Bottled water is a good business, but the pitfalls outnumber the paths. This is the sentence I say most often to every startup company that wants to do bottled water business. In September this year, two companies that wanted to operate bottled water business communicated with me a lot. Let me summarize some viewpoints to share with you. The Inescapable Principle of Overall Cost Leadership I often hear two viewpoints from water companies: 1. The market share of 1-yuan and 2-yuan water is so large that with a little effort, I can carve out a share. Nongfu Spring sells 10,000 cases; I only need to sell 1 case. The bigger the cake, the easier to slice, and my company can survive. 2. I will also adopt a follow-and-imitate strategy. Whichever capacity and packaging of water sells best in the market, I will imitate that one. There will always be opportunities. These viewpoints seem reasonable, but they overlook the most fatal factor: overall cost leadership. Take 1-yuan water as an example. Jinmailang, through ten thousand improvements, has reduced the production cost of 550ml drinking water in 124 packs to less than 5 yuan per pack. Nongfu Spring's cost is also close to this value. However, small and micro enterprises, due to factors such as uncoordinated production and sales, cannot achieve the production cost reduction brought by economies of scale, resulting in your production cost being higher than the wholesale price that first-tier brand distributors receive or even the retail price at terminals. Even if your marketing tactics are brilliant, it is difficult to have a competitive advantage. Moreover, first-tier brands also have brand power, as well as continuous investment in market expenses and human resources. Let me give another simple example: Why has no domestic company ever imitated Coca-Cola? Is it really because the formula is top-secret and impossible to surpass? Of course not, because imitators find that even if they produce similar products, they simply cannot make a profit. Coca-Cola uses its largest market share to dilute fixed costs, coupled with high operational efficiency, so it still makes money. Think about it: carbonated beverages have been the absolute number one for years, yet they haven't raised prices for over a decade. Is it really because they care about Chinese consumers? Summary: Price wars and low-price strategies have never been a company's core competitiveness, but low cost always is. Companies that want to start a bottled water business should never overlook this, otherwise, the market you have painstakingly built can easily be annihilated by industry giants in just a few months. Therefore, I do not recommend using 1-yuan and 2-yuan water as main products in the mass circulation market. Consider 3-yuan and above, or larger packaging bottled water, and make a play in segmented channels. Must Attach Great Importance to Differentiation Differentiation is a broad concept, such as product differentiation, marketing differentiation, communication differentiation, etc. Its purpose is only one: To seek market cracks through differentiation in the existing market, and like a nail, keep driving deeper to gain a foothold. 1. Channel Differentiation In the information age, product information surrounds users like air, causing users to develop self-protection awareness, which is what we often call information shielding. As a bottled water company, if your product cannot be purchased by consumers "on order" like Nongfu Spring, then in channels dominated by giants, whether it's limited offline shelves or unlimited online shelves, being ignored will be the norm. So the only way for a product to "sell" is where giants are scarce or absent. Are there such channels? Yes, and many. For example, you can use distributor relationships to supply meeting water within a government agency, or set up your own bottled water experience store plus home delivery in a local area. You can also choose to focus on household water in a region (currently no giant has heavily invested in this area), or do exclusive buyouts in local specialty restaurant channels, etc., channels that giants cannot or will not achieve due to economies of scale. A single spark can start a prairie fire. Although it's tiring, you can survive and develop. 2. Cultural Differentiation C'estbon has always used the slogans: "You and me, C'estbon" and "Pure heart, beautiful deeds"; Ganten has always used: "Aristocrat in water, Ganten." This is how water companies promote their product culture. As a startup water company, the first step is to create a positive, energetic, and universally appealing brand story for your brand. This story is the product culture. There are many stories, but it must be unique and you can only tell one story, otherwise, it's overkill. For example, there is a water company in Fujian whose water source has two major features: First, it is the hometown of top scholars, with many scholars throughout history; second, it is the hometown of longevity, with many long-lived people. My suggestion is: The concept of longevity has been promoted by several water companies for many years and has shown initial results; it's not easy to follow and tell again. Also, don't promote both scholars and longevity. Mainly because consumers are "forgetful"; remembering one concept is already difficult, so don't distract them further. 3. Product Differentiation I only emphasize two points:*** a. Don't hype the water source anymore. The great rivers and mountains of our motherland are all good; your water source is hard to stand out, especially since it's a strategy that has been used up by many companies. b. Don't hype the mineral elements in water anymore, unless the content of this element is extremely high or low and has been verified by national authoritative departments, and you have obtained relevant qualification certificates. 4. Packaging Differentiation I believe that the success of Ganten is largely due to its bottle shape. The water itself has no major difference except taste. Packaging design requires care; creating a classic bottle shape is very important. 