Recently, as the pandemic continues to cool down in most parts of China, consumer spending is gradually returning to normal. Conversely, high temperatures across various regions have brought the beverage industry into its peak season. Besides the ongoing battle for market share in the existing beverage market, new products from major companies are flooding in: Master Kong's 'Drink Boiled Water', Yinlu's Shanyun Tea Painting, Uni-President's Tea霸 and Green Plum Green Tea, and so on... Only Nongfu Spring, which holds the top spot in the drinking water market, seemed slow to act, not releasing a new product until late May: a sparkling beverage named TOT, available in three flavors: rice wine, lemon black tea, and grapefruit green tea. The official retail price on Tmall is 6 yuan per bottle. However, according to reports, this new TOT sparkling tea drink from Nongfu Spring may not actually be a 'new product.' What is the 'hidden story' behind this product named TOT? What sentiment does Boss Zhong harbor? And can it become Nongfu Spring's next big hit? -01- A Decade Later: The 'Past and Present' of TOT This story begins with Zhong Shanshan, the founder of Nongfu Spring. Boss Zhong's experience is nothing short of legendary. Born into an intellectual family, his family fell on hard times, and he had no money for schooling. He was forced to drop out in the fifth grade and later worked as a bricklayer. But Zhong never forgot about education. When the opportunity came with the restoration of the college entrance examination, he took it but failed twice before finally enrolling in a TV university. Later, he worked as a journalist, grew mushrooms, raised shrimp, and sold curtains—all of which could be described as failures. He even became a distributor for Wahaha but lost the distributorship due to cross-region selling. It wasn't until he founded Zhejiang Qiandao Lake Health Hall Drinking Water (the predecessor of Nongfu Spring) that he embarked on the road to success. From then on, his success was unstoppable. The slogan 'We don't produce water; we are just nature's porters' made Nongfu Spring famous nationwide. He also created well-known beverage brands and big hits like Nongfu Orchard and Scream. Today, his position in the drinking water and beverage industry is unshakable. Zhong Shanshan, known for his marketing prowess, rarely failed after that, but he suffered a setback with the TOT product. What exactly happened? In fact, as early as ten years ago, Nongfu Spring launched a 'TOT' soda black tea with the same name as the new product. In April 2010, Nongfu Spring launched TOT Soda Black Tea in cherry flavor and issued incentive policies for employees to activate customer numbers. In May, large-scale tasting and buy-one-get-one activities were held at KA stores with good business. In June, advertising campaigns were launched on provincial TV stations, CCTV Youth Song Contest, the internet, and magazines like Sanlian Lifeweek to support offline promotions. However, despite the vigorous efforts, TOT Soda Black Tea did not become an instant hit as Nongfu Spring had expected. Instead, sales were dismal and it was not widely accepted by consumers. Due to its unique flavor, it received mixed reviews among consumers, with extreme polarization, and was once considered a beverage with 'weird taste.' The advertisement based on the film '80' was well-made but was heavily criticized for not matching the pure love story style of the film with the product's taste. By 2011, to ensure smooth channel access for the new product Oriental Leaf, Nongfu Spring issued a document to inventory and centrally destroy returned and stocked TOT Soda Black Tea, ending in a bleak conclusion. It wasn't until a decade later that TOT sparkling tea drink made a comeback. The 'predecessor' TOT Soda Black Tea failed to succeed. So what are the differences between this new TOT product and the previous one? Why is Boss Zhong so fixated on 'TOT'? -02- When Sentiment and Ambition Meet the Trend Let's look at the newly launched TOT product, which focuses on a combination of natural rice wine or fruit juice + carbonation + tea. The product's selling point emphasizes 'natural, no additives.' Compared to many similar products on the market or the previous two generations of TOT tea, I think the difference lies more in the external environment. What does Boss Zhong value? Some FMCG industry experts believe that the new TOT sparkling tea drink targets two major trends: packaged ready-to-drink tea and healthy sparkling water. First, looking at the current situation, since 2013, China's tea beverage market has entered a fast track. Data shows that in 2019, the total scale of China's tea beverage market will exceed 400 billion yuan, more than twice that of coffee. Even calculated by new tea drinks, the new tea drink market will reach over 50 billion yuan in 2020. This is a huge cake, and Nongfu Spring currently only holds a share of 2-3 billion yuan in the tea beverage market. How to capture more of the tea beverage market is exactly where Zhong Shanshan's ambition lies. With the awakening of health awareness among the new generation of consumers, the rejection