinese soft drink magnates, Genki Forest has no price, production and distribution advantage.  And compared with popular brands, it only has equal or even less visibility.

Can Genki Forest maintain it success?

Genki Forest gained a phenomenal success mainly from its pyramid marketing strategy. It takes advantage of the rapid development of internet era in China. However, without a solid foundation, the Chinese soft drink brand will have to continue to innovate to keep gaining market share.

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About the Author

Allison

Allison is a marketing manager at daxue consulting. Graduating from the University of Minnesota and studying marketing and Chinese at Nanjing University, Allison has been quoted in the media on topics ranging from AI, social issues, tourism and pharmaceuticals.