---
title: "Soft Drink Market Heats Up: Is Nongfu Spring's Cross-Border Expansion Hitting a Roadblock?"
description: "Beyond natural water, how much room does Nongfu Spring have in the soft drink market? New soft drink brands represented by Genki Forest are blocking Nongfu Spring's cross-border expansion. In 2016, Nongfu Spring began testing overseas markets by establishing Creswell NZ Ltd in New Zealand and exporting hit products like Tea π. It took Nongfu Spring nearly 20 years from its founding to go global, while new brands are moving much faster."
author: "财经新媒体"
publisher: "New Distribution"
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published: "2021-01-07"
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# Soft Drink Market Heats Up: Is Nongfu Spring's Cross-Border Expansion Hitting a Roadblock?

> Beyond natural water, how much room does Nongfu Spring have in the soft drink market? New soft drink brands represented by Genki Forest are blocking Nongfu Spring's cross-border expansion. In 2016, Nongfu Spring began testing overseas markets by establishing Creswell NZ Ltd in New Zealand and exporting hit products like Tea π. It took Nongfu Spring nearly 20 years from its founding to go global, while new brands are moving much faster.

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****Beyond natural water, how much room does Nongfu Spring have in the soft drink market?****
**New soft drink brands represented by Genki Forest are blocking Nongfu Spring's cross-border expansion.**
In 2016, Nongfu Spring began "testing the waters" in overseas markets by establishing Creswell NZ Ltd in New Zealand and exporting hit products like Tea π. It took Nongfu Spring nearly 20 years from its founding to go global.
In contrast, new brands seem to be moving much faster.
In December of this year, Genki Forest announced that Liu Zhen, former Senior Vice President of Corporate Development at Toutiao, would join the company to head its overseas business. This new brand, only four years old, is already eager to expand overseas.
Meanwhile, in the past two years, Genki Forest's sparkling water, Heytea's sparkling water, Saturnbird's coffee, and Le Pur's yogurt have grown rapidly. They are posing new threats to Nongfu Spring's soft drink market beyond natural water.
# **-01-**
**From "Natural Water Giant" to "Soft Drink Giant"**
In 2012, Nongfu Spring's market share in natural drinking water jumped to first place nationwide. According to Frost & Sullivan, from 2012 to 2019, Nongfu Spring maintained the top market share in China's packaged drinking water market for eight consecutive years.
The domestic ordinary drinking water market has become a red ocean. For Nongfu Spring, opening new markets has become a key focus for future development. In the domestic market alone, expanding into the soft drink market beyond natural water is a good choice. In fact, Nongfu Spring started "making efforts" in the soft drink market early on.
"Nongfu Orchard, shake before drinking."
We can see that in 2003, with this advertising slogan, Nongfu Spring's first fruit and vegetable juice drink, "Nongfu Orchard," was officially launched. This was also the first product other than natural water introduced by Nongfu Spring since its founding in 1996.
At that time, Nongfu Spring, relying on marketing slogans like "Nongfu Spring is a bit sweet" and "We don't produce water; we are just nature's porters," gradually gained attention in the bottled water market. The birth of "Nongfu Orchard" was its first step to expand its product line beyond its main product and enter the soft drink market.
However, Nongfu Orchard did not become a "standout" in its category at the time because its competitors were stronger. One was Uni-President's Fresh Orange, launched as early as 2001, and the other was Coca-Cola's Minute Maid Pulpy Orange, launched in 2004. In terms of timing, Nongfu Orchard was not as early as Fresh Orange, and in terms of features, it was not as distinctive as Pulpy Orange, which featured "juice + pulp."
In the fruit juice drink segment, it was actually the later "Aqua C100" that truly helped Nongfu Spring gain a foothold.
The popularity of Aqua C100 was inseparable from Nongfu Spring's classic advertising marketing. In May 2008, the advertisement for Aqua C100's "five and a half lemons C" became a nationwide hit. In the ad, a girl did five and a half somersaults, followed by five and a half lemons popping up. The slogan "Five and a half lemons C, meet your daily vitamin C needs" became almost household.
Besides fruit juice drinks, Nongfu Spring also expanded into functional drinks and tea drinks.
In terms of functional drinks, it can be seen that Nongfu Spring was not the earliest to enter. When Scream was launched in 2004, Mizone already dominated the domestic functional drink market. Data shows that as of 2015, Mizone's market share was still as high as 92.2%.
