It is currently the peak season for bottled water sales. A reporter from China Business News visited the market and found that many supermarkets' imported water brands are proactively lowering their prices. On the drinking water shelves, low-end water at around 2 yuan is selling out, while high-end water priced at 4-10 yuan or more is not selling well.
The premium water industry is constrained by sales volume, and as consumer spending becomes more rational, simple and crude marketing and promotion are gradually losing their market appeal. The industry is thus entering an adjustment period.
This Summer's Drinking Water Market: Premium Water Shows Calm Performance
With the entry of Nongfu Spring and Evergrande Spring, the premium water market has become unusually lively. According to authoritative data, in 2014, China's bottled drinking water industry reached a scale of 100 billion yuan, with a profit margin of only 4%. Therefore, premium water, with prices and profits several times that of ordinary bottled water, has become the profit growth point pursued by various brands. However, looking at this summer's drinking water market, premium water has shown an unusually calm performance. At the Xi'an Food and Beverage Wholesale Market, many distributors complained to reporters that premium water is hard to sell; one distributor's imported drinking water brand sold less than half of its annual inventory.
After Nongfu Spring launched its high-profile glass-bottled premium water early last year, it attracted considerable industry attention, but as the traditional peak sales season for drinking water arrived, no water companies have joined the premium water battle that started early. In 2013, Uni-President launched its premium water brand Bama Spring and stated that its Changbai Mountain water plant would soon be operational, but its new product has yet to appear on the market. Similarly, Wahaha, which entered the premium water market last year with an oxygen-rich, weakly alkaline water, has made no new moves in the premium water market this year. Premium drinking water seems to have entered a truce phase this year. Kunlun Mountain, Tibet 5100, Aershan, Evergrande Spring, and Ganten are still the only domestic premium water brands visible on the market this year.
Established Premium Water Companies Lower Their Profile and Move to Mid- and Low-End Routes
While new brands have made no breakthroughs, established premium water companies have begun to lower their profiles and move to mid- and low-end routes. Shenzhen Jingtian Company launched a new purified water product, which, compared to its previous "aristocrat of water" brand Ganten, is more affordable in price and packaging. Does this indicate that after last year's intense premium water battle, consumers and companies are becoming more rational in their understanding of premium water, prompting the industry to quickly enter an adjustment period and rethink future marketing models and strategic approaches?
"The consumer base for premium water is inherently niche. Therefore, expanding this market is still somewhat difficult," said a staff member at a large supermarket in Xi'an. Their premium water sales have never been mainstream. Research shows that bottled water consumers are particularly price-sensitive, with a psychological price range of 2-3 yuan. In the premium water market, the decisive factor for sales success is brand. Consumers of premium water are no longer buying water; they care less about price and more about brand. This is the biggest confusion and obstacle for those companies eager to enter the premium segment but have yet to take action.
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