The history of China's bottled water market, roughly speaking, is outlined by a series of marketing cases. The birth of giants and the change of overlords are often accompanied by new concepts and new marketing forms.
'Boiled water' has become a new battlefield for giants in the past two years. In July, Uni-President launched 'Liang Kaishui' (cooled boiled water). At this point, the three major instant noodle giants—Master Kong, Uni-President, and Jinmailang—along with the leading packaged water company Nongfu Spring, have all launched similar products.
Liangbaikai, Baikaishui, Hekaishui, Liangkaishui—these everyday terms have become product names for various brands. Boiled water itself probably never imagined it would become so confident, priced at 2 yuan per bottle on shelves.
'Advanced technology,' 'ancient craftsmanship,' 'better suited for Chinese constitution,' 'boiled water is easily absorbed'—giants use these to market a bottle of boiled water. However, in the eyes of industry insiders, the 'redefinition' of a bottle of boiled water has more marketing significance than practical significance.
Looking back at the rise and fall of major packaged water giants, Wahaha purified water, Nongfu Spring natural water, Master Kong mineral water, Ganten natural mineral water... The rise of every giant is a marketing victory.
01 Boiled Water: The New Battlefield for Giants
Jinmailang launched 'Liangbaikai' in 2016, bringing the concept of 'boiled water' to the packaged water industry. At that time, there were many doubts, and other major giants did not take this new market seriously.
In just a few years, 'Liangbaikai' became the core product of Jinmailang's beverage business. Fan Xianguo, chairman of Jinmailang Group, stated that Jinmailang Beverage's sales revenue in 2020 was about 3 billion yuan, with 'Liangbaikai' sales exceeding 2 billion yuan.
In China's packaged water market, which has low barriers, easy imitation, and difficulty in differentiation, competition is fierce, and it's hard for a single product to reach billions in sales. 'Liangbaikai' made the exhausted giants see a new continent.
In 2020, Master Kong launched 'Hekai Shui'; in January 2022, Nongfu Spring quietly introduced 'Baikaishui'; half a year later, Uni-President launched 'Liangkaishui.' Like 'Liangbaikai,' 'Hekai Shui' and 'Baikaishui' also mainly promote 550ml bottles with a retail price of 2 yuan, while 'Liangkaishui' mainly promotes 1L bottles with a retail price of about 3 yuan.
(Photo by Shijie: Nongfu Spring 'Baikaishui', Jinmailang 'Liangbaikai', and Master Kong 'Hekai Shui')
'Some imitate my face, some imitate my noodles.' Compared to the instant noodle market, this wave of imitation in the boiled water market is even more intense, with product names confusing and marketing strategies similar.
Jinmailang claims that the core technology of 'Liangbaikai' is UHT 125°C pure physical boiling sterilization; Nongfu Spring says 'Baikaishui' is boiled to 100°C, 'restoring ancient craftsmanship'; Master Kong says 'Hekai Shui' is boiled at 135°C ultra-high temperature, an 'advanced technology'; Uni-President's 'Liangkaishui' claims 'it tastes like home-boiled water.'
'Taihe Tang' from the 'Compendium of Materia Medica' has also been used by Jinmailang and Master Kong for promotion.
'Liangbaikai' claims 'drinking boiled water is good for health,' 'soft taste, comfortable to drink,' 'more suitable for Chinese stomachs,' 'more suitable for Chinese constitution'... 'Hekai Shui' prints 'boiled water is easily absorbed' in red letters on the bottle.
Consumers' minds are quickly captured by such marketing. According to media citing CICC research data, Master Kong's 'Hekai Shui' sales in 2021 were nearly 1 billion yuan.
In the so-called 'boiled water' market, Jinmailang and Master Kong have become dual giants. Jinmailang even shouted the slogan of making 'Liangbaikai' a 'super single product aiming for 10 billion.'
Through patent search, Shijie found that Jinmailang's 'Liangbaikai' production process is as follows: front-end water treatment—degassing (removing CO2)—UHT heating sterilization—canning—cooling to obtain the final product.
