On July 20, China's well-known packaged drinking water company China Resources C'estbon released its latest report card, with its 2022 performance growing against the trend, attracting attention. Under the 'dual-engine' strategy, the company not only achieved a record high market share in packaged drinking water, but its beverage business with a stream of new products is also becoming a new growth point, with new faces such as chrysanthemum tea joining the '100-million-yuan single product club'.

Performance Growth, Outperforming the Market

The 'China Resources C'estbon 2022 Sustainable Development Report' (hereinafter referred to as the report) stated that in 2022, China Resources C'estbon's packaged drinking water revenue increased by 10.1% year-on-year, beverage revenue increased by 37.3% year-on-year, and total profit increased by 14.1% year-on-year.

The report also mentioned that the company's revenue has ranked among the top six in China's beverage industry for five consecutive years, its market share in the packaged water industry has firmly ranked in the top two, and its beverage production volume ranks among the top three in the industry. In addition, in 2022, China Resources C'estbon's overall sales in Hong Kong increased by 81% year-on-year, exceeding expectations. It is worth noting that since 2019 before the epidemic, China Resources C'estbon has achieved profit growth for four consecutive years. Data shows that in 2019, C'estbon's operating revenue was 10.396 billion yuan, with total profit of 863 million yuan. In 2020, total profit increased to 1.037 billion yuan. In 2021, total profit rose to 1.205 billion yuan. In 2022, profit grew again. In March this year, China Resources C'estbon stated on its official WeChat account that over the past year, by adhering to steady progress, actively coordinating epidemic prevention and control, business development, and safety production, comprehensively promoting the 'four reshapings', and going all out to 'stabilize growth', it delivered an excellent answer sheet of 'outperforming the market and growing against the trend'. Among them, the 'four reshapings' refer to 'value reshaping (benchmarking against domestic first-class enterprises), business reshaping (opening up new battlefields on the basis of doing existing business well), organizational reshaping (promoting the tilt of resources towards the grassroots frontline), and spiritual reshaping (stimulating the endogenous driving force for entrepreneurship and innovation).'

According to AC Nielsen data, in the first five months of 2023, in the Hubei market, C'estbon's sales share reached 36.6%, with a growth rate significantly higher than all other competitors, leading the industry. And AC Nielsen's first quarter 2023 sales share data shows that C'estbon's market share reached 25.8% - that is, in the Chinese market, 1 out of every 4 bottles of drinking water is C'estbon.

Some industry insiders commented that in 2022, affected by internal and external environmental factors, many similar leading companies in the industry encountered situations of 'increasing revenue but not profit' or 'slight revenue with negative profit', while China Resources C'estbon ultimately achieved resilient growth with high double-digit figures, which is truly commendable.

Product Matrix, Increasingly Rich

In terms of new business, China Resources C'estbon's product matrix is becoming richer. While revenue from its main product, packaged water, maintained growth, revenue from other products also grew rapidly. Data shows that from 2017 to 2019, the company's new product sales were 61.4128 million yuan, 86.7104 million yuan, and 252 million yuan respectively. In 2022, based on the annual beverage revenue growth rate of 37.3%, China Resources C'estbon has achieved considerable gains in its cultivation of other products.

As of the end of 2022, China Resources C'estbon had 11 major brands and 41 SKUs, covering multiple beverage categories. In this report, China Resources C'estbon mentioned that its annual R&D investment increased by 25% year-on-year in 2022. At the same time, to comply with the health consumption trend, the company established a research system in the fields of sensory and microbial thermophilic bacteria.

In recent years, in addition to launching products of different specifications such as 4.5L, 6L, and 12.8L in the water category to target the home consumption scenario, China Resources C'estbon has also been continuously developing new categories and products, successively launching lactic acid bacteria beverage series, honey water series, holiday juice series, flavored tea series, chrysanthemum tea, lemon tea, and other new products, with an increasingly rich product matrix. According to media reports, 'C'estbon Chrysanthemum Tea', a new product launched in August 2021, has become the latest non-water beverage single product to join C'estbon's '100-million-yuan club'. At the same time, the five major beverage categories of China Resources C'estbon's holiday series, honey water series, coffee, milk tea, and chrysanthemum tea have all reached an annual sales scale of over 100 million yuan.

It can be seen that with the vigorous increase in 'non-water' business in recent years, this packaged water giant is gradually successfully building a 'second growth curve' in the beverage market, and the 'dual-engine' development pattern of packaged drinking water and beverages is gradually taking shape.

Focusing on Channel and Supply Chain Construction

China Resources C'estbon's breakthrough in products is inseparable from its cooperation and construction in channels and supply chain. As shown in the '2022 Beverage Industry Operation Analysis' released at the China Beverage Industry Association annual meeting, in 2022, the food and beverage industry faced various uncertainties. The beverage market landscape is constantly changing, and leading companies have run out against the market by virtue of their scale and channel advantages, as well as the strengthening of brand and category segmentation capabilities, and the white-hot competition among industry leaders is becoming increasingly fierce.

To address these challenges, the beverage industry continues to improve its technological level and production efficiency. Through digitalization, intelligence, and other means to improve production efficiency and further reduce costs, in order to maintain a leading position in the fiercely competitive market.

In terms of supply chain construction, China Resources C'estbon's East China production base (Yixing, Jiangsu), Wuyishan production base (Nanping, Fujian), and Guangdong Heyuan (Wanlv Lake) drinking water production base have started construction one after another, with capacity layout accelerating comprehensively, reflecting the acceleration of China Resources C'estbon's continuous supply chain transformation, aiming to provide strong support for increasing capacity proportion and effectively reducing the cost of the entire value chain.

In terms of channel expansion, while maintaining traditional terminal channels, China Resources C'estbon is also accelerating the development of emerging channels, including e-commerce platforms such as Taobao and JD.com, unmanned vending 'Bee Store', and interest-based e-commerce platform Douyin. Taking new products as an example, China Resources C'estbon mentioned in the report that in 2022, it carried out market promotion for 12.8L large-pack water products and chrysanthemum tea, combined with e-commerce and KA channel marketing, and introduced Douyin and Bee Store channels, using diversified marketing methods and channels to strengthen product awareness, exposure, and availability, thereby driving product sales.

Currently, China Resources C'estbon is striving for a listing. With its strong performance, the 'listing rumor' may soon become a reality.