Cathay Capital’s portfolio company, the rising Chinese beverage brand Genki Forest recently announced the success of its latest funding round, valuing the company at $6 billion. This represents a nearly threefold increase in less than a year, given the company’s $2 billion valuation in the previous round in which Cathay participated, and comes less than five years after the company’s foundation. In this funding round, Genki Forest’s longstanding investor Sequoia China acted as lead investor with Warburg Pincus, L Catterton, Temasek, Gao Rong, Longhu and others participating. The unanimous recognition from these top institutions, both domestic and foreign, bodes well for Genki Forest’s current prospects and future development.
This new round of financing will serve four major purposes: carrying out overseas mergers and acquisitions with the aim of introducing new high-quality products to the Chinese market; building environmental-friendly factories and improving manufacturing capabilities; investing in research and development; and fostering Genki Forest’s status as a global company.
Genki Forest: How this Innovative Beverage Brand Disrupted the Chinese Beverage Market
Founded in 2016, Genki Forest is a beverage company with Internet Plus gene. Since its establishment, the company has strived to provide a “global service” and adhered to the principle of placing “users first” by leveraging insights into user needs and launching a range of popular health drinks catering to client preferences with regards to sugar-free, fat-free, gluten-free, calorie-free and no-GMO beverages.
The up-and-coming Generation Z (individuals born between 1995 and 2002) is rapidly reshaping the Chinese soft drinks market and initiating new consumer trends thanks to its large demographic and distinctive purchasing behaviors. They are no longer a price-sensitive generation, but a large group of consumers who prioritize product quality, uniqueness on the market, shared value, and how the brand actually benefits them. Genki Forest has done a fantastic job in understanding and accompanying the new trends driven by younger generations.
Four years ago, Genki Forest set itself apart from competitors by giving its customers the ability to “control their sugar intake”, fully leveraging its strengths and Internet mindset to expand into new consumer channels and touchpoints, focusing on online and CVS (custom value stores) and DTC (direct to consumer) channels. In adherence to its customer-centric culture, the company carried out extensive market research and precisely identified consumer demands. Thus it was able to quickly adapt to the powerful trend gearing the market towards sugar-free drinks. Thanks to its proprietary scientific research, its sugar-free sparkling water quickly became a flagship product. During the Singles Day Shopping Festival of 2020, the company surpassed the traditional international giants on Tmall and Jingdong.com and won the Champions in sales award in the soft drinks category. In 2020, sales volume reached nearly 3 billion yuan, showcasing the phenomenal rate of change seen across China’s beverage industry.
Binsen Tang, Founder and CEO of Genki Forest, said that 2021 will be a “big year” for Genki given 95% of its products have yet to be launched and investment in R&D and outputs will be multiplied by three compared to 2020 levels. In addition, Genki Forest is one of the few beverage companies that has managed to build its own manufacturing capabilities, seizing upon the global “OEM” trend. Besides increasing production capacity, the main purpose of owning the factories is to meet the demand for high-quality products and to improve efficiency and the ability to innovate.
Since last year’s completion of the Phase I factory in Chuzhou, Genki Forest’s production facilities in Tianjin Xiqing, Guangdong Zhaoqing, as well as its Chuzhou Phase II factory, will all start operations in 2021. This will form a “North, Central and South” layout covering the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Pearl River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area. Its Zhaoqing factory in Guangdong province will also be the first “wall-less and transparent” beverage factory in China. The factory will be an integral part of the surrounding community and will be open to all customers to witness the production process of every drink.
Going Global: Genki Forest’s conviction
Genki Forest has currently entered more than 40 overseas markets, notably the United States, Canada, the United Kingdom, France, Germany, Australia, Singapore, Japan, and South Korea. It has been officially certified by the Singapore Health Promotion Board (HPB) and was granted the HCS Health Preferred label. Its health benefits are gradually being recognized by all overseas markets.
Genki will be introducing its existing products overseas and will tap into markets with high spending power and sizeable young consumer groups such as the United States, Southeast Asia or Europe. To do so most efficiently, Genki will focus on innovative and DTC distribution channels, and also adapt its products’ characteristics based on local preferences. Cathay Capital is an important leader and partner in these efforts. Genki Forest is committed to becoming China’s foremost food and beverage company, and Cathay Capital will use the resources of its international ecosystem to assist Genki Forest’s acquisitions of overseas food and beverage brands, will serve as its overseas agent, and also introduce high-end foreign products to Chinese consumers.