Front-end water treatment involves raw water passing through coarse filtration (disc filter), ultrafiltration, activated carbon filtration, security filtration (using 5μm filter), and primary reverse osmosis filtration; UHT heating sterilization involves passing degassed clean water through a UHT sterilizer for heating sterilization (temperature 125°C).
The process specification mentions that the 'Liangbaikai' produced by this process has 'good taste, a sense of boiled water... conducive to small molecular clusters passing through cell water channels, easier to be absorbed by human cells, accelerating metabolism.'
From the process, 'Liangbaikai' can basically be considered purified drinking water before UHT heating. 'Hekai Shui' is similar; before ultra-high temperature boiling, it has already passed through 'natural coconut shell activated carbon and nano-level double filtration.'
'Liangbaikai' and 'Hekai Shui' implement the group standard (T/CBIA 007-2021), and there is currently no relevant national standard. In this standard, so-called boiled drinking water refers to packaged drinking water made from surface, underground, or public water supply systems as sources, processed by heating sterilization at no less than 100°C.
Essentially, 'Liangbaikai' and 'Hekai Shui' can be seen as purified drinking water or other types of drinking water in packaged water, and the so-called 'boiled water' is considered more of a marketing concept.
Yun Wuxin, a food engineering PhD and science writer, said that in the past, people had limited means of water treatment, and 'heating to boil' or 'cooking' was almost the only viable method; now, people have more options to better achieve water sterilization and purification, such as chlorine compounds, ozone, ultraviolet, activated carbon, reverse osmosis, etc.
'Traditional 'boiled water' is not necessary for health,' Yun Wuxin believes. 'Smaller water molecular clusters' only exist at high temperatures; after heating and cooling to room temperature, it returns to its normal state.
Zhu Danpeng, an analyst at China Food Industry, told Shijie that 'boiled water' is a marketing concept. Whether it's 'Liangbaikai' or 'Hekai Shui,' they play the nostalgia card. The 'boiled water' concept carries more marketing significance than practical significance; it's more about selling a concept.
02 The Rise of Giants: Marketing Victories
Creating concepts, aggressive marketing, capturing minds, rapid rise. In the segmented market, Nongfu Spring's 'Baikaishui' and Uni-President's 'Liangkaishui' have been in the market for a shorter time, while 'Liangbaikai' and 'Hekai Shui' have become dual giants.
Looking back at the development history of the packaged water market, the rise of every overlord can be seen as a marketing victory.
In 1990, C'estbon in Shenzhen, under the leadership of General Manager Zhou Jingliang, produced China's first bottle of purified water, but the first to rise in the packaged water market was not C'estbon but Wahaha in Hangzhou—which pioneered celebrity endorsements.
As domestic drinking water pollution issues gained attention, in 1996, Wahaha, already famous in the health products market, launched purified water products. To quickly promote, Wahaha invited Jing Gangshan as spokesperson and used his song 'My Eyes Only Have You' as the main advertising song, investing heavily in CCTV ads.
To leverage the star effect, Wahaha took Jing Gangshan on a national tour to meet fans, then held free giveaways and tasting events in supermarkets and stores, combined with advertising and promotion, quickly conquering the market.
In the year of the purified water launch, Wahaha's share in the bottled water market rose to first place.
After Jing Gangshan, Wahaha's cooperation with Wang Leehom lasted longer. In addition, in 2001 and 2002, Wahaha won the 'A Special' slot (15-second slot after 'Weather Forecast') on CCTV with bids of 22.11 million yuan and 20.15 million yuan, respectively.
CCTV's 'bid king' has a magic power; it can rapidly expand brand awareness and bring huge revenue.
In those years, Wahaha purified water was the overlord of China's packaged water market.
Robust, Wahaha's old rival in the health products market, saw Wahaha's success and also started producing purified water, inviting Leon Lai as spokesperson, engaging in a 'water war' with Wahaha. But due to a series of decision-making issues, Robust purified water lost ground after a few years.
A bigger challenge came from Nongfu Spring. Its challenge to the 'old era overlord' was to overthrow it. Through a series of event marketing, Nongfu Spring rose from obscurity.
In 2000, the packaged water market was still dominated by purified water, but Zhong Shanshan, a 'former general' of Zong Qinghou, showed no mercy, shocking the press conference: purified water lacks minerals, is not as good as natural water, 'purified water is not beneficial to human health,' and declared that Nongfu Spring would no longer produce purified water but focus on natural water.
