Nongfu Spring hit the door of Cestbon's house

City Boundary

2024-05-13 16:14 Posted on the official account of Beijing Municipality

01, 2 yuan "water war" has quietly begun

Cestbon went to Hong Kong to sprint to the market, Nongfu Spring "slapped the face" to promote pure water, and Wahaha made efforts to expand offline channels...... Unconsciously, the "water war" in the packaged drinking water market has started again.

It's just that this time the "water war" is quietly going on without rhetoric and hype on the surface.

▲ (The shelves of the supermarket on the side of the road in Beijing.) Photo source/city boundary)

On May 10, in a small roadside supermarket in Chaoyang District, Beijing, "City Boundary" found that 550ml of Nongfu Spring pure water, 596ml of Wahaha pure water, and 555ml of Cestbon pure water were already standing side by side on the shelves. In this small supermarket, the retail price of all three is 2 yuan. There is also an old face next to it - Nongfu Spring Natural Water, which retails for 2 yuan.

In the era of 1 yuan water, Wahaha pure water used to be the leader of bottled water, but it is falling behind in the competition with Nongfu Spring. The rise and growth of Nongfu Spring is to step on the head of pure water to promote natural water, and began to enter the era of 2 yuan water.

2 yuan water is already the mainstream price of bottled water, and the two giants are Nongfu Spring and Cestbon. And Cestbon focuses on pure water. It can be seen that the bottled water market is basically in a state of chaos.

In the last two or three months, the dark war between the giants has become even more intense.

Since the death of Zong Qinghou, although Wahaha has rarely spoken to the outside world, it has quietly made efforts to start a sales campaign, such as increasing the delivery of freezers and reconstructing offline sales channels. In Beijing, Wahaha purified water was almost impossible to see in supermarkets and convenience stores, but now, even roadside kiosks and newsstands have been placed with Wahaha purified water.

"Before Wahaha was on the hot search, many supermarkets had never seen Wahaha pure water, all of them were Nongfu Spring and Cestbon, piled up like a hill." This is the impression that many people have before, especially in cities such as Beijing and Shanghai.

In late April, Cestbon's company, China Resources Beverage, suddenly disclosed its prospectus. If it goes public, China Resources Beverage and Nongfu Spring, the leader of bottled water, will gather in Hong Kong stocks, and C'estbon, the leader of the pure water market, will also become the second packaged drinking water company in China to be listed on the Hong Kong stock market.

Immediately afterwards, the news that Nongfu Spring was going to launch green packaged purified water flowed out. A few days later, the consumer saw the product. Similarly, there is no big publicity and promotion of Nongfu Spring on the surface, but pure water has been quietly distributed to various places.

Nongfu Spring suddenly became "green" - it began to spread pure water.

Beverages are a large category, which includes packaged drinking water, fruit and vegetable juices and their beverages, protein drinks, carbonated drinks, flavored drinks, tea (class) drinks, coffee (class) drinks, plant drinks, special-purpose drinks and other sub-categories.

Among them, the packaged drinking water industry includes drinking pure water, drinking natural mineral water, and other types of drinking water (mainly including drinking natural spring water, drinking natural water, and other drinking water). The most significant difference is the water source and mineral content.

According to the relevant national standards, purified drinking water is a product made from water directly sourced from the surface, underground or public water supply system, and properly purified through processes such as distillation, electrodialysis, ion exchange and reverse osmosis. Drinking natural water is made from water from natural sources, such as wells, mountain springs, reservoirs, lakes or mountain glaciers, which has not passed through the public water supply system.

On the packaging bottle of Nongfu Spring Purified Water, it is written: Pure water, the minerals in the water are removed. In terms of price, the promotion is very strong, and the online flagship store 550ml*24 FCL event price is 36 yuan. In some places, offline retail is 2 yuan, some places are 1.5 yuan, and in some places it is even 11.9 yuan or even 9.9 yuan per mention/12 bottles, and the whole bottle is less than 1 yuan.

However, Nongfu Spring's new pure water has also attracted complaints from some consumers.

