1-Yuan Water Has Long Been Active in the Market The bottled water price war is once again heating up. In offline supermarkets, many packaged waters are priced around 1 yuan. For example, 550ml Nongfu Spring natural water sells for 1.80 yuan per bottle; Jingtian drinking natural spring water (560ml12 bottles per pack) is available at a member price of 10.8 yuan, equivalent to 0.9 yuan per bottle; C'estbon purified water (555ml12 bottles per pack) costs 10.5 yuan, or 0.83 yuan per bottle; and 596ml Wahaha purified water is priced at 1.3 yuan per bottle. Online channels are no exception. On JD.com, Nongfu Spring natural water (550ml24 bottles) is priced at 31.9 yuan, or 1.3 yuan per bottle; on Tmall, the same product costs 33.9 yuan, or 1.4 yuan per bottle; Ganten (百岁山) 348ml24 bottles is 35.8 yuan, or 1.49 yuan per bottle; and Wahaha purified water (596ml*24 bottles) is 30.9 yuan, or 1.28 yuan per bottle. On the local life platform Xiaoxiang Supermarket, 12 bottles of 550ml Nongfu Spring purified water are only 9.9 yuan per pack, equivalent to 0.825 yuan per bottle; 12 bottles of 550ml Jinmailang blue-label packaged drinking water are 6.9 yuan per pack, or 0.575 yuan per bottle. In snack stores and discount stores, Nongfu Spring is 1.2 yuan, C'estbon purified water is 0.9 yuan, and Ganten is 1.8 yuan... Clearly, whether online or offline, 1-yuan water is everywhere, appearing across all channels. In April this year, Nongfu Spring launched green-bottle purified water, aggressively promoting it to bring the price per bottle below 1 yuan, with 12 bottles for 9.9 yuan. As the sales leader in the bottled water industry, it initiated a price war, and other brands quickly followed suit to protect their market share by cutting prices. As a result, 1-yuan water has gradually become the norm. So, are the major water companies all entering the 1-yuan water market? Is 1-yuan water really selling well? A Beijing distributor said: "Nongfu Spring's green-bottle purified water has low prices and low profits. It's distributed in circulation channels and small supermarkets, bringing some foot traffic to stores, but overall sales are not large. Currently, the red-bottle water sells more steadily." A terminal store in Hebei said: "Water priced around 2 yuan is the best-selling. Consumers have been used to it for years, but 1-yuan purified water is also good, to some extent dividing consumption levels and consumer groups." Zhong Shanshan also responded to the reason for launching green-bottle water: "Launching green-bottle water was something we had to do, and we only made one specification, one SKU, very restrained. We have always controlled the price of green-bottle water, not allowing it to be sold at a premium, to tell everyone that purified water is only worth that much." In other words, the selling price of purified water has reached its ceiling. From the feedback of distributors and terminal stores, purified water serves only as a traffic driver, while the mainstream still remains bottled water in the 2-yuan price range. Channel marketing expert Mr. Haiyou said: "The market capacity for 1-yuan water is still expanding. Nongfu Spring's green-bottle purified water seems like a price war, but it is actually a phased product, a moat for the red-bottle natural water. Behind it, it actually promotes the trend of price cuts in bottled water." Why 1-Yuan Water Is Returning to the Mainstream Why is the price cut in bottled water an inevitable trend? Mr. Haiyou shared four viewpoints:
First, the supply chain system is increasingly optimized, reducing costs; Second, consumers are becoming more mature and rational; Third, consumption downgrading has occurred, especially in lower-tier markets; Fourth, channel involution, especially channels led by snack stores, with water and beverages bearing the brunt. The cost of a bottle of water consists of two parts: packaging cost and transportation cost. China's entire supply chain system is continuously optimizing. Why did Pinduoduo's market value surpass Alibaba's in 2023? Why is the discount business model sweeping and penetrating the entire market? This reflects from the side that "cost and efficiency" are becoming the core competitiveness of every enterprise, and even the core force of the market. Take Nongfu Spring's green-bottle water as an example: why not use natural water for the price war, but instead launch purified water? Natural water has a strong dependence on water sources, which greatly increases transportation costs. From the perspective of the water itself, whether natural or purified, the cost of water may be only 1 cent, but the real cost is marketing and transportation. Purified water, on the other hand, has no scarcity, does not rely on water sources, and can be produced in factories anywhere, reducing transportation costs. The supply side will inevitably secure a larger market share through lower selling prices. On the consumer side, rational and mature consumers will not pay a brand premium for purified water. Whether it's 1-yuan or 2-yuan purified water, the quality is the same, and consumers will not spend an extra cent on products of the same quality. According to the "2024 Interesting Lifestyle Report," among the main factors consumers consider when purchasing food and beverages this year, price ranks second at 49.1%, second only to ingredient health (such as sugar control and salt reduction). Behind the low-price competition is the high demand for cost-effectiveness, and cost-effectiveness has become a significant path for corporate growth. "Originally, a bottle of water was 2 yuan, but now it reaches consumers at 1 yuan. Many channels, such as home delivery, Wumart Duodian, and flash warehouses, have already driven the price down to 1 yuan. The price has been implanted in consumers' minds. 