Cola is angry again: a 28-year siege

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The production process of carbonated beverages is very simple, and it is done by injecting carbon dioxide into sugar water under pressure. Interestingly, Coca-Cola and Pepsi (hereinafter referred to as “The two colas”) are the two giants of carbonated beverages in the world.
Just like a bottle of Coke, it has a lot of gas, as long as anyone loosens their caps, they will sizzle out.

According to media reports, at the beginning of 2022, “The two colas” released ruthless words, “This year is determined to take down Genki Forest.” “In 2022, there will be no more Genki Forest sparkling water on the market”.

A downstream distributor of Coca-Cola told “Most Talk” that they did hear the wind, “But at present, Coca-Cola has not made any specific actions internally. Recently, there was an internal meeting to introduce new products, but it has not yet been carried out. Large-scale distribution.”

In fact, the hostility of The two colas to Genki Forest has been pervasive in the market for some time. Since 2021, it has been rumored that the production of Genki Forest will be suppressed by The two colas through the control of the upstream supply chain. The long-dormant asset-heavy model of this young brand came to the fore ahead of schedule, adopting the approach of “self-built factories + investment in supply chains” to build its own moat.

Of course, these methods are very heavy, and they will inevitably test the commercial operation space of Genki Forest. A beverage industry distributor told “Most Talk” that in response to changes in the outside world, Genki Forest has adjusted the relevant policies for distributors this year.

In fact, the emotions and decisions of The two colas are not difficult to understand. Douglas Daft, the former president of The Coca-Cola Company, believes that “Coca-Cola is and will always be at the center of local business.” For ten years, this sentence is actually their program of action –

Attack, in order to occupy the commercial center; attack, in order to prevent others from occupying that position.


The siege against Chinese beverage brands has long been The only survivor is Wahaha

This is not the first time The two colas has launched an action against Chinese beverage brands. As early as 1994, the siege had already been launched.

At that time, despite returning to the mainland market for more than ten years, The two colas had not fully opened the Chinese market. The main reason is that there are already many local soda brands in China. They not only occupied the minds of consumers, but also mastered the sales channels. In particular, Tianjin Shanhaiguan Soda Factory, Shenyang Bawangsi Soda Factory, Wuhan Beverage No. 2 Factory, Beijing Beibingyang Food Factory, Guangzhou Asia Soda Factory, Laoshan Soda Company, Chongqing Tianfu Cola Group Company and Shanghai Zhengguanghe Soda Factory, which are known as the eight major soda factories .

These soda factories have a long history. The earliest one, Shanghai Zhengguanghe, was established in 1864. By 1983, the sales of the eight soda factories accounted for 42% of the national total.

Of course, each of the eight major soda water factories, taken out individually, cannot match The two colas in all aspects. Therefore, under the background of encouraging foreign investment at that time, each company opened its doors and was willing to set up a joint venture with The two colas. The original intention was to exchange technology for the market, so as to make the national brand bigger and stronger.

Tianfu Cola, which started in Chengdu, Sichuan, is the first domestic cola in China. In its heyday, Tianfu Cola had 108 joint ventures in China, with an annual sales volume of more than 200,000 tons and a profit and tax of more than 70 million.
In 1994, Coca-Cola acquired the second factory in Wuhan, and the soda in the second factory was quickly frozen. After only five or six years, the once famous second factory soda was announced to stop production. And Coca-Cola quickly completed the comprehensive distribution of the regional market with the help of the channel of the second factory.
Similar things happened in Tianjin Shanhaiguan, Shenyang Bawang Temple, Beijing Arctic Ocean, Guangzhou Asia and Qingdao Laoshan. Since then, seven domestic soda factories have fallen into a bloodless business battle. This is a heavy and tragic stroke in China’s business history, known as “The two colas flooded the seven armies”.

In that era when it was almost monopolized by The Two Colas, the only survivor, Shanghai Zhengguanghe, had a difficult time, and soon fell into the market competition.

Oracle CEO Ellison once had a market philosophy: The best way to eliminate a competitor is to buy it. In that era of poverty and weakness in China, this market philosophy was widely used. In 1994, the 40-year-old Chinese toothpaste was acquired by the daily chemical giant Unilever; the vitality 28 washing powder, which was a household name in the 1980s and 1990s, was acquired by the United States in 1996; , was acquired by Johnson & Johnson in 2008…

As far as the beverage market is concerned, Robust was once determined to be China’s Danone, but in 2000 it was controlled by France’s Danone. Huiyuan Juice, which has been fighting with international giants for many years in the juice beverage market, finally declared bankruptcy in July 2021, ending in tragedy.

Now it seems that only Wahaha is the survivor of this torrent of times. After a three-year trademark dispute with Danone, Zong Qinghou took back the trademark rights of Wahaha, thus achieving today’s beverage empire


The two colas' spearhead seems to have a new target

Today, the spearhead of The two colas seems to have a new target – Genki Forest, a young company that specializes in user insights.

