Can Yuanqi Forest's overseas expansion be replicated?

In 2021, the upsurge of new consumer brands will continue.

At the end of January, the Ministry of Commerce launched the "2021 National Online New Year Festival".

At the end of the event, the national online retail sales totaled 905.
76 billion yuan.

The total online sales of Yuanqi Forest exceeded 70 million in 20 days.

According to the channel data of its e-commerce platform, the 1.
25L blessing cylinder beverages purchased by households as a unit have been sold out 3 times.

Under the data iceberg, the trends emerging on the consumer side are even more interesting.

In the beginning of 2021, the New Year goods purchased online are very different from the traditional New Year goods.

Among them, nearly 50% of Moutai, Yuanqi Forest, mobile phones, and sweeping robots were bought by the post-90s.
The sales of the New Year’s goods are showing a trend of younger, healthy, and branded development.
"Generation Z" has become the main force supporting new consumer brands.

This consumption boom started four years ago.

For example, Huaxizi in the beauty field, Perfect Diary, Wang Baobao and Zhong Xuegao in the food field, and the protagonist of this article-Yuanqi Forest, all started at this node in 2017.
force.

It is worth noting that many new consumer brands are accelerating the process of brands going overseas, and the vitality forest is naturally among them.

Tang Binsen, the founder of a "sugar-free" wind, obviously wants to replicate the logic of domestic popularity and promote internationally.
The beverage giant launched a challenge.

His thoughts were revealed in a TVC at the end of last year.

In the last 10 seconds of the commercial, the background music gradually came to an end.
In the center of the screen, there is a throne stacked by layers of Coca-Cola plastic bottles.

Vitality Forest TVC

Image source: "Dare You Dare" Promo Video of Yuanqi Forest

According to industry analysts, the artistic logic of Yuanqi Forest’s advertisement is a classic tribute to the innovator Apple’s challenge to the monopolist Microsoft in 1984.

Starting from this advertisement, the story of Apple and Microsoft mocking each other for several years has slowly unfolded.

For Yuanqi Forest, the propaganda film of its own drink imitates the advertisement of technology products, and the important reason lies in Tang Binsen's Internet background.

The wave of new consumer brands is fierce.

As one investor said, "It doesn't matter if you don't understand young people, just buy a company that understands young people.
" If you want to go overseas and become China's "Coca-Cola", what is the chance of success for the brand of Yuanqi Forest?

01

01

How to break out of the red sea of ​​beverages

How to break out of the red sea of ​​beverages

To see through the overseas deployment of Yuanqi Forest, we must first understand the logic of its popularity in the domestic market.

Among the many consumer products, the beverage industry is undoubtedly the market with the most obvious Matthew effect.

Most of the beverages displayed in the freezer are controlled by several giants.

So, why can the vitality forest fight out in the Red Sea?

The reason lies in the particularity of the other side of the beverage market and the different tastes of consumers, leading to opportunities for corner overtaking in every sub-category.
Sugar-free sparkling water is the breakthrough point of the vitality forest.

"The beverage market may be a rare trillion-level market in China," the founder of Xiaoma Song Strategic Marketing Consulting once said in an answer to Zhihu.
"Not only is the market capacity huge, there is no oligopoly, and it is not like liquor.
It is subject to a lot of policy control like cigarettes.
"

Therefore, after overseas giants such as Coca-Cola and Pepsi entered China, domestic brands such as Nongfu Spring, Master Kong, and Wahaha can still find opportunities for survival and even expansion in categories such as packaged drinking water and juice.

But what can also be clearly felt is that for many years, the beverage industry has not emerged a very hot new brand.
A report from Euromonitor Data shows that China is the world’s fastest-growing soft drink market, but the industry concentration is low.
, Most of the brands are in different categories.

Data show that the top three companies in the domestic soft drink industry in 2019 are Coca-Cola (9.
1%), Tingxin (8.
0%), and Yangshengtang (7.
2%).
In addition, there is a certain gap in the market share of domestic top local brands compared with local brands in Japan, South Korea and other countries.

2019 China's soft drink industry pattern analysis

Image source: Foresight Economist APP

The above report pointed out that the industry concentration of each category is relatively low, and emerging brands still have product differentiation opportunities.
From this point of view, Yuanqi Forest does not seem to be in line with the market development trend predicted by the report.

In the carbonated beverage market, Coca-Cola and Pepsi jointly accounted for 90.
8%.
Behind the market share lies the brand advantage that Liangle has established for a long time.

As the crystallization of the wisdom of the modern industrial system, what makes Coca-Cola's great success is actually the "brand value" established in the past one and a quarter of a century.
Even if someone holds Coca-Cola's formula, it cannot compete against its huge Production scale, terrible sales system.

