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On December 17, according to a report by Interface News, NONGFU SPRING is about to launch a brand new natural mineral water nationwide. This product sources its water from Changbai Mountain and is available in a 380 milliliter size, currently being promoted at a price of 18 yuan for a package of 15 bottles (1 case) at a certain KA channel.

This new product uses the design of NONGFU SPRING's high-end glass bottled water and features the iconic red cap, with the water source marked as Changbai Mountain.

NONGFU SPRING confirmed this news to Blue Whale News.

NONGFU SPRING has long offered several products of natural mineral water, including Changbai Snow, lithium type, sports cap, and glass bottled options, but primarily targets specific consumption scenarios and the high-end market. The company’s market focus remains on the red bottle natural water L product. Why has NONGFU SPRING suddenly placed a heavy bet on mineral water products?

For a long time, the bottled water market has been relatively stable. According to a report by Zhi Shi Consulting, in 2023, in the packaging drinking water market of China, the market shares of the five well-known brands—NONGFU SPRING, Yibao, Jing Tian, Wahaha, and Kang Shifu—are 23.6%, 18.4%, 6.1%, 5.6%, and 4.9% respectively, collectively accounting for a solid majority of the packaging drinking water market.

Although NONGFU SPRING firmly holds the leading position in the Industry, the growth rate of its packaged drinking water revenue has slowed in the past three years. From 2021 to 2023, NONGFU SPRING's revenue from packaged drinking water was 17.058 billion yuan, 18.263 billion yuan, and 20.262 billion yuan respectively, with growth rates of 22.1%, 7.1%, and 10.9%. As its tea beverage business has risen strongly, the revenue share of the packaged drinking water sector has also been continuously decreasing, with revenue shares of 57.4%, 54.9%, and 47.5% during the reporting period— in 2023, the revenue share of packaged drinking water, which is the mainstay of NONGFU SPRING, has fallen below that of non-packaged drinking water for the first time.

In the past, NONGFU SPRING has tried various segmentation possibilities in the natural drinking water market. However, looking at the slowing growth of this Business Sector, merely focusing on natural drinking water may be difficult to drive new growth.

Moreover, this year, the competition among leading brands has become more intense. Wahaha has started to reshape its offline channels, while Yibao has raised funds for expansion, which has, to some extent, triggered a sense of crisis among practitioners in the drinking water sector. This might be an important reason for NONGFU SPRING to choose to increase its investment in mineral water products and tap into more niche markets.

Specifically, the mineral water market remains fiercely competitive. Recently, not just NONGFU SPRING has launched new mineral water products. For instance, Yibao has introduced the Benyou natural mineral water, and Wahaha has launched a green single-packaged 596ml mineral water. This year, both Pang Donglai and EAST BUY have also followed suit by launching mineral water products.

Will NONGFU SPRING's sudden push into the mineral water market change the course of this fierce battle?

Renowned strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, Zhan Junhao, believes that NONGFU SPRING's sudden entry into the fray will undoubtedly change the course of the battle. "With its high-quality water source, affordable prices, and strong brand influence, it is expected to stand out in this fierce competition and become a leader in the Industry."

It is well-known that the water source is the "strength endorsement" of mineral water companies. In the water Industry, obtaining a mineral water mining certificate is a sign of having truly good water sources. However, developing natural mineral water is costly, takes a long time, and is hard to profit from in the short term. This is also why mineral water prices are relatively high and many water companies are reluctant to develop mineral water. Therefore, very few new players can be seen in the mineral water sector. The previously mentioned Pang Donglai and EAST BUY are also entering the market through an OEM model.

The water source for NONGFU SPRING's mineral water, Changbai Mountain, is globally recognized as a source of high-quality mineral water. It is reported that NONGFU SPRING has been deeply cultivating in Changbai Mountain for many years. To find this top-tier water source, the company's water source explorers assessed over 30 water sources and spent nearly two years to locate this mineral water source; furthermore, to protect this precious water, NONGFU SPRING has continuously protected the ecological environment of Changbai Mountain since 2002.

Besides product quality, price is also an important factor. According to the 2024 Interesting Lifestyle Report, statistics show that this year, price considerations accounted for 49.1% of consumers' primary factors when choosing to purchase food and beverages, ranking second only to health of ingredients (such as reduced sugar, salt, etc.).

Water priced slightly over 1 yuan is easier for consumers to purchase in the market. According to data from the fast-moving consumer goods offline retail monitoring company, Ma Shang Ying, from a pricing perspective, during the 11 quarters from the first quarter of 2022 to the third quarter of 2024, the 1-2 yuan water category has consistently held the highest market share. Taking the third quarter peak season of each year as an example, the market shares of 1-2 yuan water in 2022, 2023, and 2024 were 44%, 42.6%, and 43.4% respectively, while the shares for 2-3 yuan water in the corresponding years were 32%, 31%, and 29%.

In fact, this year the overall price of the mineral water industry has reached record lows. A Blue Whale News reporter checked e-commerce platforms and found that the price of 500ml Kunlun Mountain mineral water is 79 yuan for 24 bottles, which is about 3.29 yuan per bottle, while earlier prices were around 5 yuan. The 'noble' mineral water brand, Baishui Mountain, has also chosen to lower prices to welcome this new wave of competitors, with 6 bottles of 570ml selling for just 12.9 yuan on e-commerce platforms, equivalent to 2.15 yuan per bottle.

Meanwhile, in the past couple of years, many new mineral water brands have emerged in the market, mostly entering at prices slightly above 1 yuan. For example, Yibao's Benvy natural mineral water sells for only 37.6 yuan for 24 bottles of 555ml, which is 1.57 yuan per bottle; the price of 24 bottles of 596ml Wahaha mineral water is 29.9 yuan, equivalent to 1.25 yuan per bottle; both Panggonglai and EAST BUY have also priced their single bottle of mineral water at around 1 yuan.

In terms of pricing, NONGFU SPRING is launching new products with a promotional price of 18 yuan for 15 bottles, which equals 1.2 yuan per bottle. NONGFU SPRING's goal is clear: to quickly occupy consumers' minds with a price advantage.

With NONGFU SPRING's new mineral water products entering the market and aggressively targeting the mineral water segment, what impact will this have on the entire industry?

Zhan Junhao pointed out that as a leading bottled water brand, NONGFU SPRING's renewed push into the mineral water sector will undoubtedly intensify competition in the industry. Leveraging its strong brand influence and market share, it is expected to further standardize and upgrade the mineral water market. Additionally, NONGFU SPRING's focus on natural and pure qualities will lead the industry towards a healthier and more Eco-friendly Concept development.

Yang Huaiyu, a senior researcher at Xiangshi Liangshi Consulting Management Company and an analyst in the CSI Consumer 360 index sector, stated: 'This is NONGFU SPRING rapidly capturing the mineral water market through a Low Stock Price strategy, particularly targeting price-sensitive consumer groups. This strategy helps expand market share, increase brand exposure, especially during peak consumption seasons, attracting a large number of consumers to try and purchase. At the same time, it forces competitors such as Yibao, Wahaha, Baishui Mountain, and Yuanqi Forest to reassess their pricing strategies, thus promoting vitality across the industry. On the other hand, while price wars can stimulate short-term sales growth, they may compress overall profit margins in the long run, making it difficult for small and medium-sized enterprises to survive.'