BRAND HEALTH CHECK: A controversial beverage brand that never lacks new marketing tricks and tactics, will Genki Forest's rebranding to Chi Forest help it compete?
Over the past few months, through crossover marketing and brand collaboration, Genki Forest renamed itself Chi Forest, updated its sparkling water drink with a new logo and opened convenience stores with Swisse online while selling pop-up coffee offline.
Chinese beverage brand Chi Forest is moving on a fast track in its domestic and international marketing. Since mid-February, the brand has redesigned its logo with the Japanese Kanji ‘気’ on the bottle and changed it to the Chinese character ‘气’. At the same time, sparkling water 2.0 was launched together with its new logo. Then, Chi Forest collaborated with health and wellness brand Swisse to open convenience stores online selling probiotic gummies. As if that weren't enough, it later began to sell pop-up coffee from February to March at Double Win Coffee chain stores in Shanghai and across some cities in Zhejiang province.
Ever since Chi Forest was founded in 2016, the brand never shied from controversy, which landed it in disputes, but also enabled it to become a web sensation. It apologised for misunderstanding in labelling and tried to defend its claims in selling zero fat and zero sugar. It also cancelled online orders for incorrect pricing and discounts before the Double 11 shopping festival in 2021.
In China, GenZ consumers asked the question of whether Chi Forest’s drinks are paid for by ‘IQ tax’ or ‘stupid tax’, a Chinese internet colloquial reference, meaning the price paid for one's foolish behaviour to believe in marketing tricks. But its pop-up and brand collaboration strategies seem to have worked well for the brand over time. Its new sports drink Alienergy (a product named alien electrolyte water in Chinese外星人电解质水) helped the brand earn over 1 billion RMB (about US$150 million) in revenue, as of September 2022, according to Nielson’s data.
Coincidentally, last September, Chinese media reported that the brand quietly dropped the Japanese-style English name Genki Forest and changed to a romanised English name of Chi Forest when Miniso dropped its Japanese styling around the same time.
Like other new Chinese brands, Chi Forest is seeking overseas expansion. Having invested in supply chain and production lines before export, the brand has reached over 40 markets from South East Asia to North America. In the beginning, its target audience was mostly overseas Chinese, marketing actively through KOLs and social media marketing in overseas markets. However, it also faced competition from world-class brands and ran into a pricing problem as it was far more expensive than competitors’ products.
Campaign asked marketing and branding experts how the brand can stand out from competitors overseas keeping its top position domestically.
Sabrina Li
Managing Director
R3 China
Challenger brands in the beverage industry usually compete on features that are easy to develop and market. They might claim to be the most affordable in their category, display eye-catching packaging, or make statements about the health benefits and quality ingredients of their products. Brands like Coca-Cola and Pepsi have been able to move beyond commodity-type marketing because their consumers are already confident in the quality of their products.
Competitor brands, however, have to find a fast way to cut through a cluttered landscape of brands sold in-store and online. They tend to put more focus on what might drive short-term sales and boost temporary brand awareness and place less emphasis on long-term brand building. However, this comes at a cost. When faced with controversy, these brands have a harder time recovering their reputations. What is needed is a more balanced approach. Measuring marketing effectiveness and learning from competitors and North Star brands in China will provide Chi Forest with a more holistic marketing playbook.
Tom Zhang
Associate Partner
Prophet Shanghai
The success of Chi Forest can be connected to the rising health and wellness trend in China, but its brand equity and perceived quality have been affected as consumers started to believe its health claims to be overstated.
As Chinese consumers trade up in food and beverage, superior functional benefits will be the critical purchase driver. Therefore, the future brand and innovation strategy for Chi Forest should focus on rebuilding perceptions on quality as a core strategic pillar, like emphasising natural ingredients and wellness benefits.
Although Chi Forest has championed the “0 sugar, 0 fat and 0 calorie” sub-category, it was less successful in maintaining its leadership as an exemplary brand when competitors such as Nongfu Spring and Coca-Cola entered the space. The claim of ”0 sugar, 0 fat and 0 calorie” has now become table stakes among healthy drinks.
In today’s highly fragmented consumer market, it is imperative for brands like Chi Forest to develop a holistic understanding of the demand landscape in order to recognize nuances of different consumer segments and occasions. Through this comprehensive approach, Chi Forest will be able to identify high-value demand spaces and innovate against them. Meanwhile, it should also focus on building a few hero SKUs, rather than stretching its portfolio too thin too quickly.
As the “0 sugar, 0 fat and 0 calorie” beverage sub-category in China has been outpacing that of other global markets, there’s an opportunity for Chi Forest to unlock the potential of international markets. However, there are a few caveats.
Firstly, while Chi Forest intends to play in the health and wellness space, as a Chinese food and beverage brand, perceived quality still presents a challenge for its brand image. Secondly, overseas markets rely on offline channels even more heavily than China. Having recognized its shortcomings in channel management capabilities even in its home market, Chi Forest needs to make careful strategic decisions at every move while clearly identifying an overseas market with fewer headwinds.
Bryce Whitwam
Senior Advisor, Target Social
Co-Host of the Shanghaizhan Podcast
Chi Forest’s challenges are not the two-year-old packaging controversy but its lack of product differentiation. When it first hit the shelves in 2016, it was China’s marketing sensation, growing 2-3 times annually. Success was quickly followed by market saturation when myriad Chi Forest copycats entered the market. And now it seems Chi Forest’s fairytale has ended.
Chi Forest became a 'one-hit wonder' with its low-calorie flavored soda drinks. Its hipster 'internet start-up company with a soda product' image has now given way to a company that has to hit volume targets to keep its shiny new factories humming. Struggling to meet investor expectations, it is launching a series of generic beverage tea and water products that knock off its stronger competitors.
Its closest attempt at innovation is a new electrolyte-filled water for e-gamers, Alienergy (外星人电解质水). Seriously, sweat replenishment for gamers? This new brand is dead on arrival.
Their future is rather bleak, in my opinion, especially if it strays away from its healthy drinks credentials.
Chi Forest needs to own innovative premium health beverages and waters and needs to stop copying its competitors. Globally, there are a lot of interesting players super premium water brands out there with innovative product stories and package designs that they could give a local market spin.
Locally, one brand that I like is Yi Zheng Gen（一整根）a super-premium ginseng drink with entire root in every bottle. One bottle runs 99 RMB, and the value proposition is that you can re-fill it with warm water up to 8 times, and still get the benefits.
International markets won’t help Chi Forest, unless it plans to invest a small fortune to build a brand in an overseas market. You might get some nostalgia sales from Chinese students abroad, but it won’t catch on without marketing. And don’t forget, we’re talking about a low margin beverage product, not a premium, high margin, Xiaomi phone.