Beneath the Hype: The Rise and Fall of New Consumer Brands in China
BY Rita BaoNov 30, 2023

There used to be a "formula" for the emergence of a new consumer brand: "5000 Xiaohongshu posts + 2000 Zhihu posts + a top live streamer's recommendation + making it to a top-selling list = the birth of a new consumer brand." However, today, the market environment for new consumer brands is not as favorable as before. On one hand, venture capital has become more cautious. Data shows that investment in the new consumption field was approximately 67.4 billion yuan in 2022, down 25.7% YoY. Besides, consumer attitudes have shifted significantly, becoming more rational and focused on fulfilling genuine needs while seeking value for money in products and services.

In this context, some of the red-hot brands are fading, but there are also some brands that have risen against the headwind, gradually solidifying their market position. This article examines the current status of three typical new consumer brands and explores the reasons behind their advancement or decline.

Chi Forest

Founded in 2016, Chi Forest experienced explosive growth during 2018 and 2021, with growth of 300%, 200%, 309%, and 170.3%, respectively. In recent two years, although it has not maintained the explosive growth seen in its initial years, it has demonstrated resilience in the fierce market competition. According to Nielsen, Chi Forest rose to the 12th position among domestic beverage brands in 2022 based on offline retail. In 2023, Chi Forest's core product, sparkling water, has seen a continuous increase in market share and single-store share, with inventory turnover reduced to three weeks.

The success of Chi Forest is primarily attributed to its differentiated brand positioning. Recognizing the growing demand for health and wellness among young people, Chi Forest positioned itself as a competitor in the "healthy beverage" segment. Based on this brand positioning, Chi Forest adopted "health" as the brand's tone at the product strategy level, launching a series of drinks with the "0 sugar, 0 fat, 0 calories" concept to align with the target audience's pursuit of a healthy lifestyle. As the pioneer of this concept, Chi Forest seamlessly incorporated it into the brand, enhancing consumers' awareness and recognition of its unique brand image.

Chi Forest sparkling water (original version)

Besides, Chi Forest places a strong emphasis on product R&D. Its flagship product, sparkling water, preserves the taste of carbonated beverages while having healthy attributes of"0 sugar, 0 fat, 0 calories". This product not only popularized the raw material erythritol but also elevated the sparkling water category. Subsequently, Chi Forest continuously upgrades its formula to achieve a cleaner formula with "0 potassium sorbate, 0 sodium benzoate", while also enhancing the taste to be "more effervescent." In addition to sparkling water, Chi Forest launched another big hit-Alienergy electrolyte water. In 2022, with consumers' strengthened demand for health and functional beverages, the electrolyte water category surged. Alienergy quickly became a benchmark in the category, with the highest monthly sales exceeding 190 million and annual sales reaching 1.27 billion, becoming Chi Forest's second growth engine.

Chi Forest‘s product innovation

Regarding marketing, Chi Forest extensively utilizes mainstream online social media platforms and implements offline advertising on buildings, vehicles, subways, and outdoor spaces to ensure broad exposure. Furthermore, Chi Forest consistently innovates its marketing strategies, including organizing music festivals and sports carnivals popular among young audiences, and launching collaborations with renowned IPs such as "Dungeon & Fighter" and "Pop Mart," thus enhancing brand visibility.

Chi Forest Music Festivals

It's also worth mentioning Chi Forest’s supply chain construction under the model of “super-large-scale factory for super-city cluster.” By far, Chi Forest has established five major factories in Anhui, Tianjin, Guangdong, Hubei, and Sichuan, serving the market demands in city clusters across East China, North China, South China, Central China, and Southwest China regions. Currently, Chi Forest’s sixth factory is under construction. This facility is the production and operation base in the East China region, which represents Chi Forest's latest layout targeting the core markets of Jiangsu, Zhejiang, and Shanghai. Chi Forest's supply chain construction enables product development and supply with regional specificity, enhancing flexibility in response to market changes.

Parts of Chi forest's factories

But it should be noted that Chi Forest faces significant challenges in distribution. It is weak in traditional channels, and the market pressure from beverage giants like Coca-Cola and Nongfu Spring is increasing. At present, establishing and perfecting a deep distribution network in traditional channels is of utmost importance for Chi Forest. Starting this year, Chi Forest has become more focused on channel optimization and expansion and invested more in distributor cooperation.


In October, a post by a resigned employee demanding unpaid wages ignited the internet, exposing the challenges faced by the well-known new consumer ice cream brand, Chicecream. According to Qichacha, all 21 branches of the main company, Zhong Xuegao Food (Shanghai) Co., Ltd., are in a deregistered status. Besides, its official Weibo account has stopped upgrading since August. Moreover, due to a contractual dispute, the enterprise is facing a lawsuit, and assets of 5.5 million yuan have been judicially frozen. Regarding sales, on Douyin, Chicecream's market share was less than 4% in Q2 2023, far behind brands like Cornetto, Chocliz. Also, Chicecream was absent from best-selling lists in this year’s Double Eleven shopping festival, in contrast to its outstanding performance in previous years. Chicecream seems to be in a stagnant state in both marketing, new product development, and channel expansion.