In fact, The two colas’ fear of Genki Forest is not entirely unreasonable. At present, this emerging beverage manufacturer has already revealed its strengths. Founded in 2016, Genki Forest doubled its valuation in just 5 years and became a new unicorn with tens of billions of dollars. At present, Genki Forest’s product line covers almost the entire beverage industry, including carbonated beverages, fruit juice beverages, tea beverages, functional beverages, mineral water, and even dairy products, but objectively speaking, its flagship product is still 0 sugar as the core selling point fruity sparkling water.

In fact, zero-sugar beverages, such as Coca-Cola’s Coke Zero, had been on the market for a long time before the launch of Genki Forest sparkling water, but Coca-Cola probably didn’t realize that zero sugar would be a big hit in the market, so it didn’t target This concept makes a large-scale marketing campaign.

Therefore, when Genki Forest sparkling water was launched with the concept of 0 sugar and 0 calories, it immediately defined the market segment of 0 sugar sparkling water, and positioned itself as a leading brand in this segment. This zero-sugar beverage first captured the minds of the health-conscious Gen Z group with widespread body anxiety.

According to public information, in 2021, Genki Forest products have covered more than 30 provinces, municipalities and autonomous regions across the country, and exported to 40 countries including the United States, Japan, and Singapore. On Double 11 in 2019, Genki Forest sold 2.26 million bottles and won the first place in the water drink category. For the first time, the sales of beverages on the whole network surpassed Two Cola to become the second place; on Double 11 in 2020, Genki Forest sold more than 20 million bottles. The total sales volume ranks first in the water drinks category of Tmall and Jingdong. It is not difficult to see that the sudden emergence of Genki Forest is an extreme application of brand positioning methodology. In fact, these methods have already been verified in the process of Coca-Cola and Pepsi’s love and killing, and even the routines to seize the minds of young people are similar. Pepsi was born in 1898, and the first advertisement for Coca-Cola appeared in the Atlanta Journal in 1886. PepsiCo has long faced a situation where it is a latecomer to the cola market and its competitor is the soft drink leader. As the book Positioning states, “The first brand to enter people’s minds typically has a long-term market share twice that of the second brand and four times that of the third brand, and this ratio does not change easily. “But Pepsi has found a consumer group that is not precisely targeted by Coca-Cola, that is, young people. Because of its long-term competitive advantage, Coca-Cola has long been a national beverage brand in the United States, and it is impossible to specialize in the minds of young people. At the time, Coca-Cola was 195ml per bottle, while Pepsi was 335ml per bottle, and both cost the same. So Pepsi took aim at this weakness and launched an advertisement imitating the British hunting song “John Peel”. The lyrics sang: “Pepsi hit the prey, it’s 335ml, it’s good, you can buy it for five cents. Two servings, Pepsi is your choice.” The “five cents for two” strategy hits teens, after all, when it comes to snacks, kids generally think quantity is more important. Due to economic pressure, Coca-Cola could neither cut prices nor destroy and repackage beverage bottles. As a result, Pepsi-Cola successfully seized the Coca-Cola market with this excellent marketing campaign.

Later, Pepsi also took this positioning to the extreme. Its slogan “The Choice of a New Generation” is aimed directly at the young market. In order to capture the hearts of this generation, it has spared no expense to hire the super-popular idol Britney Spears as its image spokesperson. In China, Faye Wong, Aaron Kwok and Chen Huilin, who are most popular among young people, appear in the advertisement. The slogan “I wish you Pepsi” is deeply rooted in the hearts of the people. Over the years, a war for the minds of consumers has continued between The two colas. The most classic is the advertising war that serves as a “stepping stone” metaphor. PepsiCo once launched an advertisement in which a little boy bought a drink in front of a vending machine. Because he was not tall enough to reach PepsiCo, he first bought two bottles of Coca-Cola to stand up. After the purchase, the little boy left contentedly, leaving the two bottles of Coca-Cola in place. The implication is that Coca-Cola should only be used as a stepping stone. Coca-Cola immediately launched a corresponding advertisement to fight back. It was also a little boy who bought Coke, and it was also out of reach. However, this time, the stepping stone became Pepsi, and in the end, the little boy put Pepsi back in its original place. Coca-Cola wants to express that customers love Coca-Cola more, and Coca-Cola consumers are more qualified. Roger Enrique, the former CEO of PepsiCo, once commented on the relationship with Coca-Cola: “The war between the two must be seen as a protracted war without gunpowder. Without Coca-Cola, Pepsi-Cola is unlikely to become a A creative, nimble competitor. The more successful Coca-Cola is, the sharper we must be. And across the trenches, I’m sure the people at Coca-Cola will say that no one has contributed more to The Coca-Cola Company’s success today than PepsiCo.”


