By Zhang Jian, FBC reporter
The legendary Evergrande Spring is back. This time, it brings low-sodium water and aims to position itself in the 3-yuan price range. In the increasingly competitive bottled water market, does Evergrande Spring still have a chance?
Why choose "3-yuan water"?
In mid-March, Evergrande Spring held its 2018 distributor conference in Shenzhen and launched its new low-sodium water series. The company stated that the new products target the 3-yuan price segment to compensate for the "high-open, low-walk" performance of its "classic series" in the market.
Evergrande Spring, which launched at a high-profile 5-yuan price in 2014, saw its price drop to the 2-yuan range after aggressive expansion, becoming collateral damage in the battle between Nongfu Spring and C'estbon.
"They spent billions, and while the brand became known, the market nearly disappeared," a source familiar with Evergrande Spring's current situation told FBC.
According to him, in 2015, Evergrande Spring had sales of several hundred million yuan in Sichuan alone, with a sales team of over 200 people in that region. But by the end of last year, that team had shrunk to just 40-50 people, and sales had plummeted.
Unfortunately, this situation was common nationwide.
In the second half of last year, an industry insider had the opportunity to join Evergrande Spring's southwest sales team. But after talking with several friends familiar with the brand, he declined the offer, which paid no less than 15,000 yuan per month. "I had no confidence; it seemed too difficult to revive. There were too many problems to solve," he said.
The collapse of Evergrande Spring may have multiple causes, "but the most important is that the 2-yuan price left distributors with almost no profit. Many of Evergrande Spring's distributors came from other industries, and once margins thinned and sales slowed, they quickly exited," a distributor analyzed for FBC.
External pressure accelerated the decline.
In the bottled water market, the top three brands—Nongfu Spring, C'estbon, and Master Kong—have strong positions in the 2-yuan and 1.5-yuan low-to-mid price segments, with scale advantages that are hard to challenge.
In other words, Evergrande Spring has no opportunity in those price segments.
Ganten, ranked fourth, is positioned in the 3-yuan range, but its control over the 3-yuan market is far weaker than C'estbon and Nongfu Spring's dominance in the 2-yuan segment. For example, Yake Changbai Ganquan, also priced at 3 yuan, has covered 14 provinces and nearly 100 prefecture-level cities in just over a year since launch. This shows the potential of the 3-yuan water market.
Additionally, Evergrande Spring has tried to enter the mid-to-high-end bottled water market above 3 yuan. When it launched in early 2014, it was positioned at 5 yuan, the "waist price" of bottled water, but that failed.
In early 2017, Evergrande Spring launched a new packaging with a price of 10 yuan+ for its metasilicic acid series. To this day, besides e-commerce platforms like JD.com, consumers rarely see this product in offline stores. "This product is mainly promoted in Hong Kong. Distributors see it as an image product, as bottled water at this price doesn't focus on volume and requires long-term market cultivation," the aforementioned distributor said.
In the bottled water market, competition below 3 yuan is saturated, and prices have hit bottom; above 3 yuan, it's hard to balance sales volume and investment.
A key logic is that although the retail price of 3-yuan water is only one yuan higher than existing products, in the view of industry insider Cao Jin, this one yuan can effectively improve the gross margin for distributors and retailers.
"The current market situation is that if you don't leave at least 10 points of gross margin for distributors and at least one yuan of markup for retailers, the product basically won't move," Cao Jin told FBC.
Take Ganten as an example: the ex-factory price for a case of 24 bottles is about 38 yuan, distributors supply retailers at about 42 yuan per case, and the retail price is 3 yuan per bottle. This gives distributors a gross margin of about 15 points, and retailers can add one yuan profit per bottle—everyone is happy. In contrast, for 2-yuan bottled water like Nongfu Spring and C'estbon, the ex-factory price is about 0.9 yuan per bottle. Because the brands are strong and volumes are large, after retailers add one yuan, distributors' profits are thin, reducing them to mere delivery workers.
Importantly, Evergrande Spring is a mineral water category with high transportation costs. Lowering the ex-factory price to give distributors more room is not realistic. Therefore, in the context of industrial upgrading and consumption upgrading, entering the 3-yuan market to balance channel profits and sales volume seems like a good business.
How to play the 3-yuan water game? Evergrande Spring seems undecided
Opportunities exist, but does opportunity guarantee success?
According to beverage marketing expert Fu Bang'an, although Evergrande Spring's 3-yuan water has market dividends that 2-yuan and high-end waters lack, for bottled water—a product with severe "homogenization" in taste and content—3 yuan is also a critical price point for consumer spending.