But Nongfu Spring used a "combination punch." After Scream, Nongfu Spring launched a new functional drink in 2010—Vitamin Water. Scream alone might not be able to beat Mizone, but "Scream + Vitamin Water" might.
At that time, in the vitamin water segment, there were strong competitors like Coca-Cola, but Coca-Cola's vitamin water was priced as high as 15 yuan. With the same vitamin and mineral content, Nongfu Spring's vitamin water, priced at only a quarter of Coca-Cola's, had a clear advantage, and its market share successfully rose to 6%.
In tea drinks, Oriental Leaf in 2011 clearly did not get as much attention as Tea π, which was launched in 2016. On one hand, the beverage market in 2011 did not yet popularize concepts like "sugar-free" and "healthy," so Oriental Leaf grew slowly. On the other hand, Tea π had significantly more marketing efforts, which helped boost its visibility.
In May 2016, Tea π announced that the popular Korean group BIGBANG had signed as the new product's image spokesperson, cleverly "cashing in" on the "fan economy" dividend. Then in 2017, Tea π sponsored the highly popular variety show "The Rap of China," and thanks to this phenomenal program, it became popular again.
After Tea π, Nongfu Spring used the same "celebrity marketing" to revive the dormant Vitamin Water. In 2018, known as the first year of talent shows, Nongfu Spring chose to cooperate with iQiyi's hit variety show "Idol Producer." To help their idols gain votes, Vitamin Water was snapped up across online and offline channels.
It was through these hit soft drinks that Nongfu Spring gradually established a leading position in the domestic soft drink market.
According to Frost & Sullivan, based on 2019 retail sales, Nongfu Spring ranked among the top three in China's market share in tea drinks, functional drinks, and fruit juice drinks.
# **-02-**
**The Rapidly Growing "Genki Forests"**
**Nongfu Spring's Growth Slows**
It is undeniable that Nongfu Spring has a very complete range of soft drink categories, covering almost all types.
So, how are they performing in the market? Let's look at Nongfu Spring's business segments and their revenue shares as of the mid-2020 report:
It is not difficult to see that apart from the main business "water products," the relatively high revenue shares are mainly "ready-to-drink tea products" and "functional drink products." In 2019, Nongfu Spring updated these two popular categories.
In March 2019, Tea π got a packaging refresh and flavor upgrade. Then in April, the 16-year-old Scream series also launched two new flavors: white peach and green mango.
In fruit juice drinks, although the revenue share is not as high as the previous two categories, Nongfu Spring has not stopped updating. Like Scream, after 16 years, Nongfu Orchard also launched a new product in 2019—50% mixed fruit and vegetable juice.
In other products, in May of this year, Nongfu Spring launched a new product, "TOT" carbonated flavored drink. Then in June, Nongfu Spring launched a cup coffee drink, "Charcoal Cup Coffee." This series is actually an extension of the new product Charcoal Coffee, which Nongfu Spring launched last year.
It is not difficult to see that Nongfu Spring, which had not launched new products for nearly four years, has become much more active in the past two years. It is evident that the "Genki Forests" and other dark horses emerging in the soft drink market in the past two years have indeed had an impact on Nongfu Spring, forcing it to accelerate its layout in new markets.
However, judging from the current situation, Nongfu Spring's new products seem to be "no match" for the new brands.
In the past two years, sparkling water has undoubtedly become a "hot trend." According to Nielsen's omnichannel sales data, as of August 2019, the annual retail sales of flavored sparkling water were $2.45 billion, a 54% increase over the past four years.
Facing the impact of new brands like Genki Forest, Heytea, and Naixue Tea, traditional brands have successively increased their efforts in the sparkling water market. Besides Nongfu Spring, big brands like Coca-Cola have also launched their own new products.
Genki Forest has achieved a market valuation of nearly 14 billion yuan thanks to its sparkling water, while Nongfu Spring's new product "TOT," despite inviting popular members of the domestic girl group The Nine—Liu Yuxin, Xie Keyin, and Yu Shuxin—as brand ambassadors, still cannot match the popularity of Genki Forest and Heytea's Xiaoping.
In coffee, Nongfu Spring faces far more competitors than just Saturnbird. Among the new coffee brands that emerged this year, including Yongpu and Xiongzhua, they have gradually established their own brand recognition. Although Nongfu Spring's Charcoal Coffee has not yet disclosed sales data, based on feedback from some users, it seems to be less than satisfactory.