The rise of Genki Forest, for The two colas Not all bad

Like Pepsi’s challenge to Coca-Cola, the rise of Genki Forest is not all bad for The two colas. When 0-sugar sparkling water became popular, the entire sugar-free beverage market also ushered in an explosion. The “2021 China Sugar-Free Beverage Market Trend Insight Report” released by the Chinese Academy of Sciences shows that the market size of sugar-free beverages in 2020 will reach 11.78 billion yuan, a seven-fold increase from 2014; Double the size; in 2027, the market will continue to climb to 27.6 billion yuan.

In this explosive growth market, almost all beverage giants have already entered the game. In February 2021, Coca-Cola also introduced sparkling water AHA into China, named “AH! HA! Small Universe”. Coca-Cola’s shift has produced relatively good results. According to Zhan Kunjie, chairman and CEO of The Coca-Cola Company, “the Chinese market grew strongly last quarter”, “especially the zero-sugar Coca-Cola, which doubled compared to the fourth quarter of 2019.” Other beverage brands are also running in and besieging Genki Forest. In June 2021, Pepsi launched the sparkling water “bubly smile fun bubble”, and Nongfu Spring also launched its own soda sparkling water, which also created an annual sales volume of more than 600 million yuan. In the same year, Wahaha launched a new product “Little Light Smoked Soda Sparkling Water”; in June, it made another effort, not only its beverage brand KellyOne launched the sparkling water “Angry Boo Boo”, but also invited Wang Yibo as a spokesperson for publicity. Going back, in 2020, HEYTEA and Nai Xue’s tea have also launched bottled sparkling water drinks. The launch of giants and new consumer brands has directly led to the squeeze on upstream production capacity such as raw materials and production lines. For example, the price of erythritol, which is an important raw material for 0-sucrose sparkling water, has risen rapidly recently, and the supply of production capacity is very tight. International giants will even rely on their own size advantages to overwhelmingly plunder upstream resources, or directly cut off upstream supply with tough means of competitive exclusion.

According to 36Kr report, at the beginning of 2021, the boss of a certain international beverage giant personally called the cooperative foundry and asked all the other factories producing Genki Forest products to stop work. By May of that year, even the preform factory that supplied Genki Forest with carbonated beverage bottles had been cut off. Under the pressure of the huge demand from the giants, the weak domestic brands can only find another way out. At the end of February 2022, Genki Forest’s sixth self-built factory will land in Jiangsu, focusing on the Yangtze River Delta region, with an estimated annual output value of 2.4 billion after it is put into operation.

Many newly entered sparkling water brands started as OEMs, and as the sales volume increases, companies will establish more stable own production capacity. But the supply cutoff made Genki Forest make up its mind to strengthen its self-built factory. Since 2020, Genki Forest has built its own factories in Chuzhou, Anhui, Zhaoqing, Xiqing, Tianjin, Xianning, Hubei, Dujiangyan, Sichuan. Markets in Beijing-Tianjin-Hebei, Yangtze River Delta, Pearl River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, Sichuan-Chongqing, and the central and southern regions of the two lakes have initially established a national strategic layout of “super city clusters + self-built factories”. PepsiCo once conducted a market survey and found that when consumers choose drinks, they actually only make three choices. The first is to choose between soft drinks, juice and milk; the second is to choose Coke, Sprite, 7Up Wait for non-Coke; finally choose among Pepsi, Coca, and other Coke brands. It’s just that for a hundred years, the love and killing of The two colas (bundled propaganda) is too lively, which easily creates an illusion for consumers – there are only two drinks in this world, Coca-Cola and Pepsi, you only need to make one choice. . When Genki Forest sparkling water appeared in the market as a spoiler, people began to return to the first thinking about business competition. Whether you make soda or any other beverage, there is a chance for consumers to choose. In 2007, Yiqing Food Group, which was responsible for managing the Arctic Ocean Food Company, negotiated with PepsiCo, demanding the return of the Arctic Ocean. On the condition of “not producing any carbonated beverage products under the Arctic Ocean brand within four years”, Yiqing Group regained the brand management rights. In November 2011, this old brand drink that disappeared for more than ten years returned to the market. In 2017, Jin Yawen, a young creative, started the “Second Factory Soda Rebirth Plan”, which made the Hankou Second Factory return to consumers’ choice.

At the same time, more and more various beverage brands have appeared in the freezer of supermarkets. Some of them want to contain Genki Forest, and some want to recreate Genki Forest, but the two colas are dazzling. Their Places are also crowded out a lot. So far, this 28-year siege has not ended, and there is no final winner. There will always be generations of consumers growing up, and there will always be mental blocks waiting to be occupied. Genki Forest is not the first to be besieged by giants, nor will it be the last.

I hope this overview article helped you understand the beverage market trend. If you feel this article can help others and fulfill their wishes, please share.

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John Lau.

John Lau.

John Lau, a project manager holding an engineering bachelor's degree, became fascinated with optimizing beverage production equipment during his university days. As an overseas project manager, he firmly believes that educating clients on achieving efficient workflows through customized equipment design is one of the most impactful aspects of his job.

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