Chicecream products.jpg

Chicecream had initially enjoyed significant success in the market, owing to its distinctive creamy flavors, premium positioning, and captivating marketing campaigns. However, as market competition intensified and consumer preferences diversified, Chicecream's strategic advantage gradually eroded. Particularly in the face of heightened economic pressures, consumers have become more discerning in their product choices, prioritizing items that offer better value for their money. Against this backdrop, Chicecream's premium pricing has come under scrutiny from consumers, earning it the moniker of an "ice cream assassin."

As consumer attitudes have changed, Chicecream is perceived as prioritizing marketing over product innovation. Despite the introduction of Sa'Saa, a new product priced at 3.5 yuan earlier this year, Chicecream's attempt to restore brand image fell short. Instead, it prompted consumers to question whether the previous pricing was unreasonably high. With both high-priced and low-priced products facing challenges in the market, the brand finds itself in a tough situation. Adding to the complexity, the "non-melting" incident raised concerns regarding food safety and adversely affected Chicecream's reputation.

Worse still, Chicecream grappled with the channel disarray. Since 2021, the brand has aggressively ventured into offline channels without a meticulous channel selection process. Considering Chicecream's positioning as a high-end product, the appropriate channels for offline distribution should be high-end supermarkets and premium shopping malls, rather than regular markets or groceries. In the former, consumers possess stronger purchasing power and are more willing to pay a premium for novel offerings. Conversely, in smaller shops, where Chicecream is placed alongside numerous affordable ice creams in a freezer, the "value" of its higher price is not as readily acknowledged. Subsequent to encountering sluggish sales in these locations, merchants often resort to significant discounts or transfer the goods to smaller agents in other regions, leading to channel and price chaos.

Wang Baobao

In 2018, Wang Baobao, a domestically produced cereal brand positioning itself as both healthy and delicious, made a notable entrance into the market. Within the subsequent two years, it successfully secured four rounds of financing, garnered top celebrities as endorsers, and achieved significant visibility on platforms such as Xiaohongshu and Douyin. It clinched the top spot in the cereal category during the Double Eleven shopping festivals in both 2019 and 2020. However, following a brief moment of acclaim, Wang Baobao embarked on a downward trajectory.

Wang Baobao's ascent to prominence was credited to its keen understanding of consumer demands, strategic product positioning, and adept deployment of targeted traffic. The brand specifically targeted young women aged 18 to 25. Through celebrity endorsements and social media marketing, Wang Baobao swiftly boosted brand visibility. However, after reaching its target audience multiple times, the room for incremental growth inevitably diminished. Data reveals a 48% decline in Wang Baobao's online sales in Q1 2021 and a further 58% decline in Q2. It is noteworthy that Wang Baobao's highly refined positioning didn't work well in offline channels, as it narrowly targeted a specific audience, rendering its product advantages ineffective.

While claiming to be healthy and delicious, Wang Baobao encountered significant challenges related to food safety. According to the third-party complaint platform Black Cat, 53% of the total complaints against Wang Baobao's products were associated with food safety concerns. Furthermore, Wang Baobao's self-established factory, Hangzhou Baole Food Co., Ltd., faced penalties from the market supervision administration for "selling other food products that do not meet food safety standards or requirements." Subsequently, the company opted against expanding its factory and instead increased outsourcing to OEM factories. However, this asset-light model has also led to food safety hazards, imposing substantial limitations on the brand's long-term development.

Apart from internal challenges of dependence on marketing and food safety issues, Wang Baobao faces external challenges from competitors. Although Wang Baobao defined a new category for cereal, this innovation does not constitute a high barrier with exclusive patented technology, and the entry threshold is not high. With the surge in the consumption trend of instant oats, major brands rushed to launch similar products. In a stage of market homogenization, the competition among companies revolves around continuous product innovation, brand strength, supply chain, and channels—areas where Wang Baobao falls short and are difficult to overcome in the short term.

To sum up, traffic serves as a touchpoint and the product stands as the foundation. In essence, the key factor influencing sustained consumer repurchasing is the strength of the product. If a brand's marketing attributes overshadow the product itself, the brand is susceptible to entering a decline phase once the initial novelty fades. Moreover, navigating channels presents a formidable challenge that brands must overcome to scale successfully.  The success of a brand is the result of the joint efforts of product development, marketing strategies, and effective channel management. For emerging consumer brands, the pivotal question is how to transform from a transient "internet sensation" to an enduring "long-lasting success."

 Disclaimer: All images used in the article are from the Internet.

Rita Bao
ChemLinked Regulatory Analyst
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