On the one hand, the green packaging of Nongfu Spring pure water is somewhat similar to the green packaging used by Cestbon pure water. Some consumers complained: The most high-end business wars often wear Cestbon clothes through the most simple means - Nongfu Spring.

On the other hand, Nongfu Spring "slapped himself in the face". Zhong once criticized Wahaha pure water for nothing, insisting on making natural water containing minerals, which is also the key to the sudden rise of Nongfu Spring, but now he has turned around and returned to the pure water market, breaking the brand defense line that he has been building through marketing.

02, Nongfu Spring felt the crisis

In the bottled water market, the rise and change of giants is often a victory for marketing. This is especially true of Nongfu Spring.

In 2000, the packaged drinking water market was still the world of pure water. That year, Zhong Sui made a thunderous speech at the press conference: pure water does not contain minerals, it is not as good as natural water, "pure water is not beneficial to human health", and declared that Nongfu Spring will no longer produce pure water, but will make every effort to produce natural water.

As soon as this statement came out, the media rushed to report it, and the more it was hyped, the hotter it became. At the same time, Nongfu Spring also placed advertisements on television and other media, and conducted a series of controversial controlled experiments to prove its theory. For example, use pure water and natural water to raise daffodils to see who grows faster.

Almost overnight, Nongfu Spring became the "public enemy" of the industry.

Wahaha and Robust, together with dozens of pure water production enterprises across the country, issued an "anti-agricultural joint statement", requesting relevant departments to severely punish Nongfu Spring's "unfair competition". In the end, Nongfu Spring was fined 200,000 yuan.

However, under the marketing momentum, the concept of natural water has entered people's minds.

While stepping on pure water, he relied on various marketing strategies and the brainwashing advertising slogan "We don't produce water, we are nature's porters" to promote natural water. Since 2017, Nongfu Spring has become the leader of packaged drinking water in China.

After Zong Qinghou's death, Nongfu Spring encountered a "public opinion crisis", and Zhong continued to praise natural water in subsequent posts. In the article "Two and Three Things with the Elder Zong" released on March 3 through various platforms of Nongfu Spring, Zhong Sui mentioned:

After 2000, the dispute between natural water and pure water was boiling, and as the two protagonists of the dispute, 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. ”

However, just over a month later, Nongfu Spring launched pure water "dressed in green". And pure water does not contain minerals, which is contrary to Zhong's consistent assertion, and it is somewhat a slap in the face. In fact, this is also Nongfu Spring felt the pressure and began to defend and counterattack.

▲ (Nongfu Spring pure water.) Photo source/city boundary)

Some analysts said that Nongfu Spring's move is to cover up the previous public opinion incidents, and enter the same subdivision as Wahaha, if your pure water sells well, I can also produce and sell it; Nongfu Spring, on the other hand, is anxious to find new growth.

Although Nongfu Spring is the leader of bottled water, it is also afraid of losing a little market share.

The public opinion crisis at the beginning of the year had a very big impact on Nongfu Spring, and its performance was naturally affected. At the same time, Wahaha is exerting its strength. Since March, Wahaha pure water has appeared in supermarkets in Beijing. And China Resources Beverage, to which Cestbon purified water belongs, is also sprinting to the market.

Opponents are all acting, but they are caught in the whirlpool of public opinion. This seems to have made Nongfu Spring feel the pressure.

If China Resources Beverage is successfully listed, the competitiveness of Cestbon after raising funds will be further strengthened. In the use of funds raised by China Resources Beverage's IPO, it is clearly written: strategic expansion and optimization of production capacity, acceleration of sales channel expansion and improvement of channel efficiency.

In 2023, the revenue of Nongfu Spring's packaged drinking water products will be 20.262 billion yuan, an increase of 10.9% over 2022. In 2023, China Resources Beverage, a subsidiary of Cestbon, will have a revenue of 13.515 billion yuan, of which the revenue of packaged drinking water products will be 12.447 billion yuan, a year-on-year increase of 4.5%.

Although the packaged water market is still growing, it is not growing as fast as in previous years. The same is true for the giants. While trying to hold on to their original positions, they are looking for new growth. In the face of growth, whether you slap your face or not is not so important.

