---
title: "3 Yuan a Bottle, Which One Would You Choose?"
description: "Spending 3 yuan, which brand of mineral water would you choose? This simple question for consumers reflects the main competitive dynamics in the packaged drinking water industry. In recent years, with the rapid development of China's mineral water market, many companies have seen the huge dividends of the incremental market. Among them, Ganten, Nongfu Spring, and Evergrande Spring are undoubtedly the most powerful and influential brands in the 3-yuan price segment. Not long ago, Xu Jiayin, chairman of the Evergrande Group, personally announced that the group had repurchased shares of Evergrande Spring and would promote its listing in the future."
author: "里雨曦"
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published: "2021-05-22"
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# 3 Yuan a Bottle, Which One Would You Choose?

> Spending 3 yuan, which brand of mineral water would you choose? This simple question for consumers reflects the main competitive dynamics in the packaged drinking water industry. In recent years, with the rapid development of China's mineral water market, many companies have seen the huge dividends of the incremental market. Among them, Ganten, Nongfu Spring, and Evergrande Spring are undoubtedly the most powerful and influential brands in the 3-yuan price segment. Not long ago, Xu Jiayin, chairman of the Evergrande Group, personally announced that the group had repurchased shares of Evergrande Spring and would promote its listing in the future.

Spending 3 yuan, which brand of mineral water would you choose?
This simple question for consumers reflects the main competitive dynamics in the packaged drinking water industry:
In recent years, with the rapid development of China's mineral water category market, many companies have seen the huge dividends of the incremental market. Among them, Ganten, Nongfu Spring, and Evergrande Spring are undoubtedly the most powerful and influential brands in the 3-yuan price segment.
Not long ago, Xu Jiayin, chairman of the Evergrande Group, personally announced that the group had repurchased shares of Evergrande Spring and would promote its listing in the future. Almost at the same time, Nongfu Spring, a domestic packaged drinking water giant, launched its ninth new product this year, a natural mineral water named "Changbai Snow". Coupled with the leading brand Ganten in the 3-yuan mineral water segment, the 3-yuan mineral water market is about to form a "three-way melee" situation.
Competition and market complement each other, and brands and industries achieve mutual success. In the 3-yuan mineral water consumption field, who will win? Who will dominate?
****-01-******Giants Enter**
With the same water source and entering the market at the same time, Nongfu Spring and Evergrande Spring seem to be in sync in their mineral water businesses this time.
On March 31, at China Evergrande's 2020 results conference, Xu Jiayin said that the group had bought back 49% of Evergrande Spring's equity and was planning to list it. "Now Evergrande's diversified development aims to achieve a fully closed industry chain for clothing, food, housing, transportation, health, tourism, and entertainment."
In 2013, Evergrande Group entered the packaged drinking water market strongly, launching Evergrande Spring. Evergrande chose the core spring source of Changbai Mountain and built its own water source base and logistics channels. It spared no expense in marketing and promotion, making Evergrande Spring a household name in a very short time.
However, the overwhelming advertising did not translate into actual sales. A few years later, Evergrande Group exited with huge losses, and Evergrande Spring could not maintain its original high-end water positioning; its core products had to lower their prices to around 3 yuan.
Industry insiders believe that Evergrande Group's return is mainly due to the downturn in the real estate market and the uncertain prospects of its new new-energy vehicle business, so the group urgently needs to find reliable business support. Against the backdrop of the bright prospects of the big health industry and the trend of health and wellness becoming the future of the real estate industry, Evergrande Group's re-emphasis on Evergrande Spring, which is relatively mature in both brand and industry, reflects considerations of stability.
Interestingly, a few days after Evergrande Group announced the buyback of Evergrande Spring, Nongfu Spring announced that it would launch a natural mineral water product "Changbai Snow" priced at 3 yuan. A Nongfu Spring spokesperson responded to the media: "The new product will directly target the 3-yuan natural mineral water segment and will be fully rolled out across all channels nationwide."
However, industry speculation suggests that although the launch timing of "Changbai Snow" is awkward and it also chose Changbai Mountain as its water source, Nongfu Spring's move is not aimed at Evergrande Spring but at the current leading brand in the 3-yuan natural mineral water segment—Jingtian Ganten.
In response, the two brands at the center of the storm remained relatively calm.