Finally, there is Nongfu Spring's new product plant-based yogurt from last year. Plant-based yogurt is similar to plant-based meat, which has been popular in the past two years, focusing on plant nutrition. Its fermentation base is not common cow's milk, but plant-based ingredients like soybeans and coconut milk. It sounds healthy, but its "unique" taste is hard to accept. This can be seen from the comments on its flagship store:
Euromonitor International data on the plant-based yogurt market shows that in 2018, the global plant-based yogurt market size was $974 million, with Western Europe being the largest market, followed by North America. In the Asia-Pacific market, plant-based yogurt performed poorly, with generally low consumer acceptance. In the domestic plant-based yogurt market, apart from Nongfu Spring, Weiwei, and Yangyuan, there are basically no well-known brands entering.
In contrast, the low-temperature yogurt segment is much more "lively." Internet-famous brands like Jane and Le Pur have gradually occupied a certain market share and are now expanding into more dairy-related products.
Overall, Nongfu Spring's original hit products like Scream and Nongfu Orchard have not yet caused a major market sensation with their updates. The new products it is pushing, such as sparkling water, coffee, and yogurt, are struggling against the new brands. For a soft drink giant, this clearly needs attention.
# **-03-**
**Time May Be Running Out for Nongfu Spring**
So, if Nongfu Spring wants to maintain its market share in the soft drink market, here are the issues it needs to focus on:
**First, "beware" of the rapidly growing "Genki Forests."**
Unlike traditional brands' advertising marketing, new brands represented by Genki Forest are willing to "burn money" on marketing. Most of them became popular through the promotion and seeding by a large number of streamers and influencers. This "heavy marketing, light R&D" approach is risky, but it can build brand awareness in the shortest time.
In other words, compared to traditional brands, new brands actually have fewer growth barriers. They usually rely on one or several hit products for overwhelming online promotion, allowing consumers to remember them quickly. Traditional brands are different; their entire growth path is much more complex, from advertising to social activities to topic marketing.
Nongfu Spring took nearly four years from its birth in 1996 to transform into natural water in 2000, while Genki Forest, in the same time, has nearly quadrupled its valuation in the capital market, showing astonishing growth speed.
One Genki Forest may not be a threat, but when several Genki Forests gradually occupy Nongfu Spring's original tea drink, functional drink, and fruit juice drink markets, the situation may be different.
**Second, the soft drink track is highly homogeneous, making it even harder for latecomers to catch up.**
In today's "fast-paced" era, new products' ability to "break out" largely depends on "formulaic" marketing. But this model is more suitable for brands that are ahead, even in first or second place. For latecomers to catch up, besides increasing marketing, they also need to quickly establish their own differentiated advantages.
And Nongfu Spring seems not "attentive" enough in new product R&D.
Take the most competitive sparkling water as an example. There is no major technical barrier, so to highlight differences, you have to work on flavors. Nongfu Spring's sparkling water comes in three flavors: rice wine, grapefruit green tea, and lemon black tea. Except for the rice wine flavor, the other two "fruit + tea" flavored sparkling waters are already flooding the market.
In terms of timing, in the sparkling water segment, Nongfu Spring has already "fallen behind" the first-tier Genki Forest and the second-tier Heytea and Naixue. Now, without sufficient differentiation, it is extremely difficult to "break through."
In addition, the soft drink market, like other consumer markets, has entered a period of dividends for segmented categories. But for the entire soft drink market, there are actually not many categories to choose from. Carbonated drinks have Coca-Cola and Pepsi, sparkling water has Genki Forest, Heytea, and Naixue, coffee has Saturnbird, yogurt has Le Pur and Jane...
This means that for Nongfu Spring, it must quickly find a new "growth point" to gain a first-mover advantage. After all, in the soft drink market with low competitive barriers, most brands will eventually face a "one against many" situation.
Admittedly, with its channel advantages built over many years, Nongfu Spring's position in the soft drink market is hard to shake. But the momentum of new brands should not be underestimated. As mentioned at the beginning, Genki Forest, only four years old, has already set its sights on overseas markets, showing ambition no less than traditional brands.
If Nongfu Spring fails to catch up with the former in new categories soon, then losing its market beyond natural water may only be a matter of time.
Source: Mantis Finance (ID: TanglangFin), Author: Tu Lin
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