Analysis of China's carbonated beverage industry pattern in 2019

Image source: Foresight Economist APP

The rise of Nongfu Spring, Master Kong, and Wahaha can also be reversed by this logic.
Explosive items form barriers.
The huge marketing system is an important factor for these drinking companies to maintain their competitive advantages.

However, the development of the industry is inseparable from changes in the general environment.
With the popularization of health concepts, consumers' awareness of sugar-sweetened beverages has gradually increased, and the demand for sugar-free and low-calorie products has gradually promoted a huge market.

Yuanqi Forest has found all of these points.
Although there is no sugar and zero calories, the sparkling water has the taste of carbonated beverages, which deeply implants the brand image in the hearts of consumers, and category selection and product development are the foundation for brand success.
.

Along the direction of zero sugar beverages, the early Yuanqi Forest kept trying and developed a variety of products.
An episode is that in 2017, a batch of products from Yuanqi Forest failed to meet the company's internal quality inspection standards.
The final batch of goods was completely destroyed until the development of burning tea and soda sparkling water was successful, and Yuanqi Forest became an instant hit.

After taking the first step, Yuanqi Forest did two more things:

After taking the first step, Yuanqi Forest did two more things:

First, as an online celebrity brand, it focused on traditional supermarket channels from the beginning.
More precisely, it is the freezer of major chain convenience stores, and the audience of convenience stores is highly consistent with consumers of sugar-free beverages.

You must know that sparkling water is not new in the Chinese market.
The two sparkling waters under Nestlé, Saint Pellegrino and Paris Water, both occupy a certain market share.
However, Nestlé pays more attention to high-end catering B2B channels.
In the retail channel, there are basically only imported supermarkets and some large-scale supermarkets.
Later, the market expansion was limited to high-end bars and Starbucks chain stores.

In the early years, Coke Zero completed the cultivation of consumers’ awareness of sugar-free beverages.
However, the main ingredient of Coke Zero is aspartame, and Genki Forest chose erythritol because of its sweetness with sucrose.
Similar, but the cost is also higher.
Therefore, Yuanqi Forest cuts in from the convenience store, and at the same time seizes the two gaps in the bubble water market and young people.

Second, on the online channel side, Yuanqi Forest also pays attention to the marketing of target user groups, through naming variety shows for young groups, and marketing on social media such as Xiaohongshu and Weibo.
There are many related product reviews and videos.
With more than a thousand, Yuanqi Forest has been able to circle a large number of user groups and precipitate brand value.

The data shows that in 2018, the online proportion of Yuanqi Forest reached 60%-70%.
Compared with traditional brands, the number of fans in the flagship store of Yuanqi Forest Taobao's official website has reached 5.
03 million, surpassing the 1.
07 million of Nongfu Spring, 940,000 of Master Kong Drinks flagship store and 737,000 of Coca-Cola.

At the same time, many social platforms are also working hard to shorten the path between consumers obtaining information and purchasing products.
Consumers may click on the page links to buy grass-growing products when they browse the products of Yuanqi Forest.

As He Yu, the managing partner of Black Ant Capital, who invested in Yuanqi Forest, said, "Many people think that the life cycle of new consumer brands is relatively short.
In fact, once new consumer brands take the lead in a certain vertical category with user insights and product iteration capabilities, The next step is to build barriers.
The logic is to consolidate first-mover advantages and occupy core scarce resources.
"

The synergy of channel innovation and marketing innovation has enabled Yuanqi Forest to rise quickly and continue to extend the life cycle of its products.

02

02

Copy play to go overseas

Copy play to go overseas

The lens has been pulled to overseas markets, and news of the Yuanqi Forest brand going overseas became intensive in the second half of last year.

On December 17, 2020, Yuanqi Forest announced that it had recruited Liu Zhen, former senior vice president of corporate development in Toutiao, to be responsible for the overseas business of Yuanqi Forest.
Liu Zhen has nearly ten years of work experience in Silicon Valley and has helped many well-known companies realize overseas business layout.

At the same time that the personnel changes were announced on the same day, Yuanqi Forest also exposed its overseas strategy.
It established a separate overseas business department.
On the Tmall overseas platform, Yuanqi Forest’s overseas sales in the past three months increased by 69% year-on-year and sold to 40 countries around the world.
And region.
In the previous year of 2019, the caliber of Yuanqi Forest's export to overseas markets has always been dozens of countries around the world.

Fengshang Capital stated that Yuanqi Forest will not begin its internationalization process until 2020, but its products have been sold in some foreign supermarkets in 2018, especially those frequently visited by Chinese students.
Because the Chinese business sense of smell is relatively sensitive, they feel that this brand drinks well in China, and it will be sold abroad immediately, and gradually has a large audience in the foreign student market.