As soon as these words were spoken, the media rushed to report, and the topic heated up. At the same time, Nongfu Spring also placed ads on TV and other media, conducting a series of controversial comparative experiments to prove its theory. For example, using purified water and natural water to grow narcissus, to see which grows faster.
Almost overnight, Nongfu Spring became the industry's 'public enemy.'
Wahaha, Robust, and dozens of purified water producers jointly issued an 'anti-Nongfu joint statement,' requesting relevant departments to severely punish Nongfu Spring's 'unfair competition behavior.' Ultimately, Nongfu Spring was fined 200,000 yuan.
However, under the marketing momentum, the concept of 'natural water' entered people's minds.
While Nongfu Spring was in close combat with purified water giants like Wahaha and Robust, Master Kong, which sold instant noodles, couldn't stand by and launched mineral water in 2003—adding a certain amount of minerals to purified water.
Nongfu Spring was also stunned. With the concept of 'mineral water' and the ad 'A little more, life is healthier,' Master Kong's 1-yuan mineral water became a weapon for attacking cities, leading to the rapid rise of Master Kong's packaged water.
Nongfu Spring didn't want rivals to surpass it. When Wahaha was deeply embroiled in a equity dispute with Danone, Nongfu Spring began distributing pH test strips free on the streets to test the pH of mineral water, targeting rivals like Master Kong, Wahaha, and C'estbon, aiming to break the existing market structure and re-rank.
To market the 'acid-base theory,' Nongfu Spring also entered schools. Lin Xiao remembers that in 2006, when she was at a middle school in Haidian, Beijing, Nongfu Spring promoters gave each class a free box of water and pH test strips to test the acidity or alkalinity of the water.
Through this series of marketing, Nongfu Spring wanted to show that weakly alkaline water is good water, while acidic water is not beneficial to health.
Relying on various marketing strategies and the catchy slogan 'We don't produce water; we are nature's porters,' Nongfu Spring has been the undisputed leader in China's packaged water market for several consecutive years since 2017.
Between the 'old overlord' Wahaha and the 'new overlord' Nongfu Spring, Master Kong and C'estbon have also been leaders.
C'estbon had a troubled early period, only turning around after being acquired by China Resources. After clearly positioning in 2004, C'estbon focused on sports event marketing, sponsored variety shows, and used China Resources Snow's 'mushroom strategy' to expand nationally.
After leaving C'estbon, Zhou Jingliang founded Shenzhen Jingtian, whose Ganten brand, with its 'aristocrat in water' identity marketing, became the overlord of natural mineral water. Zhou Jingliang also became the 'father of China's packaged water.'
Spokespersons, concepts, water sources, slogans, event planning... Water is plain, but with more marketing, it stirs waves.
03 The 200-Billion-Yuan World of a Bottle of Water
From Wahaha, Robust, C'estbon purified water, to Nongfu Spring natural water, Master Kong mineral water, to Ganten, Evergrande Spring, Kunlun Mountain, Tibet 5100 and other natural mineral waters, to the current so-called 'boiled water' like 'Liangbaikai' and 'Hekai Shui,' in this water business, with various marketing, what exactly are everyone competing for?
Let's start with the packaged water category. Beverages are a large category, including packaged water, fruit and vegetable juices, protein drinks, carbonated drinks, flavored drinks, tea drinks, coffee drinks, plant drinks, special purpose drinks, and other subcategories.
Among so many beverage subcategories, packaged water is the largest, with a market size exceeding 200 billion yuan, making it an absolutely large track. This is an important premise for the various marketing and 'water wars' among giants.
Packaged water includes purified drinking water, natural mineral water, and other types of drinking water (mainly including natural spring water, natural water, and other drinking water). The most significant difference is the water source.
(Photo by Shijie: A supermarket shelf in Beijing in late August)
In the market, different water sources lead to different marketing concepts, and of course, different 'prices,' and there is a hierarchy, with natural mineral water often at the top.