Nongfu Spring told the reporter of Caijing National Weekly that Nongfu Spring had launched mineral water products long ago; its previous student water and high-end water were mineral water products. Moreover, Nongfu Spring had started research in the mineral water field early on. Currently, there are not many good mineral waters on the market, and consumers do not have much awareness of them, so Nongfu Spring finds it necessary to launch a good mineral water to let consumers understand what truly good mineral water is.
Jingtian Ganten told the reporter of Caijing National Weekly that the upgrade of consumption trends has made more water companies realize that natural mineral water is the best water type. In the future, consumer demand for natural mineral water will increase, and natural mineral water will become the mainstream category in the drinking water industry.
However, in reality, the confrontation between Nongfu Spring and Ganten has been frequent in recent years, and their competition in channels and terminals is clearly not as calm as it appears on the surface.
At the end of last year, an industry insider reported to this magazine that Ganten and Nongfu Spring were engaged in a "war of words" at the terminal.
At a small store's Nongfu Spring display, a sign reading "Nongfu Spring is natural water, not purified water" was prominently erected, with targeted language seemingly aimed at its competitors—purified drinking water represented by C'estbon and Jingtian. Ganten's mineral water, known as the "aristocrat in water," naturally did not want to be outdone, and next to Nongfu Spring, it put up a slogan in response: Ganten is natural mineral water, not "natural water."
In a small store, the confrontation between the two industry giants was clearly full of gunpowder.
In addition, in recent years, Jingtian's barreled water and Nongfu Spring have also engaged in fierce competition in the household and office water market, with both sides promoting heavily online and offline, neither giving in.
Chen Wei, a senior beverage marketing expert, said that competition among drinking water companies is very normal and reflects the execution and combat effectiveness of enterprises.
"It is a good thing for major companies to increase their efforts in the mid-to-high-end mineral water business," said Zhu Danpeng, a food industry analyst in China. China's mineral water industry is currently in a stage of expansion. Whether it is Nongfu Spring or Evergrande Spring, the entry of large enterprises and brands will enhance the consumption atmosphere of the entire mineral water field, and the improvement of the category will also bring certain benefits to brands like Ganten that have been deeply cultivating the category for many years.
****-02-******Why 3-Yuan Mineral Water?**
In fact, as Zhu Danpeng said, China's mineral water category indeed has a lot of room for improvement.
Packaged drinking water mainly includes four sub-categories: natural water, natural mineral water, purified drinking water, and other drinking water. The largest is not natural water or natural mineral water, but purified drinking water, which accounted for 64% in 2019, while natural water accounted for 23%, and natural mineral water only 9%.
However, with the enhancement of Chinese consumers' health awareness and spending power, natural mineral water has grown rapidly in recent years. Public data shows that from 2014 to 2019, the compound annual growth rate of natural mineral water was about 18.4%. By retail sales, the market size of natural mineral water reached 15.1 billion yuan in 2019. Institutions predict that this trend will continue, with an estimated compound annual growth rate of about 14.2% from 2019 to 2024.
Therefore, it is not difficult to understand why since 2020, many companies have entered and increased their efforts in the mineral water industry.
In 2020, Orion, a giant in the snack food industry, launched its first drinking water product to enter China; Junyao Dairy, which mainly produces lactic acid bacteria beverages, established a mineral water company to officially enter the water business; coupled with brands such as Ganten, Kunlun Mountain, Evergrande Spring, Gesang Spring, and Yangquanyang that have already occupied a certain market share in the consumer market, the mineral water category is expanding rapidly in both market size and number of brands.
What is the logic behind mineral water clustering in the 3-yuan price segment?
In recent years, the growth rate of 1-yuan water has gradually declined, and 2- and 3-yuan water have become the main growth drivers of the industry. The reason mineral water can become the main product of water companies and attract companies to enter is due to the high profits of the product. The average profit margin of ordinary packaged water in China is only about 4%, while the profit margin of mid-to-high-end mineral water is about 25%.
Public data shows that in 2019, the gross profit margin of Nongfu Spring's packaged drinking water products was as high as 60.2%, a ratio that is almost second only to baijiu in the food and beverage industry.
Zhu Danpeng believes that 3-yuan water has a certain price difference, but this difference is acceptable to consumers, and it is a relatively cost-effective pricing for both enterprises and consumers. Moreover, mineral water is definitely an important growth pole under the expansion of packaged drinking water, which is also the core point for companies to increase their efforts in 3-yuan mineral water.
Ganten told this magazine that due to the healthiness and scarcity of mineral water, mid-to-high-end water brands at home and abroad are all natural mineral water. AC Nielsen data in recent years also shows that the sales share of bottled mineral water in China has risen rapidly year after year, while the share of purified water, natural water, and mineralized water has declined significantly.