In terms of specific strategic actions, Yuanqi Forest has the most intensive layout in the Southeast Asian market.
In Tang Binsen's view, the overseas market is divided into three major markets at most, one is China and Southeast Asia, the other is Japan and South Korea, and the rest is Europe and the United States.
Because of geographical and cultural factors, the development cost of Southeast Asia is obviously lower.

In fact, the health value of Yuanqi Forest has gradually been recognized by overseas markets.

In August last year, the Health Promotion Board of Singapore (HPB) approved the use of the "Healthier Choice Symbol" (HCS, or Healthier Choice Symbol) logo for Yuanqi Forest Drink.
According to reports, the Health Promotion Agency, a subsidiary of the Singapore Health Commission, began to implement the "Healthy Choice" logo in 2001.

In order to control the occurrence of diabetes and obesity, in October 2019, Singapore officially became the first country in the world to ban the advertisement of high-sugar unhealthy beverages.

Just like the expansion logic in China, as early as March 2020, Yuanqi Forest was deployed in Singapore’s major supermarket chains NTUC, Sheng Shiong, e-commerce platforms Lazada, Shopee and other channels.
At the same time, it also found Singapore’s 711 convenience store for strategic cooperation.

The report also revealed that Yuanqi Forest has also entered the Malaysian market, selling products through offline supermarket convenience stores and online emerging export e-commerce platforms.

"Thailand and Taiwan will be the next target markets," said Benny Wang, head of business development of Yuanqi Forest's Southeast Asia business, in the report.
However, this goal is quite difficult.
The former does not yet have a mainstream e-commerce platform, and the latter is Taiwan.
In the hinterland of local drinking companies, the status of Unity and 711 is hard to shake.

For Yuanqi Forest, the positive point is that the marketing trend of Internet celebrity brands is not limited to the domestic market.
At a deeper level, games such as social fission, short video, and live e-commerce have been played by Yuanqi Forest.
It can be said that such a marketing method is also an important prerequisite for domestic products to surpass international brands.
It takes time to test.

The above-mentioned executives said that the target consumer of Yuanqi Forest is the same as the target audience of TikTok, and the company is currently evaluating how to market on TikTok to attract consumers in Southeast Asia.

Sorting out its layout in mainstream social media marketing, the author found that Yuanqi Forest has opened three Facebook accounts in Singapore, Malaysia, and Cambodia in the Southeast Asian market.

In the Cambodian market with the smallest capacity, Yuanqi Forest cooperated with the local MINISO in August last year, and launched the product on the official flagship store of MINISO established on the Cambodian e-commerce platform LaRue.

Propaganda poster of Yuanqi Forest in Cambodia market

Image source: Vitality Forest

However, the marriage with MINISO did not seem to have enabled Yuanqi Forest to provide blessings.
LaRue's platform sales were difficult to pick up.
Later, Yuanqi Forest cooperated with Cambodian local online celebrity studio 8mm Online and entered the TikTok platform as a brand.
The total number of fans on the platform exceeds 500,000.

And on the picture social platform Instagram, the play style of Yuanqi Forest is obviously also following the road of Xiaohongshu, using the celebrity effect of Ins to drive brand value.
At present, the scope of its promotion is only in the US market.
After all, the difference between Ins and Xiaohongshu is that Ins still adheres to a single mode of picture sharing.
It is not as good as Xiaohongshu notes that have video, text and other forms to choose from, and the fission method is different.
.

Yuanqi Forest's brand promotion on Instagram

Image source: Instagram@malorieyagelski

From a comprehensive perspective, the brand of Yuanqi Forest is still in the stage of gaining momentum.
With the implementation of the domestic factory supply chain, independent production capacity may accelerate the potential of Yuanqi Forest to build a brand.

03

03

The way forward for new consumer brands to go overseas

The way forward for new consumer brands to go overseas

Yuanqi Forest's brand going overseas is just a microcosm, providing more possible models for the overseas expansion of domestic brands.

The confidence that new consumer brands can go overseas is that while their products are sufficiently competitive, they can find the best channels and spend the least money to influence the most consumers.
This is the core principle of the consumer goods industry in the Internet era.

This logic has been verified in the past year.
According to the "Domestic Brand Power Development Report" released by Giant Engine, 74% of respondents have a better impression of domestic brands in 2020.

The trust of Chinese consumers in domestic brands has increased significantly, and the belief in domestic consumption has become increasingly firm with the continuous growth of domestic brands.
The report shows that cheap prices are no longer the primary driving factor for Chinese consumers to purchase domestic products, and the impression of reliable quality of domestic products has been deeply rooted in the minds of Chinese consumers.

At the same time, the vocabulary exclusive to imported goods in the traditional impression of trendy design and high technological content has gradually become the label of Chinese product brands in the minds of consumers.

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