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"The bottled water market is already a red ocean," "Water is hard to sell"... Such perceptions are common in the industry. Is there still opportunity in the bottled water market?

-01-

How to Tear Open a Gap in the 200-Billion-Yuan "Red Ocean"

With industry development, in today's domestic bottled water market, Nongfu Spring, C'estbon, Ganten, Kangshifu, Coca-Cola, and Wahaha have already captured 80% of the market, leaving the rest to emerging and regional brands to "sip the soup." Whether from a brand or channel perspective, the bottled water market is a red ocean, a consensus in the industry.

On the other hand, concepts like weak alkaline water, small molecule water, activated water, oxygen-rich water, and ionized water have become things of the past. It seems even the path of innovation in the bottled water market has been blocked.

Is there really no opportunity? Data shows that in 2019, bottled water became the largest category in soft drinks, with sales volume surpassing all other soft drinks combined, maintaining a relatively high growth rate, and is expected to exceed 200 billion yuan in market size by 2020.

This shows that although the bottled water market is highly mature, its prospects remain vast; the only question is who can step up to open the gap.

Jinmailang seems to have found the answer.

In 2016, Jinmailang launched the slogan "Don't drink raw water, drink cooked water; when drinking water, drink Liangbaikai," introducing "Liangbaikai" as a "bottled cooked water" product, creating a new category in packaged water.

At the time, both inside and outside the industry believed that creating another "billion-yuan product" in the bottled water market was impossible. Even at the product's launch, Jinmailang's internal team thought "water is hard to sell."

But with this "Liangbaikai," which was mocked as "you can boil a pot for a few cents," it sold 2 billion yuan in just three years, carving a new path in this red ocean.

No one could have predicted that in this category dominated by giants and with innovation concepts nearly exhausted, "Liangbaikai" would achieve a curve overtaking.

In May of this year, Kangshifu launched "He Kaishui" (drinking boiled water) to enter the bottled cooked water track. Kangshifu's entry undoubtedly affirmed the value of this category and raised the category ceiling.

In any case, the path of bottled cooked water has been opened. Judging by the development speed of "Liangbaikai," this category has promising prospects, and a hundred-billion scale can be expected.

-02-

Value Innovation + Channel Implementation

Looking back, in the process of opening the new field of bottled cooked water and achieving 2 billion in sales, what did Jinmailang do right?

1. Value Innovation

First, the success of "Liangbaikai" largely stems from its innovative concept truly aligning with consumer needs.

The concept of "Liangbaikai" is based on the habit of Chinese people drinking cold boiled water, influenced by thousands of years of subtle cultural influence. In China, drinking cold boiled water is not just about convenience and taste; it is also considered a healthy lifestyle.

Some say the concept is too cheap, as "Liangbaikai" can be boiled at home for a few cents. But upon reflection, this criticism doesn't hold: on one hand, home-boiled cold water is inconvenient to carry when going out; on the other hand, many office workers in the "996" work culture simply don't have time to boil water.

In today's rising prices, spending two yuan for a healthy lifestyle seems acceptable.

Research shows that boiled cooked water has significantly reduced cold properties, is mild and non-irritating, and is indeed more suitable for Chinese stomachs, thus healthier.

From a process perspective, "Liangbaikai" is not much different from water consumers boil themselves, except it is safer than home-boiled water and reasonably retains some calcium and magnesium ions for better taste.

In the years of bottled water development, apart from Nongfu Spring's "Nature's Porter," few concepts have had such broad and deep influence on consumers.

With this concept that carries inherent "recognition," "Liangbaikai" hardly needed to explain what kind of product it was after launch, because almost all Chinese people drink cooked water at home. This greatly reduced the cost of consumer awareness cultivation for "Liangbaikai."

At this point, the reporter cannot help but admire the wisdom and determination of Jinmailang's chairman, Fan Xianguo. It must be noted that the industry generally dismissed "Liangbaikai" at the time, and the product was controversial upon launch; even Jinmailang's internal water team told him "water is hard to sell." But Fan firmly believed that "Liangbaikai" could forge its own path.

Today, the diversification of consumer needs is widely recognized. The volume of "Liangbaikai" is still a "fraction" compared to other giants. But from another perspective, "Liangbaikai" has divided bottled water into two segments: "cooked water" and "raw water," and has become the sole representative of the "cooked water" category (Wahaha also launched a similar product last year, but only for vending machine sales; Kangshifu only recently launched "He Kaishui").

The category positioning of "Liangbaikai" precisely tapped into differentiated demand in the bottled water market. Moreover, this innovative concept not only saved significant effort in consumer awareness cultivation but also provided ample storytelling material for marketing.

2. Channel Implementation

The true rise of innovative products often isn't just about a clever idea.

The creative entry point of bottled cooked water indeed gave Jinmailang an opportunity to break through, but supporting the rapid development of "Liangbaikai" to 2 billion in sales wasn't just about playing with "concepts."

From a category perspective, the nature of bottled water determines high product homogeneity, making marketing extremely difficult; on the other hand, it also places higher demands on refined management and cost control.

In marketing, Jinmailang leveraged the perfect interpretation of "Liangbaikai" in Chinese culture, and as the pioneer, Jinmailang holds the advantage of being the "original." The reporter believes that at least its concept is creative and fits consumer needs well, making it commendable.

