Going Beyond the Made in China.
What does going Direct-to-consumer (DTC) mean? Selling direct-to-consumer, commonly referred to as DTC or D2C, means you’re selling your products directly to your end customers. Sellers bypass any third-party retailers, wholesalers, or any other type of middlemen to deliver their products.
Recognizable examples of DTC brands include Casper, Warby Parker, and Dollar Shave Club. However, there are now thousands of sellers undertaking this unique approach. These DTC brands are leveraging mobile and digital channels that are bypassing traditional sales models.
DTC brands are usually sold exclusively online or specialize in a specific product category. However, top growing brands are expanding to other channels like their own storefront or exclusive partnerships with other retailers.
Branding over Sales Performance
China consumption has evolved already. Many start-ups from mainland China experienced new way of purchasing clothes but also electronic accessories and food for years. They’ve already generated high volume of online sales and are now developing more sophisiticated and creative product and online ad campaign to elevate their brand. From a strong product positioning they are creating strong brand to retain existing users and attract new consumers. I’ll comment on the one I found interesting and worth sharing with followers here.
These brands understand why brands are so important?
“The most important thing really, is this notion that the consumer has changed, and really a lot of retailers are way, way, way behind the curve,” said Paula Rosenblum, co-founder of retail advisory firm RSR Research – source CrunchBase
Chi Forest (previously Genki Forest) 元气森林 – The Fastest Growing Chinese Beverage Brand
The global beverage industry, including alcoholic and non-alcoholic beverages, is projected to reach $233.9 billion in 2022. It is an incredibly lucrative segment of the fast-moving consumer goods (FMCG) market. One Chinese company tapping into this sector is Chi Forest. The company’s unique selling point is that it makes zero-sugar, low-calorie drinks. Its product range includes Sparkling Water, Milk Tea, and Yogurt Refreshing Sparkling Water, available in multiple flavors.
Chi Forest has already established itself as an instantly recognizable name in mainland China, selling in convenience stores across the country. However, it’s present in stores outside China now, in Asia, Oceania, and North America, totaling 40 countries and nearly 500,000 stores. But what is most impressive is its quarterly revenue growth, with the first quarter of 2022 reporting a whopping 50 percent growth. The annual revenue during 2021 was 2.6 times that of the previous year. This spectacular revenue growth primarily comes from its sales in stores and on popular ecommerce platforms in China.
The company is responding to this growth and market expansion by increasing its manufacturing capacity with its super city groupof five factories in major manufacturing hubs in different Chinese provinces. It aims to increase production to five billion bottles a year. The brand is clearly the front runner in China’s beverage industry, but the company’s ambitions are global even with such a big market already at its disposal. And fortunately for them, there’s a growing demand for what they have to offer: healthy beverages. The US is the largest market for health drinks, with a 65 percent share in the North American market alone. Although there are many local brands in the US, especially for flavored sparkling water, which is Chi Forest’s main product line, it’s safe to say that there is potential for a new entrant, provided they use the right marketing tactics and invest in making their product stand out. Statistics show dramatic year-on-year increases in the sales of flavored sparkling water in the US, indicating a growing inclination of consumers for healthy drinks.
This series of articles named “Design in China” was initially published on the author’s LinkedIn, and will provide a snapshot of new DTC Chinese brands. Joss Roulet will review emerging brands in China and outside of China. But all these brands are designed and created from China.