Click the image for details The high-end water market in 2019 is full of uncertainty. Recently, market sources said that Danone China would stop producing and selling Yili bottled water from January 16. On January 20, a reporter from Economic Observer Online confirmed the news with Danone China. Danone China stated that the decision was made to adapt to the rapid changes in the local Chinese market. The company evaluated its business development strategy and decided to make business adjustments, ceasing production and sales of Yili brand bottled water. The Yili large-barrel water business and other brands under Danone China will not be affected. In recent years, Danone China has been making adjustments in the drinking water sector. In 2016, Danone sold Lebus, including the brand and factories, completely divesting Lebus. Three years later, Yili faced adjustments again. An insider from a domestic drinking water company revealed to Economic Observer Online that Danone's internal business adjustments also reflect the current situation of the drinking water industry: the concentration of leading enterprises is increasing, and the gap between tiers will grow larger. A 30-year-old brand bids farewell to the bottled water market Drinking water and beverages are important business segments for Danone, with consumer-familiar brands like Evian and Mizone under its umbrella. According to Danone China's official website, in addition to the two brands mentioned, Danone's water product matrix also includes Yili, Badoit, and Volvic. Among these brands, Yili is a local Chinese brand under Danone. According to Yili's official website, as early as 1986, Shenzhen Mineral Water began production. In 1998, Shenzhen Mineral Water and the Danone Group formed a joint venture to establish Shenzhen Danone Yili Beverage Co., Ltd. and Shenzhen Danone Yili Spring Beverage Co., Ltd. Since 1998, the Yili brand has been deeply rooted in Shenzhen for 30 years. Now, although Yili brand barreled water will continue to be produced, Yili will bid farewell to the bottled water market. Regarding the news of Yili bottled water production halt, the above-mentioned insider from a domestic drinking water company made a judgment: "It's not because large packaging is more profitable, but because Yili's share in the bottled water market is not high. The homogeneity and substitutability among bottled water brands are high, and the entry barrier seems low, but catching up is difficult." Another drinking water industry insider told Economic Observer Online that from the Yili brand perspective, it only has a certain foundation in Shenzhen. In the national market, its brand competitiveness is not strong. The insider introduced that competition among domestic bottled water brands has gone through several stages: competition between drinking water and mineral water, competition for water sources, and price competition. After several rounds of competition, industry concentration has increased. Nielsen data shows that in October 2018, the Chinese bottled water market structure was: Nongfu Spring and China Resources C'estbon held the top two market shares, with Ganten ranking third at 10.1%, followed by Master Kong at 6.9%. The top three brands already occupied 60.1% of the bottled water market share. Yili, which was confined to one corner, also attempted to expand northward and increase its share, for example, in 2017, the brand cooperated with Didi Chuxing in Beijing; Yili also tried to change, such as launching cartoon bottle children's water in 2017 and colorful illustrated bottles in December 2018. However, Danone China's production halt notice indirectly indicates that these actions may not have worked. Danone China's next move Will Yili become the next Lebus? With the news of the production halt of bottled Yili, the market has begun to speculate. Danone is the world's second-largest producer of packaged drinking water and beverages. In addition to its two natural mineral water brands, Evian and Volvic, Danone owns well-known packaged water brands in many markets around the world, including Aqua in Indonesia, Bonafont in Mexico, Villa del Sur in Argentina, and Fontvella in Spain. Lebus, once a household name in the Chinese market, was also a Danone brand. In 2000, Danone acquired 92% of Lebus's equity in one fell swoop, becoming the company's largest shareholder. However, after acquiring Lebus, Danone did not continue to strengthen the brand; instead, it gradually divested multiple business segments of Lebus, finally leaving only the drinking water business. But the drinking water business was not spared either, and in 2016 Danone divested it. Danone has also publicly reflected: "We made mistakes on the Lebus issue." The above-mentioned drinking water company insider believes that from Lebus to Yili, the status of relatively mid-to-low-end water brands in Danone's drinking water segment is weakening, and high-endization may be Danone's strategy for the Chinese drinking water market in the future. For example, Evian has always been a representative brand in Danone's drinking water segment. In addition, in 2017, Danone launched a new high-end imported drinking water brand, Bonafont (actually, the brand is "极境之兰" in Chinese, but the English name is not provided; it might be a new brand), in China. At that time, Danone stated that in the packaged drinking water market, demand for high-end natural drinking water and imported water is growing. Industry insiders thus judged that focusing on high-endization may be the future development strategy for Danone's water business. In the high-end market, Danone has many competitors. Besides the active layout of local Nongfu Spring, Nestlé's high-end water brands Perrier and San Pellegrino are also increasing their market share. China's Huabin Group has also introduced the Norwegian high-end water brand VOSS to the Chinese market. The above-mentioned drinking water company insider frankly said: "True high-end water is not easy to do either. The main purpose is to enhance brand image and demonstrate corporate strength. For ordinary consumers, the obstacle to the high-end water market is just one word: 'expensive'." Source: Economic Observer Online New Distribution will hold the 2019 (5th) FMCG + Internet Conference during the Chengdu Spring Sugar and Wine Fair from March 16 to March 18. 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Conference Time: March 16-18, 2019 Conference Venue: Longfeng Hall, Chengdu Longemont Hotel Conference Topics 2019 5th FMCG + Internet Conference Date | Time | Venue | Topic 3.16 | Morning | Main Venue | B2B Special Session Afternoon | Main Venue | Regional Market Digital Intensive Cultivation Main Venue | Brand Channel Digitalization Special Session 3.17 | Morning | Parallel Forum 1 | Social E-commerce Parallel Forum 2 | New Logistics, New City Distribution Afternoon | Parallel Forum 1 | How Does Community Group Buying Reconstruct the Value Chain? Parallel Forum 2 | IP Empowerment, Boosting Brand Growth 3.18 | Morning | Sub-Venue | New Marketing Open Class Parallel Forum 2 | How Can Distributors Achieve Iterative Upgrades? Afternoon | Sub-Venue | New Marketing Open Class Registration Method The registration channel is now open. 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