Beyond concept and marketing coordination, Jinmailang's channel management model also has "novelty."

Through distributors, the reporter learned that Jinmailang adopted a "four-in-one" channel model: using information technology, it integrates vehicles, personnel, terminals, and regional contractors for unified management and dispatch.

These contractors operate under a "small boss" consignment mechanism. Simply put, one person contracts a region, and this person could even be a salesperson under a distributor.

In this model, Jinmailang requires distributors to develop salespeople as partners to contract vehicles, and additionally imposes assessments on salespeople, such as terminal visit frequency, store posters, shelf display, and stack standards, all with clear requirements. Through the intelligent system, the company can grasp frontline information at any time.

The new model gives Jinmailang detailed insight into marketing personnel's work, enabling timely problem detection and resolution, greatly improving work efficiency and management level. Relying on this approach, "Liangbaikai" truly gained a foothold and achieved rapid initial development.

The model's promotion was not smooth; it made distributors "too transparent," causing slow initial progress. To address this, Jinmailang first selected some experienced distributors as pilots. After the pilot succeeded, it fully promoted the model, and distributors gradually accepted it.

-03-

Who Is the Future: "He Kaishui" or "Liangbaikai"?

Thanks to the innovation of "Liangbaikai," the bottled cooked water market has entered the industry's view. At the same time, "Liangbaikai" has also met a strong competitor: Kangshifu's new product "He Kaishui." Although bottled cooked water is still a small category, given the overall scale of bottled water and its own development speed, it is not impossible for a "hundred-billion" product to emerge in the future.

The two products have similar positioning and retail prices, but Kangshifu clearly surpasses Jinmailang in brand power and channels. In the future bottled cooked water market, who will first reach 5 billion or even 10 billion?

We have already discussed the secret to Jinmailang's 2 billion success, but moving toward 5 billion or 10 billion will still face many difficulties.

The reporter learned from visiting distributors that "Liangbaikai" has developed rapidly since the second half of 2019, partly due to market recognition and also because Jinmailang has made substantial investments. However, this investment has an obvious bias: it focuses more on benefiting terminals and consumers, leaving distributors with relatively low gross margins.

Distributor Mr. Zhao told the reporter that the profit per case of "Liangbaikai" is meager, only one or two yuan, and manufacturer rebate policies often require reaching a certain scale to obtain. In this situation, Jinmailang also adopts a "one-size-fits-all" pricing approach.

Such a strategy means that in Jinmailang's advantageous regions, distributors can still earn decent profits, but in regions where Jinmailang is not strong, such policies undoubtedly make distributors lose motivation to promote "Liangbaikai," resulting in significant market performance disparities across regions.

A distributor in one city said that the concept of "Liangbaikai" is good, but the gross margin for distributors is too low, and with the impact of the pandemic, there was even a period of selling at a loss. This led to slow progress of "Liangbaikai" in his market, with total sales of only 20,000 cases in 2019.

In another county-level market, however, the local distributor was able to sell more than in the prefecture-level city and also earn some profit through certain policies. In terms of sales volume, "Liangbaikai" performs well in lower-tier markets like townships, but in urban areas squeezed by brands like Nongfu Spring, C'estbon, and Kangshifu, it cannot secure good shelf positions, limiting expansion speed.

Additionally, the price system of "Liangbaikai" has shown some disorder. It is understood that on Jinmailang's JD self-operated flagship store, a case of 500ml*15 bottles of "Liangbaikai" is priced at 30 yuan, with actual selling prices varying between 25 yuan and 24 yuan per case, a discount of 5 or 6 yuan per case. Even in a Beijing supermarket, a single 500ml bottle of "Liangbaikai" sells for 1.8 yuan, with a promotional price of only 1 yuan.

Although the bottled water market relies on concepts and channels for success, and price is not an absolute factor, price can reflect brand value. Jinmailang's brand power and bargaining power are limited, so it may face constraints in subsequent development.

What about its competitor Kangshifu? Mr. Zhao told the reporter that as one of this year's key new products, Kangshifu is investing almost at all costs in "He Kaishui." At the terminal, this is reflected in many supermarket shelves where Kangshifu's "He Kaishui" is placed at the entrance at 2 yuan, clearly higher than Jinmailang's "Liangbaikai," which is discounted to around 1 yuan.

Although Kangshifu's position in the bottled water market is not what it used to be, its channel foundation remains intact, and its brand power is advantageous. Moreover, "Liangbaikai" has already paved the way for "He Kaishui." It is also understood that Kangshifu is more generous in distributor profit distribution, giving distributors more drive. Combined with multiple factors, the probability of "He Kaishui" overtaking "Liangbaikai" in the future bottled cooked water market is not small, and many in the industry are more optimistic about the prospects of "He Kaishui."

It can be seen that in the early development stage, "Liangbaikai" relied on growth in strong regions to drive overall sales, which proved feasible. But in the later stage, to expand to a larger scale, it will inevitably face the above problems in developing weak markets. And the strong approach of Kangshifu's "He Kaishui" will continue to increase competitive pressure on "Liangbaikai."

For now, both brands' bottled cooked water products are expanding rapidly. Although "Liangbaikai" created the new category, "He Kaishui" seems to have momentum to catch up. Perhaps Jinmailang should consider new paths to face the inevitable more intense competition!