****-03-******Each with Their Own Agenda**
"Full rollout across all channels nationwide," "planning to list," "natural mineral water is the best water type"—whether it is Nongfu Spring, Evergrande Spring, or Ganten, they all seem to show their determination to win in the mineral water business. In reality, the three major brands have different intentions and focuses in their layout for 3-yuan mineral water.
Industry insiders believe that Nongfu Spring, which has always focused on natural water, launching mineral water is undoubtedly forced by circumstances. On one hand, there is pressure from the expansion of competitors; on the other hand, performance growth is showing signs of fatigue, forcing Nongfu Spring to consider product changes.
Nongfu Spring's 2020 performance announcement shows that its annual operating revenue was approximately 22.877 billion yuan, a year-on-year decrease of 4.8%; net profit was approximately 5.277 billion yuan, a year-on-year increase of 6.6%. It is worth noting that Nongfu Spring's packaged drinking water, tea beverages, functional beverages, fruit juice beverages, and other products all saw revenue declines. Among them, packaged drinking water revenue was 13.966 billion yuan, a decrease of 2.6% from 2019.
It can be seen that Nongfu Spring's water business has already experienced negative growth, with growth only in sub-categories such as soda water beverages, oxygenated flavored beverages, coffee beverages, and plant-based yogurt products. These small categories are difficult to support the growth of a company of Nongfu Spring's size.
From the outside, competitors like Ganten have grown rapidly in recent years, squeezing Nongfu Spring in both channels and terminals, making Nongfu Spring aware of the crisis. The launch of "Changbai Snow" this time, whether in category or pricing, is considered to be targeting Ganten.
More importantly, with the continuous improvement of consumers' awareness of drinking water health and the continuous improvement of consumption levels, mineral water has become a new growth pole for the industry. As a "veteran" in the packaged drinking water industry, Nongfu Spring has to admit the bright prospects of mineral water.
Of course, Nongfu Spring is not the only one that sees the prospects of the mineral water industry. Evergrande Group also seems to have woken up, and this return reveals a bit of its unwillingness.
Previously, according to Evergrande Group's plan, the bottled water project was to be built into another 100-billion-yuan sector besides the real estate business, and Xu Jiayin even planned a 10-year development plan for it.
However, under the high-profile approach, the actual performance of Evergrande Spring was disappointing. In the year of its launch, it only sold 1.09 billion yuan, which was not even enough to fill the advertising costs Evergrande had spent. In the end, the FMCG market did not give this new brand with a real estate background and real estate playbook a chance. Three years later, Evergrande Group exited gloomily, selling Evergrande Spring at a discount for 1.8 billion yuan, at which time Evergrande Spring had suffered huge losses of 4 billion yuan.
However, after leaving Evergrande, Evergrande Spring has not stagnated in recent years. It has invested in new factories to expand capacity, launched the "low sodium water" series, and further reached consumers through Evergrande Group's own channels... Obviously, in the packaged water project, Evergrande Group has never truly left, and this return will bring more support to Evergrande Spring.
▲Evergrande "low sodium water"
Now let's look at Ganten, the long-term "hegemon" in the mid-to-high-end mineral water field. Facing the "invaders," this brand has been preparing for battle.
Ganten first adopted a strategy of "attacking as a defense." In recent years, Jingtian Company has continuously launched new products, and its diversified layout has begun to show results. Shortly after Nongfu Spring announced the launch of 3-yuan mineral water, Ganten made another major announcement, declaring its entry into the skincare field, possibly launching a metasilicic acid hydrating spray, with the raw material being natural mineral water.
Ganten told this magazine that the company's launch of the skincare spray is based on its advantage of having natural mineral water sources, because the metasilicic acid content in its natural mineral water sources is high, which helps improve cell elasticity. Launching new products is to enrich the company's brand matrix and also an attempt to cultivate the market.
In addition, Jingtian Company has continuously expanded its main packaged drinking water business. In 2017, Jingtian Company's ultra-high-end mineral water Benlaiwang was launched, and since then, Jingtian Company has formed a "high, medium, low" market coverage pattern with Benlaiwang, Ganten, and Jingtian. In the same year, Jingtian Company entered the barreled water business, launching 14.8L one-time packaged drinking water, competing with other giants in the barreled water market. This year, Jingtian Company launched the 4.5L Ganten large-barrel water, which is another increase in the large-packaged water market after its sibling brand Jingtian launched 4.6L large-barrel water.