“We firmly believe that Genki Forest has the potential to grow into a leading global brand,” said Ming-po Cai, Founder, President and CEO of Cathay Capital. “At Cathay Capital, we are always looking for tomorrow’s extraordinary companies that can lead the transformation of industries. In the past few years, Chinese consumer groups have undergone fundamental changes. People are more willing to enjoy high-quality products and the new generation of consumers are no longer obsessed with big foreign brands. As an investment institution with profound global resources, Cathay will help bring Genki Forest to the world by facilitating partnerships with international consumer sector giants and a quality selection of local brands.”
Why We Invested: Genki’s Market Potential and the Power of People
The logic is simple: we recognize the industry’s massive potential, and we trust the people we do business with.
The Chinese soft drink market, and the global market more broadly, is immense and has huge growth potential. In China, the new trend dominating the beverage industry is the growing demand for functional and plant-based drinks. Consumers are no longer satisfied with cheap products. They increasingly ask for high quality and a broad and varied range of products. This demand has not yet been met. While the industry’s glass ceiling is still far away, the market lacks real innovation. Most products on supermarket shelves are controlled by giants. Although there are new products released constantly, they remain very similar, the same characteristics repeat themselves and the quality is barely improved. Hence, consumers are not satisfied.
More importantly, we believe in Binsen, the founder of Genki whose long-term vision enables him to grasp the global horizon. He’s not only driven and committed to this vision but has the audacity, with a strong sense of empathy, to succeed.
The first time they met, Mingpo Cai recalls how Binsen told him that “中华有为 (China is promising and has huge potential).’ “I couldn’t forget that moment,” says Mr Cai, “I thought I just had to invest in him.” In Mr. Cai’s eyes, there is a harmonious conflict in Binsen. He is a multifaceted global talent, an investor and serial entrepreneur, and one of the few entrepreneurs possessing a global perspective. Though at the same time, he remains very down-to-earth. This is consistent with Cathay’s unique approach of “Glocolization”. This character also set the base of Genki Forest’s value proposition.Binsen’s vigor and boldness are at the heart of Genki Forest’s vitality. Binsen has proven his astuteness and crossover entrepreneurship skills in fields ranging from gaming to the soft beverage industry – he materialized a series of bold ideas and operations which have proved him right over and over again, for instance the sponsorship of Bilibili’s New Year’s show, its ambitious sales target, and Genki’s numerous innovative product R&D and launches. And what Cathay sees and admires most is the incredible diversity and creativity of the Genki Forest team.
Genki Forest’s team is very versatile with talent hailing from both technology and more traditional industry backgrounds. Coupled with a flat structure and lean management, efficient communication is achieved to reshape the organizational structure. Internet thinking is reflected on the product development side: consumers come first, followed by fast iteration processes, gray tests and data analyses. In short, products are developed based on consumer’s preferences. On the other hand, Genki Forest respects the rules of the industry and understands that the most important channels and supply chains in the beverage industry remain offline.
As a global investment platform, the advantage of Cathay lies in the fact that we can connect all kinds of high-quality resources for our investees. We provide Genki Forest with a threefold support: 1. A connection to the global ecosystem to exchange and promote more opportunities for collaboration; 2. To assist Genki with global acquisitions and mergers to bring overseas assets and brands to China; 3. Helping Genki go global, not only in Southeast Asia and North America, but all over the world, to make China’s excellent brands shine in the global arena.
About Genki Forest
Founded in 2016, Genki Forest is a beverage company with Internet Plus gene. Since its establishment, the company has strived to provide a “global service” and adhered to the principle of placing “users first” by leveraging insights into user needs and launching a range of popular health drinks catering to client preferences with regards to sugar-free, fat-free, gluten-free and calorie-free beverages.
Genki Forest’s offering can be divided into 2 categories: room-temperature products and the refrigerated range. Its raw materials are precisely selected and strictly controlled from source to production. Genki Forest’s distribution channels currently cover more than 30 provinces, municipalities and autonomous regions in China, and some of its products are also best-sellers globally in North America, Asia and Oceania. In addition, the online selling channels are also opened to the public via T-mall, JD.com and Xiaohongshu.com.
About Cathay Capital Group
Cathay Capital Group is a global investment firm supporting companies at all stages throughout North America, Asia, Europe and Africa. By helping navigate the opportunities of globalization and sustainable transformation, Cathay is the partner of choice for companies aspiring to lead markets and make a positive impact. Its global platform connects people – from investors and entrepreneurs to management teams and leading corporations – across continents to share knowledge, the tools to scale, and achieve the extraordinary. Founded in 2007 with a strong entrepreneurial heritage, Cathay Capital now manages over $4,2B in assets, has completed over 180 buyouts, growth and venture capital investments with the global reach and local expertise across Paris, London, Munich, New York, Boston, San Francisco, Shanghai, Beijing and Singapore.
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