In this water business, two Chinese richest men have emerged: Zong Qinghou and Zhong Shanshan. This fully shows that this is a 'money-making' business, even a 'nature's money printer,' so much so that Nongfu Spring dares to say, 'We are one of the most profitable companies in the beverage industry in China and globally.'
Nongfu Spring is already a huge beverage complex, and the annual report does not separately disclose the gross margin of various products. From the prospectus, in 2019, the gross margin of Nongfu Spring's packaged water products exceeded 60%, while the gross margins of core products of Tsingtao Brewery and Yili shares were less than 39% in the same period.
From the cost perspective, the largest cost of Nongfu Spring's packaged water is packaging materials like PET, cartons, and labels. In 2019, packaging materials accounted for 63% of sales costs. To obtain water resources, manufacturers need to pay water resource fees or taxes to local authorities regularly, but these are almost negligible when spread over each bottle.
This is the fundamental reason why this business is 'attractive'—the industry chain is short and not complicated, and it's very profitable.
In recent years, the competitive landscape of the packaged water market has stabilized, with Nongfu Spring, C'estbon, and Ganten firmly in the top three.
Jinmailang launched 'boiled water,' avoiding the high wall of 'water sources' from various mountains, rivers, lakes, and seas, and distinguishing itself from the original 'raw water' in the market. So, when the new story came, Master Kong and others followed closely.
The original 1-yuan water has been trying to move to 2 yuan in recent years, but competition is fierce, and price wars continue. Except for higher prices in convenience stores, in channels like supermarkets, community group buying, and e-commerce, not many truly reach the 2-yuan price band. Supermarkets have brand promotions almost every day, and buying a pack often averages only a few cents per bottle.
(Photo by Shijie: In a Beijing supermarket in late August, Nongfu Spring 12-pack at 10.9 yuan, Ice Dew 12-pack at 7.5 yuan)
'Liangbaikai' and 'Hekai Shui' directly set the retail price at 2 yuan, also using the so-called new category to push price increases.
Zhang Kai, a Jinmailang business person, told Shijie that if acting as an agent, the profit for 'Liangbaikai' is 4-5 yuan per 24-bottle case; if a supermarket buys from an agent, it's 24 yuan per 24 bottles, with a retail price of 2 yuan per bottle.
UHT is an ultra-high temperature process, not an advanced technology, and is common in the food industry, widely used for instantaneous high-temperature sterilization of products like room-temperature milk. This process helps 'boiled water' stand firm at the 2-yuan price band.
Master Kong seems more eager to expand the 'boiled water' market. Among the companies launching 'boiled water,' none have yet hired spokespersons, but 'Hekai Shui' invited Cai Xukun as spokesperson in 2021.
(Photo by Shijie: 'Hekai Shui' on a supermarket shelf in Beijing)
Li Shang, a Master Kong distributor in Beijing, told Shijie that the supply price of 'Hekai Shui' to supermarket terminals is 24 yuan per 24 bottles, with additional gifts—at least 2 yuan red envelope per case, and one free case for every 10 cases, 'averaging 20 yuan per case.'
In contrast, Master Kong's classic blue packaged water has a supply price of 15 yuan per 24 bottles, with less profit margin than 'Hekai Shui' during the promotional period.
The urgency of several giants, mainly Master Kong, can probably be found in financial reports.
In the first half of 2022, Master Kong's beverage business revenue increased 9% year-on-year to 24.298 billion yuan, but net profit dropped 37% year-on-year to 744 million yuan. Uni-President also saw revenue increase but profit decrease in the first half, while industry leader Nongfu Spring's packaged water product revenue was 9.35 billion yuan, up 4.8% year-on-year, having left high growth, compared to nearly 26% in the same period last year.
'The packaged water market is highly homogeneous, with little room for innovation and iteration,' Zhu Danpeng said. To break through in a stable competitive landscape and maintain original positions in an involution market, new stories are needed.
Behind the giants' marketing of 'boiled water' is more anxiety about performance growth. (Lin Xiao, Zhang Kai, and Li Shang are pseudonyms)
References: 'Zong Qinghou: The Principle of Universal Gravitation,' Chi Yuzhou, Red Flag Publishing House (Except for separately noted sources, the above images are from VCG) Source: Shijie (ID: ishijie2018)