1-yuan water has always been active in the market," said a Beijing distributor. Behind the intensifying competition from channel involution, market competition, and supply chain optimization, the essential water and beverage category always bears the brunt. Despite this, water companies of all sizes continue to flock to this track, with huge existing volume and growing scale. According to a CIC report, the retail sales of China's ready-to-drink soft drinks market reached 909.2 billion yuan in 2023, with packaged drinking water being the largest category, reaching 215 billion yuan in 2023. It is expected to reach 314.3 billion yuan by 2028, with a compound annual growth rate of 7.9%, making it one of the fastest-growing categories among all ready-to-drink soft drinks. Mr. Haiyou mentioned that the 1-yuan water market is fragmented, while the 2-yuan, 3-yuan, and 5-yuan water markets are concentrated. For example, 2-yuan water is represented by Nongfu Spring, C'estbon, and Jingtian; 3-yuan water is Ganten; and 5-yuan water is Kunlun Mountain. Because of high concentration, they receive more attention. In the 2-5 yuan price range, consumers have brand awareness, but in the 1-yuan price range, besides the well-known C'estbon and Nongfu Spring's green-bottle purified water, there are many large and small regional water companies active in local markets, with total volume far exceeding those in the 2-5 yuan range. Therefore, the future development of bottled water will be polarized. High-End Water Is the Watershed Bottled Water Will Move Toward Polarization The critical point of polarization is overall cost leadership. Michael Porter's positioning school divides strategy into three basic options: overall cost leadership, differentiation, and focus. While everyone is cutting prices, if you can still make a profit, that's your strategic advantage. You make a profit because you occupy the largest market share, have high operational efficiency, and your total costs are lower than others, squeezing competitors to second, third, or even out of the mainstream market. For example, for 1-yuan water, a 1*24 pack of 550ml drinking water, if you implement meticulous improvements in production, the production cost can be controlled below 5 yuan. Distributors purchase at 10-12 yuan, and terminal stores sell at 24 yuan, with relatively good profits. Secondly, purified water actually has no differentiation; the only differentiation is brand differentiation, but rational and mature consumers will not pay for brand differentiation. Finally, there is focus: no company will focus all resources on 1-yuan water. From these three points, only overall cost leadership, continuously compressing costs at every stage, will lead to lower prices. Therefore, 1-yuan water will always exist, and the price decline of mass-market purified water is inevitable. However, natural water and mineral water will not cut prices because these two types rely heavily on water sources, especially mineral water, where the state's control over mining permits is increasingly strict. Indeed, scarcity increases value. Mr. Haiyou mentioned, "Price wars and low-price strategies have never been the core competitiveness of enterprises, but low cost always is." Regarding low-end and high-end water, it will be a prolonged battle. Low-end water is the biggest lever for companies to expand territory and quickly capture market share, while high-end water, especially high-quality mineral water, will become the watershed among enterprise tiers. Undoubtedly, the future development of bottled water will move toward polarization. According to a CIC report, in 2023, the market size of purified drinking water accounted for 56.09% of packaged drinking water, with a compound annual growth rate of 7.7%, and in the next five years, its growth rate will be higher than that of natural mineral water. The scale and growth of purified water should not be underestimated, but due to its low moat, it is already a red ocean. The "2022 JD.com Supermarket Mineral Water Consumption Trends" report mentioned that the water source of mineral water has become a key factor in consumer purchase decisions, with more and more brands adding water source labels to their products. In the future, labeling water sources will become a trend, and the market for quality drinking water from premium water sources has huge potential. Clearly, the mineral water market is a blue ocean for major water companies and represents a long-term consumption trend.