By continuously increasing product lines, Jingtian Company has gradually formed a strategic layout with Ganten as the core and diversified development.
****-04-******Who Wins?**
With its strong strength, Nongfu Spring wants to continue to complete its "unification" of the packaged drinking water territory in the mineral water field;
Ganten, the "hegemon" in the mid-to-high-end mineral water field, shows greater ambition while holding its main business;
Evergrande Spring, once again with the capital advantage of Evergrande Group, wants to stage a comeback.
Many people cannot help but ask: in this "three-kingdom struggle" over 3-yuan mineral water, who will win?
Zhu Danpeng believes that in the 3-yuan mineral water field, Ganten is dominant, and consumers have extremely high brand awareness and acceptance of Ganten. In contrast, most of Nongfu Spring's audience has a deep-rooted perception of its 2-yuan water positioning, and consumers' acceptance of Nongfu Spring's 3-yuan water will not be high. Therefore, in his view, Nongfu Spring and Evergrande Spring are only aiming to reap a wave of dividends from the incremental mineral water market.
Nongfu Spring has launched mineral water products before.
As early as 2015, Nongfu Spring released three bottled water products: Nongfu Spring natural mineral water (glass bottle), Nongfu Spring natural mineral water (sports cap), and Nongfu Spring drinking natural water (suitable for infants). However, to this day, Nongfu Spring's mineral water products have not gained any traction, and the results have been unsatisfactory.
An industry insider told this magazine that Nongfu Spring's previous mineral water project can be said to have failed. Although the overall growth of the mineral water category will bring some profit increment to Nongfu Spring, in the long run, it will be difficult for Nongfu Spring to achieve much in the mineral water business.
However, Chen Wei believes that after Nongfu Spring's listing, the team's management and morale are stronger than before, and it has firmly occupied the position of the first group in the water and beverage industry. Nongfu Spring's entry will still pose a certain threat to Ganten.
Regarding whether the continuous entry of competitors has put pressure on Ganten, Ganten did not respond directly, only saying that many companies have begun to pay attention to the mineral water field, which to a certain extent shows that natural mineral water is an irreplaceable high-quality water type, proving that Ganten's decades-long brand strategy of only producing natural mineral water is very correct.
Compared with Ganten and Nongfu Spring, Evergrande Spring is more "bearish."
An industry insider said that Evergrande Spring's previous failure was partly due to the fact that Evergrande Group, as a real estate company, did not understand the development laws of the FMCG industry. At the same time, Evergrande Spring's dependence on Evergrande Group is too strong, and there are certain limitations in channel construction, making it difficult for Evergrande Spring to truly enter the circulation market.
However, at present, Evergrande Group seems not to have realized these problems.
In this re-purchase of Evergrande Spring, Evergrande Group stated that in terms of sales model, Evergrande Spring will leverage the group's advantages in the national layout of the real estate field, establishing direct sales wholesale points in more than 130 cities and over 200 real estate projects across the country, focusing on direct-operated channels and modern channels, supplemented by special channels and distributor channels.
In addition, Chen Wei believes that Evergrande Spring's problem lies in the fact that its water source is limited to Changbai Mountain, with a single and concentrated water source, resulting in too long a logistics radius. Moreover, compared with the stable teams and channels of Nongfu Spring and Ganten, Evergrande Spring has constant fluctuations in policies, personnel, and channels, which greatly reduces the brand's consumption, reputation, and execution.
Evergrande Spring's previous failure also proves the above point to a certain extent. This magazine sent an interview letter to Evergrande Agriculture and Animal Husbandry Brand Center regarding issues related to Evergrande Spring's development. The other party said that Evergrande Spring is formulating a new brand plan, which is still in the preparation stage, and cannot answer interview questions at present.
However, on the other side of the coin, the return of Evergrande Group has also brought some benefits to Evergrande Spring. Previously, driven by capital, Evergrande Spring went from a start-up brand to a household name in just one year, and it can even be said to have completed the brand building path of a decade for an FMCG brand. From this point of view, Evergrande Spring is undoubtedly successful, whether in strategic courage and boldness or in the use of capital, and it is worth learning from for other enterprises.
Now, the flames of war have been lit. In the future mineral water market, who will dominate? Let's wait and see.
Source: Caijing National Weekly (ID: ENNWEEKLY) Author: Li Yuxi
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