24 years after Nongfu Spring attacked Wahaha, it finally wants to sell pure water

Interface News

2024-04-24 19:19 Published on the official account of Beijing Jiemian News

Interface News Reporter | Lou Yibei

Interface News Editor | Ya Han Xiang

On April 24, 2000, because pure water is not beneficial to the human body, Nongfu Spring solemnly announced to the industry that it would no longer produce pure water, but would instead produce all natural water. This is a piece of history in the memorabilia of Nongfu Spring. Twenty-four years later, Nongfu Spring plans to turn around and embrace pure water again.

On April 23, Nongfu Spring purified water products were circulated on social networks, following the classic advertising slogan of Nongfu Spring "Nongfu Spring is a little sweet", Nongfu Spring seems to be going to launch 550ml of pure water from ten major water sources, including Qiandao Lake, Danjiangkou Underwater Deep, Sichuan Emeishan, etc. And it has changed the red bottle packaging of natural water to "Cestbon green".

Jiemian News asked Nongfu Spring to verify this news, but Nongfu Spring neither affirmed nor denied it.

According to the "Beijing Business Daily", Nongfu Spring said that Nongfu Spring's natural water has not changed and will continue to be produced, and pure water also uses natural water sources, but the filtration form is different.

The official website of Nongfu Spring divides water into four types: natural water, natural mineral water, purified drinking water, and other drinking water. Taking common products as an example, Nongfu Spring, which costs about 1.5 yuan, is natural water, and the small green bottle of Cestbon is pure water.

The distinction between water and water helped Nongfu Spring achieve a surprise attack in 2000.

In 1997, the first Nongfu Spring packaged drinking water was put on the market with Qiandao Lake in Zhejiang Province as the water source, and Nongfu Spring was still producing pure water until 1999. However, in the decade before the new century, the business of selling water has been controlled by old brands, and the pure water advertisements of Wahaha and Robust have been broadcast on various TV stations in a loop.

As a result, in April 2000, the founder of Nongfu Spring, Zhong Sui, bombarded pure water in a high-profile manner at a press conference held for the new production base, and subsequently used controlled tests such as daffodils and animals to launch an offensive against the pure water at that time through TV commercials. In June of that year, the bosses of 69 pure water companies from 19 provinces and cities led by Wahaha gathered together, as if the six major factions were besieging Guangmingding, and the enterprises united to accuse Nongfu Spring of unfair competition.

Image source: Nongfu Spring official website

This incident, which later became known as the "Water War of the Century", finally ended with Nongfu Spring and Wahaha shaking hands. Zhong also mentioned this matter in the article "Two and Three Things with the Elder Zong" released in March this year, saying that Wahaha and Nongfu Spring clarified their respective positions and product propositions in the dispute.

"To this day, I still insist that the minerals in water are essential for human health, which is why I insist on producing natural water. Zhong said at the same time.

With the classic advertisements of Nongfu Spring such as "we don't produce water, we are just the porters of nature" deeply rooted in the hearts of the people, as well as the pervasive distribution of convenience stores, supermarkets and commissaries for many years, Nongfu Spring became the largest packaged drinking water brand in market share in 2012. And it still maintains an absolute leading position to this day.

According to Mintel's data, in 2022, the top three estimated market shares in the national bottled water market by sales were Nongfu Spring (25.7%), China Resources (Cestbon, 17%) and Jingtian (Baisuishan, 9.7%).

Although Nongfu Spring has the upper hand, the growth rate of Nongfu Spring's packaged drinking water revenue has slowed down in the past three years.

From 2021 to 2023, the revenue of Nongfu Spring packaged drinking water will be 17.058 billion yuan, 18.263 billion yuan, and 20.262 billion yuan respectively, with a growth rate of 22.1%, 7.1%, and 10.9% respectively. While its tea beverage business is rising strongly, the revenue proportion of the packaged drinking water business segment is also declining, with 57.4%, 54.9%, and 47.5% respectively during the reporting period - in 2023, the revenue proportion of packaged drinking water, which is the basic plate of Nongfu Spring, is smaller than that of the non-packaged drinking water business for the first time.

In the drinking natural water track, Nongfu Spring may have tried almost all the subdivisions possible.

Whether it is the use of water or the packaging of water, Nongfu Spring has been trying to find differentiated innovation points in recent years. In 2021, Nongfu Spring launched tea water from Wuyi Mountain, Fujian Province, its new water source at that time, as well as new Changbai Snow products from Changbai Mountain, and in 2022, due to the impact of the epidemic, the sales of packaged water ready-to-drink channels were impacted, and in order to promote the sales of medium and large sized packaged drinking water, Nongfu Spring launched large-package aquatic products such as 4.5L and 6L.

It's just that judging from the slowdown in the growth rate of this business segment, it is no longer enough to make a fuss about drinking natural water.

But packaged water is one of the most important products in the beverage industry. Although the market size of sugar-free tea has risen rapidly in recent years, according to the Yiou think tank, the scale of sugar-free tea in 2023 will be nearly 10 billion, which is still less than one-twentieth of the scale of 200 billion for packaged water. Therefore, many beverage brands are aware that as China's packaged water begins to gradually transition to the era of natural mineral water, many brands have entered the mineral water track.

In April 2023, Master Kong joined the 2 yuan mineral water track with the new product "Drinking Mineral Spring". The brand's entry into the 2 yuan price band is mainly to fill the gap in its product matrix, Jinmailang launched the high-end mineral water "Jinkuang" and entered the 3 yuan water track, and CP Group will also upgrade its natural mineral water brand "So Run" in 2023 with a price of 3 yuan.

Although Nongfu Spring has achieved outstanding growth in business segments such as tea beverages and fruit juice beverages, it has become difficult to further innovate and open up the market in the current competitive environment. Nongfu Spring has many innovative and failed products, including lithium water launched for the health segment, plant-based yogurt that has been cultivated for three years, and sparkling water that has been fighting with Yuanqi Forest many times.

In March 2022, Nongfu Spring "resurrected" the sparkling tea that was released in 2005, continuing the differentiated play on the basis of sparkling water. But this product has once again proven to be a failure, and by the summer of 2023 it has disappeared. According to the financial report, the revenue of other product businesses, including soda drinks and carbonated flavor drinks, will be 1.311 billion yuan in 2023, a slight decrease of 3.1% from 2022, accounting for 3.0% of the total revenue in 2023.

At present, Nongfu Spring's determination to return to the packaged drinking water business seems to be not small, after all, its pure water products seem to be directly fired at the little green bottle C'estbon.

Just one day before the promotional image of Nongfu Spring's new product was released, Cestbon's parent company, China Resources Beverage (Holdings) Co., Ltd., submitted a listing application to the Hong Kong Stock Exchange on April 22, with Bank of China International, CITIC Securities, Bank of America Merrill Lynch, and UBS Group as joint sponsors.

According to the CIC report, CR Beverage is currently the second largest packaged drinking water company in China and the largest drinking water company in China, with the market retail sales of Cestbon brand drinking water products in 2023 reaching RMB39.5 billion, accounting for 32.7% of the market share.

However, the growth rate of the pure water market, which is the main product of Cestbon, began to lag behind other categories. According to the "2022 Annual Report on Mineral Water Consumption Trends" released by Jingdong Supermarket, the sales growth rate of mineral water, drinking natural water and purified water was 43%, 35% and 31% year-on-year respectively, and the growth rate of purified water was the lowest.

With Nongfu Spring's entry into the pure water track, the packaged drinking water market may change again.

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