---
title: "Jinmailang Liangbaikai: A 'Glorious' Present and a 'Worrisome' Future"
description: "In early September this year, Nongfu Spring was officially listed on the Hong Kong Stock Exchange, opening at HK$39.8 per share, with a total market value of HK$445.3 billion. This directly made Zhong Shanshan, founder of Nongfu Spring who holds 84.4% of shares, surpass internet tycoons like Jack Ma and Pony Ma to become China's richest person. The information disclosed by Nongfu Spring's listing focused the business world's attention on the 'story of bottled water.' According to a survey by Euromonitor, China's bottled water market has a capacity of 183 billion yuan, with a compound annual growth rate of 11.8% over five consecutive years. Although the bottled water market is large and growing fast, competition is unprecedentedly fierce."
author: "刘冉"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-10-09"
language: "en"
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---

# Jinmailang Liangbaikai: A 'Glorious' Present and a 'Worrisome' Future

> In early September this year, Nongfu Spring was officially listed on the Hong Kong Stock Exchange, opening at HK$39.8 per share, with a total market value of HK$445.3 billion. This directly made Zhong Shanshan, founder of Nongfu Spring who holds 84.4% of shares, surpass internet tycoons like Jack Ma and Pony Ma to become China's richest person. The information disclosed by Nongfu Spring's listing focused the business world's attention on the 'story of bottled water.' According to a survey by Euromonitor, China's bottled water market has a capacity of 183 billion yuan, with a compound annual growth rate of 11.8% over five consecutive years. Although the bottled water market is large and growing fast, competition is unprecedentedly fierce.

In early September this year, Nongfu Spring was officially listed on the Hong Kong Stock Exchange, opening at HK$39.8 per share, with a total market value of HK$445.3 billion. This directly made Zhong Shanshan, founder of Nongfu Spring who holds 84.4% of shares, surpass internet tycoons like Jack Ma and Pony Ma to become China's richest person.
The information disclosed by Nongfu Spring's listing focused the business world's attention on the 'story of bottled water.'
**According to a survey by Euromonitor, China's bottled water market has a capacity of 183 billion yuan, with a compound annual growth rate of 11.8% over five consecutive years.** Although the bottled water market is large and growing fast, competition is unprecedentedly fierce.
The competition in the bottled water market is self-evident, with more than 3,000 companies waiting eagerly, not only national brands but also regional brands carving up the market. From the overall market structure, Nongfu Spring and C'estbon have formed a 'red-green duel' in the bottled water market, with relatively stable positions.
**-01-**
**The Birth of Liangbaikai and Its Current Glory**
Competition among bottled water brands is becoming increasingly intense. In this context, the difficulty of trying to get a share of the bottled water market is imaginable. During this period, smart business managers tried every possible means, such as launching new brands, changing spokespersons, or introducing new packaging, to win market competition, but the results were unsatisfactory.
**There is no 'impregnable fortress' in the market that cannot be broken.**
In 2016, Hebei Jinmailang Company took a different approach by launching the 'cooked water' category in the bottled water market. That year, although Jinmailang Liangbaikai was only distributed in some channels and did not carry out extensive marketing activities, it sold over 5 million boxes.
In 2017, Liangbaikai sales reached 250 million yuan.
Seeing positive market feedback, Jinmailang began to inject resources into Liangbaikai, increasing advertising spending, especially its sponsorship of the CBA basketball league, which was very eye-catching. Jinmailang's approach was undoubtedly to use advertising to quickly bring the 'cooked water' category into the public eye, thereby pushing it into the mainstream of bottled water.
In fact, Jinmailang Liangbaikai has indeed grown remarkably. According to Jinmailang Chairman Fan Xian'guo's public statement: 'In 2018, Liangbaikai sales reached 1.25 billion yuan; in 2019, Jinmailang Liangbaikai achieved annual sales of 2 billion yuan; in 2020, a target of 5 billion yuan was set for Jinmailang Liangbaikai.' He further emphasized: 'In the next 10 years, Liangbaikai is aiming to become a super product with 10 billion yuan in sales.'