of sugar and the improvement of health awareness have transitioned from non-essential to essential. The current beverage market's education on health concepts is also continuously strengthening, and sugar-free tea drinks are becoming a hot emerging category in the beverage industry. The post-90s and post-95s, who are 'Buddhist-style health keepers, soaking goji berries in their thermos cups,' have become the main consumer group for such beverages. On the other hand, carbonated sparkling beverages seem to have hit a bottleneck, but in reality, survey results show that while consumers are keen on healthy drinks, they find it hard to resist the 'cool and stimulating' temptation of carbonated drinks, exhibiting an attitude of 'the mouth says no, but the body is honest.' Data also shows that in the first three quarters of 2019, national beverage retail sales exceeded 150 billion yuan, a year-on-year increase of 9.8%. Among them, carbonated beverages held a market share of nearly 20%, ranking third after packaged drinking water and fruit juice, still occupying the third position in China's beverage market. There is no denying that the 'strong demand' for carbonated beverages still exists. Moreover, in terms of market growth, according to Nielsen omnichannel sales data, as of August 2019, flavored sparkling water grew by 54% over the past four years. This high growth has also given rise to dark horse brands like Genki Forest. Adhering to the goal of 'breaking the unhealthy and cheap impression, making new carbonated beverages with real ingredients,' Nongfu Spring's new TOT sparkling flavored beverage is precisely the fusion of Nongfu Spring's 'ambition' and the current 'trend.' If there is anything else, it might be Boss Zhong's 'lingering regret' over the failure of the previous TOT product, which has led him to maintain a special sentiment for the name 'TOT.' -03- Can This TOT Succeed? It is said that Boss Zhong is a marketing master, and the marketing of various brands under Nongfu Spring is indeed outstanding. However, it has been over 20 days since the launch of this new TOT product, but Nongfu Spring does not seem to have conducted large-scale promotion. Why is that? In fact, this is related to Nongfu Spring's consistently steady marketing style. 'Although many of Nongfu Spring's advertisements and marketing campaigns are praised by the industry, in reality, Nongfu Spring prefers to 'add icing on the cake' in marketing.' An expert said: 'They always distribute products and test the waters first, advancing step by step to adjust to market changes at any time. Only when the new product has a certain foundation and gains some market recognition do they start large-scale promotion and publicity.' As for whether this TOT new product can achieve a certain scale and move towards success, the expert did not make a hasty conclusion but conducted a simple analysis. 1. First, the product is quite aligned with the current market environment and development trends; 2. Second, Nongfu Spring's brand power itself is strong enough; the four characters 'Nongfu Spring' make this product very convincing; 3. Third, Nongfu Spring's channel advantages allow them to leverage existing channels for distribution and gain market first-mover advantage; 4. Finally, based on Nongfu Spring's past style of being very attentive and determined to do well with each new product, distributors will also cooperate and provide strong impetus. Of course, even with multiple advantages, market competition remains fierce. Other leading brands are also participating, each with their own characteristics. Which one will succeed ultimately depends on subsequent operations. -04- Is Nongfu Spring 'Forced' to Go All Out? As a leading enterprise in domestic drinking water, Nongfu Spring's main bottled water business has a gross profit margin as high as 60%, earning 6 mao for every 1 yuan sold. Drinking water accounts for nearly 60% of revenue. Moreover, Nongfu Spring has maintained the number one market share in China's packaged drinking water market for eight consecutive years since 2012 (20.9% in 2019). Such a high market penetration rate means that further improvement in the drinking water business is likely very difficult. For this reason, in a fiercely competitive environment, Nongfu Spring has realized that future growth space is becoming increasingly smaller. This has made Nongfu Spring, while reaping huge profits, more urgently seek new areas for expansion. 'Due to market saturation and competition from new market entrants and substitute products, we cannot guarantee that demand for our products will continue to grow at a similar rate in the future,' Nongfu Spring once warned investors. Tea and sparkling categories respectively occupy two major industry trends: health and excellent taste. This is also one of the positioning points of the new TOT product. Coupled with the recent listing turmoil, Nongfu Spring, even if 'forced,' will go all out to do well with this new product, right? What do you think of Nongfu Spring's 'TOT sparkling tea drink,' which has been launched twice? Feel free to discuss and exchange views at the end of the article.