03. Rolled up in 200 billion rivers and lakes

According to the relevant research report of Haitong International, the market size of packaged drinking water in 2023 will be 226.6 billion yuan, and it is expected that in the next five years, the industry will enter a low-speed growth, and the growth center will remain between 3% and 4%, which is in a stage of steady expansion.

In other words, the packaged drinking water industry is gradually peaking.

In 2023, in China's packaged drinking water market, the top five giants will be Nongfu Spring, C'estbon, Jingtian, Wahaha, and Master Kong. According to the CIC report, Nongfu Spring's market share is 23.6%, while C'estbon, Jingtian, Wahaha and Master Kong are 18.4%, 6.1%, 5.6% and 4.9% respectively.

China's packaged drinking water market is an absolute big track. This is an important premise for the giants to compete in various ways.

In the water business, Zong Qinghou and Zhong Sui, two of China's richest men, have been born. This is enough to show that this is a "profitable" business, and can even be described as "nature's money printing machine", so that Nongfu Spring has the courage to say that "we are one of the most profitable enterprises in the beverage industry in China and the world".

In China's packaged drinking water, by 2023, drinking purified water will still be the largest market segment, accounting for more than 56%.

In the pure water market, in 2023, the top five giants will be Cestbon, Wahaha, Jinmailang, Jingtian, and Master Kong, among them, Cestbon occupies 32.7% of the market share, far ahead of the competitors behind it. Nongfu Spring withdrew from the pure water market due to the promotion of natural water through the "water war" in the early years, so Nongfu Spring was absent from the pure water market in recent years.

This is the more interesting point: Nongfu Spring is the leader of the packaged drinking water market, but in the largest market segment of packaged drinking water, there is nothing to do with Nongfu Spring.

Moreover, among the several giants, each has its own advantages, and the main market segments are different, Nongfu Spring focuses on natural water, and then also launched mineral water; Cestbon mainly promotes pure water; Jingtian has both pure water and mineral water brand Baisui Mountain, and Baisui Mountain is the largest mineral water brand in China. Wahaha pure water has been a little lonely in recent years, and in the past two years, it wants to restore its position in the water market.

The industry is getting closer to the ceiling and is looking for growth. In 2023, the growth of Nongfu Spring's performance will be mainly driven by sugar-free tea drinks, and the packaged water business, which accounts for the largest proportion, will be a bit of a laggard.

In terms of packaged drinking water, Nongfu Spring has also followed other brands to make cooked water. After the cooked water products "Cool White Water" and "Drink Boiled Water" launched by giants such as Jinmailang and Master Kong one after another, seeing that the opponent's new category is doing well, Nongfu Spring has also quietly laid out "boiled water", but the effect is not as good as the first two. Of course, this is both a defense and a desire to find new growth.

This time, competitors made frequent moves, and Nongfu Spring also made pure water under pressure.

The involution of the packaged water industry can be seen.

▲ (Photo source/Little Red Book)

Wu You, founder of Jinghu Capital and a practitioner in the bottled water industry, told "City Boundary" that in the medium and long term, relatively speaking, Nongfu Spring has greater advantages, and in terms of channels, including the digitalization of channels, Nongfu Spring is indeed very strong, and Wahaha still needs to work hard.

If we only compare the number of distributors, among the two giants of packaged drinking water, there is indeed a certain gap between China Resources Beverage and Nongfu Spring.

According to the prospectus, as of the end of May 2020, Nongfu Spring had 4,454 dealers across the country, covering more than 2.43 million terminal sales outlets, in addition to 247 direct customers. China Resources Beverage said in the prospectus that it has cooperated with more than 1,000 distributors across the country, covering more than 2 million retail outlets in China.

"From the current point of view, the price of Nongfu Spring pure water is still very competitive. It goes from brand suppression to price oppression, or market temptation. Nongfu Spring seems to want to set a sales price first, see how the market reacts, and then make adjustments. If Nongfu Spring has another wave of big promotions after all the offline outlets are in place, the competitive landscape of the pure water market may change. Wu You analyzed.

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