The 'cooked water' market is booming, driving rapid growth for Jinmailang Liangbaikai for three consecutive years. At the same time, even more favorable news for Jinmailang is that Kangshifu and Want Want Group have simultaneously joined the 'cooked water' market. **The entry of giants will inevitably accelerate the growth of the 'cooked water' market.**
With positive market feedback, many marketing experts and industry insiders have applauded Jinmailang for creating the 'cooked water' category. Everything seems to be developing in a more favorable direction for Jinmailang. But in reality, **the seemingly promising Jinmailang Liangbaikai harbors a major strategic crisis.**
**-02-**
**The Tail of the Trend**
Why pour cold water on Jinmailang Liangbaikai?
In business, judgment of trends is indispensable. Lei Jun, founder of Xiaomi, once said in an interview: 'There are many smart and diligent people in the world; the real key to success is to follow the trend and seize it.'
Jinmailang is clearly a smart company; otherwise, Liangbaikai would not have been born. The next question is: Can Liangbaikai, priced at 2 yuan per bottle, seize the trend and ride the waves in the bottled water market?
The answer is no.
**Because the 2-yuan water market is not only highly competitive but also about to become outdated.**
From the development trend of bottled water, the 1-yuan water market is already at a dead end. The leading brand in this market, Kangshifu, has seen its market share continuously decline.
> In 2015, its market share was 16%, ranking third in the bottled water market, almost equal to Nongfu Spring, which was second at the time;
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> In 2016, Kangshifu's bottled water market share was 14%;
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> In 2017, Kangshifu's bottled water market share continued to decline to 12.4%, barely maintaining third place;
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> By 2018, Kangshifu's bottled water market share suffered a Waterloo, dropping significantly to only 6.8%, ranking fifth in the market.
Kangshifu's situation reflects the market position of 1-yuan water. The other two brands in the 1-yuan water market, Pure Water and Ice Dew, have become channel brands, serving as 'decorative water' for low-end meetings, with very few consumers buying them voluntarily. As consumption levels rise, the 1-yuan water market will gradually be replaced and inevitably disappear from consumers' sight.
For now, the 2-yuan water market is the most competitive and is the main channel of the bottled water market. This is not speculation but real market feedback. From 2015 to 2018, the two strongest brands in the bottled water market were both 2-yuan water brands: Nongfu Spring and C'estbon.
**While Nongfu Spring and C'estbon are growing rapidly, they also face the risk of being forced to abandon this segment.**
From Nongfu Spring's financial reports, it can be seen that its fastest-growing products are not the 2-yuan bottles but bulk water. This means that consumers are gradually giving up drinking Nongfu Spring directly and instead using it as household water, which is not a good sign. At the same time, it further indicates that 2-yuan water is beginning to follow the path of 1-yuan water.
**Based on the trend of bottled water, it can be seen that Liangbaikai, priced at 2 yuan per bottle, is in an awkward position. Thus, it is not difficult to judge that Liangbaikai's growth cycle is extremely limited.**
**-03-**
**A Worrisome Future**
Since its birth, Jinmailang Liangbaikai has been launched nationwide at a price of 2 yuan per bottle. At the time, pricing Liangbaikai at 2 yuan lacked long-term strategic consideration.
The rapid development of Jinmailang Liangbaikai can be attributed to two important reasons. First, Jinmailang's extensive channel advantages in the northern market. Jinmailang has a very dense network of outlets in the northern market, and its unique 'four-in-one' model tightly binds terminal outlets to its own chariot, making it extremely difficult for competitors to break into Jinmailang's channels.
The second is conceptual innovation. It is undeniable that Liangbaikai is indeed a brand-new category. Before Liangbaikai, no brand had proposed the concept of 'cooked water.' The introduction of the 'cooked water' concept made consumers' eyes light up. In fact, Jinmailang had already sold bottled water in the market, but the market response was mediocre. It can be said that the new 'cooked water' concept added a lot of color to Jinmailang's bottled water.
**Relying on channel advantages and innovative concepts, Jinmailang Liangbaikai has developed smoothly. However, advantages can never outweigh trends. The big ship of bottled water has already begun to sail toward the 3-yuan water direction; this is the trend.**
Apart from trends, there are also competitive factors. From a competitive perspective, 2-yuan water is not the best choice. Although the 2-yuan water market has the largest sales volume, competition is extremely fierce, with two very strong brands in this field: Nongfu Spring and C'estbon. For other brands, there is almost no place to stand. At present, Jinmailang Liangbaikai is already showing signs of fatigue in competition.