"From a consumer psychology perspective, the public believes water's value is lower than beverages. When beverage prices are around 3 yuan, water should be below 3 yuan. Therefore, 3-yuan water must carry more value than 2-yuan water," Fu Bang'an told FBC.
Currently, in the 3-yuan price segment, mainstream brands include Ganten and Yake Changbai Ganquan, both mineral water like Evergrande Spring. Simply preaching the source concept may cause consumer fatigue, so capturing consumer mindshare and scenario marketing have become their trump cards.
Ganten frequently sponsors sports events like tennis and golf, which attract many elite fans, continuously emphasizing its "noble water" image and product appeal to elevate consumers' sense of hierarchy. Changbai Ganquan, on the other hand, created its own consumer value through "the first glass of water in the morning," building a scenario marketing strategy that distinguishes it from competitors.
In contrast, Evergrande Spring's introduction of low-sodium water—"sourced from the low-sodium Anning Spring in the Changbai Mountain Ecological Reserve, with sodium content of only 1.6-9.9 mg/L, far better than the international low-sodium standard of ≤20 mg/L, providing trace elements and minerals while effectively controlling sodium intake and reducing kidney burden"—is clearly still stuck in a "self-talk" product strategy.
"Unless you're a professional, the low-sodium concept is hard to grasp. Compared to competitors, this kind of messaging is unlikely to trigger consumer demand. Pure rational concept promotion requires market cultivation time and higher costs," marketing expert Zou Wenwu objected.
On the other hand, how Evergrande Spring will restore market confidence is also key to this "revival journey."
After Evergrande sold Evergrande Spring for 1.8 billion yuan in 2016, the new owners—Shenzhen Sanwei Dulin Automobile Sales Service Co., Ltd. and Linpu (Hong Kong) Co., Ltd.—began restructuring Evergrande Spring's organizational and product systems in 2017. FBC verified through business registration that Shenzhen Sanwei Dulin holds 100% of Evergrande Agriculture and Animal Husbandry Group (formerly Evergrande Beverage Group), which in turn holds 60% of Evergrande Changbai Mountain Mineral Water Co., Ltd., the current producer, and indirectly controls Shenzhen Evergrande Beverage Co., Ltd.
A new company should have a new look, but after four years of chaos—from "high-profile" to "price collapse," "distributor loss," and "product stagnation"—Evergrande Spring has much work to do to boost market confidence and team morale.
However, the aforementioned distributor believes that signs indicate Evergrande Spring is returning to the normal operational track of FMCG.
Changes are quietly happening; can Evergrande make a comeback?
"Evergrande Spring has changed; it's no longer recklessly spending money," the distributor told FBC.
Specifically, first, the "people" have changed.
Now, Evergrande Spring's sales team is mostly composed of seasoned professionals from the FMCG sector, often from JDB, Master Kong, or Pepsi systems, rather than the "leaders" transferred from Evergrande Real Estate. This was a major reason for their collapse: cross-industry operations led to inconsistent concepts and lack of communication, causing the manufacturer to lose control of the market and eventually the price system collapsed.
Additionally, after several rounds of elimination, the number of distributors has decreased, but their quality has improved. They are now professional trading companies with a certain scale in the industry, unlike the past when many came from other industries. "Many former Evergrande Spring distributors were wealthy but lacked mature channel networks and operational experience. They participated with a speculative mindset and left as soon as the market turned bad."
Most importantly, Evergrande Spring has finally become "low-key."
"Distributor ordering no longer has the previous high deposit thresholds of hundreds of thousands of yuan, nor the grand gesture of giving away BMW 5 Series cars for 1 million yuan payments at the 2015 water conference. Instead, more time is spent explaining how to protect distributor interests and how manufacturers and distributors can cooperate to drive sales," another Evergrande distributor told FBC.
A key piece of information is that Evergrande Spring will replace the previous "two-for-one or even one-for-one" upfront cost method used to aggressively push inventory with a more rational "compound verification" approach to plan channel sales strategies. This means Evergrande Spring is unwilling to repeat the mistakes of aggressive inventory pushing and market collapse, and is beginning to position itself as a truly advantageous brand to control the market and build a more stable sales network.
Entering 2018, Evergrande Spring seems to be transforming. But in the future, whether it can find a balance between resource allocation and new product promotion intensity will be the key factor determining the success of the new products. As Zou Wenwu said, "If Evergrande Spring stops burning money, in the bottled water market, which is harder to promote than ordinary beverages, Evergrande has a tough battle to fight."
Source: Food Business Observation (ID: fbc180) -END-