S: Hello everyone, I’m Stephanie Li. Welcome to CBN Friday Special.
J: Hi, I am Jenny.
S: Do you want some drink, Jenny？
J: Thanks, but I have just finished a bottle of Sprite. Stephanie, do you prefer Sprite or Coke?
S: Well I used to drink Coke more. But currently, I prefer Genki Forest sparkling water. And, peach flavour is my favourite. Have you heard Genki Forest is bringing out its new Coke-flavoured product soon?
J: Yes, I heard about that too. The new beverage is Genki Forest's attempt to upgrade sugar-free Coke. The product is placed in its sugar-free sparkling water series, which may indicate the firm's prudent approach to direct rivalry with the dominating global Coke brands, such as Coca-Cola and Pepsi.
S: Genki Forest, a Chinese firm known for its low-sugar tea and sparkling water beverages, entered the sugar-free carbonated drinks market in 2016. 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. Its total sales from secondary dealers in 2021 amounted to 7.3 billion yuan, following years of high-speed growth. In 2022, Genki has set a sales return target of 10 billion yuan.
As for promoting strategies, Genki Forest cooperates with influential bloggers, KOLs and KOCs on Xiaohongshu and Douyin to reach a huge pool of potential customers. So far, the number of followers in Xiaohongshu and Taobao Genki Forest flagship stores has reached over 3.3 million and 3.35 million respectively.
J: Last month, Genki Forest unveiled its new Coke beverage Genki Cola, officially announcing that it has entered the sugar-free Coke market in a cautious attempt to break down the barriers of global giants Coca-Cola and Pepsi in China and take on them.
But it won’t be an easy job. Over the past few decades, Coca-cola and Pepsi in China have been firmly controlling the raw material supply chain and the sales market of coke. Almost all the newly-emerging domestic coke would be acquired or soon became insolvent.
S: However, despite being sandwiched between the two giants, Genki Forest launched a charge toward them. After the self-owned material-supporting factories in Anhui and Guangdong Province were built and put into operation, the supply chain of Genki Forest has been completed, solving the problem that the supply of raw materials for coke production may be limited. Genki has also established a relatively stable and large customers base for it to debut a Coke product.
In fact, Genki’s founder Tang Binsen made the decision to launch the offensive against the two giants back in 2016, who is a serial entrepreneur and also an investor himself, and the highly anticipated new Genki Coke is considered to be the brand’s next big hit that boosts growth in its flagship sparkling drink series.
Speaking of which, Jenny, how much do you think the Genki Cola will cost?
J: Hmm…I’m not so sure, but I think Genki should be careful about setting the price. Coca-cola and Pepsi’s product price has long been adhering to a low price strategy. Such market barriers may pose threats to new enterers like Genki Forest. A bottle of the sparkling water from Genki Forest costs 6 yuan, while the price tag of Coca-Cola with the same specification is only about 3.5 yuan. So will consumers welcome a more expensive Cola drink just for a similar experience, and will they like the taste of the new Coke? And since selling more will finally reduce marginal cost of production, will the newcomer be able sell enough to make a profit, or at least stay afloat in the already crowed market?
S: Former domestic cola challengers like Wahaha, Laoshan, and Tianfu have failed to make their names as the two international giants dominate the Chinese market. Take 2019 as an example, according to industry research data, in China's carbonated beverage market, Coca-Cola's market share was 59.5%, while Pepsi's took up 32.7%, making their combined industry concentration to be as high as 92.2%. That basically bars any brand from taking a slice of the market.
J: Right. In the second quarter of 2022, Coca-Cola reported revenue of over 11 billion dollars, up 12% from a year earlier. Will Genki Forest takes on a market share smoothly or Coca-Cola continue to merge with the new entrant? Let's wait and see who will win this "Coke War". That’s all for today. See you next time.
Executive Editor: Sonia YU
Editor: LI Yanxia
Host: Stephanie LI
Writer: Stephanie LI, ZENG Libin
Sound Editor: ZENG Libin
Graphic Designer: ZHENG Wenjing, LIAO Yuanni
Produced by 21st Century Business Herald Dept. of Overseas News.
Presented by SFC