5. Marketing Differentiation Putting it last doesn't mean it's unimportant, but it covers a wide range. For example: How to combine product characteristics, operating conditions, and company status to do offline channel coverage models? How to do brand content marketing and content seeding on various platforms? How to do online and offline BC integration, etc. Any one of these topics would require tens of thousands of words. In short, each company has its own marketing model, and the pros and cons can only be verified by sales volume. Summary: What is differentiation? Simply put, it's doing things differently from the giants. Avoid the channels where giants operate, and don't make the products that giants focus on. Especially for bottled water companies, no water company has ever exploded in a short time. This is a slow process. Don't hit an egg against a rock, and don't be stubborn and fight head-on. Our country has 1.4 billion people and 9.6 million square kilometers. The market is huge. As long as you are attentive, there will always be cracks. Just drive your differentiation nail in. Focus Is Essential Money is a good thing. Most people with money don't necessarily start a business, but those who do start a business must lack money. Previously, Evergrande Mineral Water was wealthy and threw billions or tens of billions into the market. In the end, it wasn't that they stopped throwing, but that they couldn't throw anymore. Focus is always an important corporate strategy. 1. Product Focus Nongfu Spring's annual sales of drinking water are around 10 billion yuan, of which 550ml bottled water accounts for no less than 60%. Don't think that all your products can sell. The same water in different bottle capacities has vastly different sales. Capacity determines the consumption channel, scenario, consumer group, and consumption timing. Do consumer insights, discover market opportunities, analyze the competitive landscape of products, and then select the one that best fits the current situation for key promotion. My suggestion is: one main product and two auxiliary products. Invest 80% of resources in the main product, 20% in the two auxiliary products, and let other products ride on the traffic. 2. Channel Focus My view is to find a niche market where the product can survive, become the leader in that niche, and achieve absolute sales volume, far exceeding the second place. For example, bottled water can precisely segment the tea house market in the form of tea-brewing water. List all the tea houses in the market, break them one by one, and strive for over 90% product coverage. When you achieve this, consumers will naturally think of your product when buying tea leaves. At that point, product power and brand power will gradually emerge, and you will have shaped your own core competitiveness. 3. Market Focus There is an old saying: "Bite off more than you can chew." When starting a factory, bosses are ambitious and plan to lay out the national market, recruiting and seeking distributors nationwide. Ask yourself a few questions: a. How many markets and distributors can your current capabilities manage? b. How many markets can your current funds maintain and serve? c. How many markets can your current production capacity supply? d. If promotion fails, how many resources are left to retreat to the existing market? If you cannot answer these questions truthfully, I advise you to first test a few markets to find the feel and model, which is more practical. Summary: **What is a focus strategy It's about what to do first when funds are insufficient, where to do it, what to do later, and where to do it. It's hard for the sun to ignite a piece of paper, but easy with a magnifying glass. Where is the magnifying glass for a bottled water company? That is the key focus strategy. Don't Put All Eggs in One Basket Does this contradict the focus strategy? Yes and no. Yes, because theoretically, it disperses energy and resources; no, because in actual operation, only bottled water is indeed very painful. 1. Recruiting distributors is painful Bottled water is an inevitable trend in beverage development, but it is indeed difficult for startup bottled water companies to recruit distributors. With distributors becoming increasingly cautious, the attrition rate of recruitment teams is high, and other beverages are needed for support. 2. Nurturing distributors is painful Although health is often mentioned, and 0 sugar, 0 fat, 0 calories are prevalent, consumers find it hard to give up the refreshing feeling of carbonated drinks and the pleasure of sugar. In the initial market distribution of healthy bottled water, due to the slow consumer acceptance, there are sales issues, and distributors' returns do not match their efforts. Other beverages are also needed for support. 3. The company is painful The off-peak and peak seasons for bottled water are very obvious. Especially for startup companies, they cannot use channel policies to guide supply chain partners to stock up. In the off-season, they face huge capital pressure, and this process cannot be changed in just two or three years. Other beverages are also needed for support. The core of not putting all eggs in one basket is to consider the potential risks and pressures during operation, and to make medium and long-term strategic plans. As I said, bottled water companies do not explode in a short time. It's a slow process that requires endurance. Great water companies are all forged through endurance. Finally, let me share a post I made on Moments a few days ago, which is beneficial for bottled water entrepreneurs. Last weekend, I had tea with a provincial distributor of a well-funded bottled water company. His evaluation of a relative's business was: "It looks big, but it's actually superficial prosperity, and profits are not optimistic." I have a few viewpoints: 1. A company should cook according to the size of its pot; greed leads to loss. 2. Small and micro enterprises rely on emotional connections, win people's hearts, and their core competitiveness is cohesion. 3. Large and medium-sized enterprises rely on institutional and cultural connections, and team cohesion is driven by vision and a sense of achievement. 4. All operators who do not aim for profit are hooligans; all operators without profitability are hooligans. 5. Leaders should be good at strategizing, generals at tactics, and soldiers at individual combat capability. 6. The most terrifying thing is: a small company suffering from the disease of a big company. There is no cure except changing the mindset. Are you "watching" me?