According to observations, in some northern markets, Jinmailang Liangbaikai is gradually slipping from the 2-yuan water market due to lack of competitiveness. According to Jinmailang's JD flagship store, a box of 15 bottles of Liangbaikai is priced at 30 yuan, but the actual transaction price is 24-25 yuan per box, 5-6 yuan cheaper than the list price. In some supermarkets in Beijing, Jinmailang Liangbaikai is priced at 1.8 yuan per bottle, and during promotions, the price is only 1 yuan per bottle.
It is understood that Jinmailang Liangbaikai performs well only in township markets; in urban areas, due to the squeeze from Nongfu Spring and C'estbon, market feedback is average, and expansion is limited.
**The essence of Liangbaikai's gradual loss of competitiveness lies in the fact that Jinmailang had problems with the category definition from the very beginning.** Pricing at 2 yuan did not align with the trend. At the same time, engaging in head-on competition with Nongfu Spring and C'estbon was not the optimal choice. Due to its disadvantageous position in competition, the product has been continuously discounted. This has led consumers to define Jinmailang Liangbaikai as a low-priced product, even less valuable than 'raw water.'
Such a perception is not friendly to a brand-new category. Jinmailang Liangbaikai has already been defined, and this perception is gradually solidified over time. Once a perception is formed, it is almost impossible to change.
**Jinmailang failed to place Liangbaikai in the best position; instead, it was placed in a 'sunset' and highly competitive position. That is why there is concern for the future of Jinmailang Liangbaikai.**
**-04-**
**It Could Have Been Better**
Stepping back, if Jinmailang had correctly judged the bottled water market trend from the beginning, the situation would have been very promising. The best approach for Jinmailang would have been to avoid the most competitive 2-yuan water market and instead compete in the 3-yuan water market. This way, **it would not only avoid direct competition with Nongfu Spring and C'estbon but also potentially form a strong 'duopoly' with Ganten in the 3-yuan water market.**
For this opportunity, Jinmailang Liangbaikai has already missed the boat.
One might wonder: if Liangbaikai lacks competitiveness in the 2-yuan water market, wouldn't it be even less competitive in the 3-yuan water market?
Such speculation is not unreasonable. But there are two prerequisites. First is pricing: if Liangbaikai had been priced at 3 yuan from its birth, although it might not have grown as fast, its perception would be higher than it is now. Because Liangbaikai is a brand-new category, the perception of a new category should be superior to old categories; otherwise, why create a new category?
Second is the choice of brand and market. In fact, using Jinmailang as the brand name is not the best choice. In the early stage, considering channel and brand influence, the Jinmailang brand provided endorsement for the product and channels. However, for a new category, in the long run, the disadvantages outweigh the advantages. Using the Jinmailang brand obviously means distributing in third- and fourth-tier markets in the north, where products are seen as ordinary.
What perception does the Jinmailang brand have?
Jinmailang is a company from Xingtai, Hebei. Xingtai, Hebei, has no advantage in perception. Consumers find it hard to believe that a company from Xingtai, Hebei, can produce high-quality products.
Furthermore, regarding the perception of the Jinmailang brand, consumers understand the brand through its products: Jinmailang's water is low-priced, its instant noodles are low-priced, and its channels are in third- and fourth-tier markets.
**Therefore, consumers see Jinmailang as a township brand. Especially in developed southern regions, Jinmailang has always struggled to cross over, because its long-term brand perception determines its brand influence.**
From this, it can be seen that using Jinmailang as the brand name for Liangbaikai has perception issues, and the price of Jinmailang Liangbaikai is also affected by Jinmailang's perception. If Jinmailang had launched a new brand for this business, in the long run, it would definitely have been better than using the Jinmailang brand.
**The current achievements of Jinmailang Liangbaikai are commendable. But from a trend perspective, the 2-yuan water market is already at the end of its rope.** Due to the inherent perception of the Jinmailang brand, it lacks competitiveness against Nongfu Spring and C'estbon in the 2-yuan water market. In many supermarkets, Jinmailang Liangbaikai needs to be discounted to promote sales, which further reduces the category's value, creating a vicious cycle.
If Jinmailang had given more value to the category definition of 'Liangbaikai' from the beginning, its prospects would likely have been brighter. Currently, consumers have already formed a certain perception of Liangbaikai, and the opportunity to redefine it has been lost.
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