---
title: "The Business and World of a Bottle of Water"
description: "It wasn't until Nongfu Spring went public and revealed its financials that the public realized selling water is a lucrative business. In 2019, Nongfu Spring's revenue was 24.021 billion yuan, with water sales alone contributing 14.346 billion yuan, accounting for 59.7% of total revenue."
author: "王不易"
publisher: "New Distribution"
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published: "2020-06-06"
language: "en"
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---

# The Business and World of a Bottle of Water

> It wasn't until Nongfu Spring went public and revealed its financials that the public realized selling water is a lucrative business. In 2019, Nongfu Spring's revenue was 24.021 billion yuan, with water sales alone contributing 14.346 billion yuan, accounting for 59.7% of total revenue.

Until Nongfu Spring went public and laid out its books, the public didn't realize that selling water is a good business.
**-01-**
How much does a bottle of Nongfu Spring cost? At retail prices: 550ml for 2 yuan, 1500ml for 3.5 yuan, and 5L for 10 yuan per barrel. The unit price isn't high.
But in **2019, Nongfu Spring sold 24.021 billion yuan, with water alone bringing in 14.346 billion yuan, accounting for 59.7% of total revenue.** In other words, Nongfu Spring's journey from "a bit sweet" to "a bit rich" mainly relies on selling water. Over the years, the bottled water sold could circle the earth several times.
Looking at the gross margin of Nongfu Spring's drinking water products in 2019—60.2%. What does a gross margin over 60% mean? It's slightly lower than baijiu, but Sinopec and PetroChina's gross margins are only around 20%. No wonder Sinopec and PetroChina have also entered the mineral water industry in recent years.
**Bottled water hasn't always been a business.** We used to drink well water, then boiled tap water, and at the most particular times, people across the country bought water purifiers. The classic train call "beer, soft drinks, mineral water" didn't exist back then; there was no bottled water sold on trains. Even when it became available, few people spent 2 yuan, preferring to drink boiled water. If thirsty when out, there were tea stalls by the roadside.
Putting water in a bottle and selling it for money was something even big beverage companies like Coca-Cola couldn't imagine decades ago: "Would people be willing to give up nearly free tap water and pay for Coca-Cola products?"
**Coca-Cola started selling water in the 1970s.** The catalyst was the deterioration of public water supply systems in American cities, which gradually lost public trust. In 1983, something interesting happened: an E. coli outbreak in a Michigan area led residents to flock to the Coca-Cola plant for water instead of seeking help from the city. They believed Coca-Cola's water was cleaner and healthier than city water.
"New Orleans water tastes a bit strange now, doesn't it? Then try Coca-Cola!" This was an advertising slogan Coca-Cola widely spread in the 1960s. By the mid-1980s, it had a double meaning: Coca-Cola seemed to be taking on social responsibility through bottled water, replacing tap water as the primary drinking choice for citizens.
Coca-Cola certainly wouldn't miss this perfect marketing opportunity. Gradually, a concept began to prevail in American society: bottled water could replace inadequate public water systems. Between 1965 and 1982, per capita tap water consumption in the U.S. fell from 269 liters to 178 liters. This again proved that markets need to be educated; once you capture consumers' minds, money flows in.
**In the same 1980s, bottled water also began to appear frequently in China, becoming a high-end lifestyle.** Previously, soda and mineral water were rationed, with mineral water mostly for export. When it entered ordinary people's daily lives, it naturally carried a halo.
Wang Zengqi wrote: Mineral water is a high-end beverage, now popular in China, and trendy youth drink it to show off. Tang Lusun in Taiwan also noticed the rise of the "water business": nutrition experts suddenly began advocating mineral water, and people treated it as a daily drink. He lamented, "The status of mineral water will be lively for a while again."
**In 1982, the state listed beverages as planned management products, marking the initial stage of bottled water development. In 1989, bottled mineral water was designated as one of the eight major beverages. Major brands at the time included Laoshan, Coconut Palm, Yili, and Wudalianchi.**
Interestingly, the prevalence of bottled water gradually squeezed out two other trades: tea stalls and book stalls. Book stalls often relied on tea stalls; a cup of tea cost two cents, and reading a book cost one cent, making them popular leisure spots. When tea stalls declined, book stalls couldn't sustain themselves.
**-02-**
**Tracing back to China's first bottled water production plant, it dates to the 1850s-1860s.** At that time, foreign wines and soft drinks were imported into China in large quantities. Some foreign firms began investing in beverage factories. In 1892, the British opened a "Bile Water Factory" in Shanghai, and in 1900, a "Universal Soda Water Company" in Tianjin. Water was bottled in glass, with products including soda, distilled water, mineral water, seltzer, ginger ale, and lemonade—a wide variety.
A more familiar brand is the Qingdao Soda Water Factory established by Germans in 1905, most famous for Laoshan mineral water. The 1985 national drinking water standard mainly referenced Laoshan mineral water.
Cai Lan is a fan of Laoshan mineral water, "buying it by the case, delivered by Yuhua Department Store." Old Hong Kong residents are familiar with the slogan "There's salty and there's light." When he couldn't buy it later, he felt a sense of loss. I wonder if Cai Lan ever tried Laoshan White Flower Snake Grass Water.
**The real bottled water war began in the late 1990s.** The starting point was the founding of Nongfu Spring. Its founder, Zhong Shanshan, after resigning as a Wahaha distributor, first started a health products company, then in 1996 established Zhejiang Qiandao Lake Health Food Drinking Water Co., Ltd., the predecessor of Nongfu Spring, selling its first bottle of water in 1997.
**When Nongfu Spring entered the market, it was already a three-way split among Nestlé's blue bottle, Robust's green bottle, and Wahaha's pink bottle.**
Zong Qinghou and He Boquan, both who made their fortunes with children's lactic acid drinks, started selling water around the same time. The concept of bottled water at the time was largely shaped by Wahaha and Robust.
**In 1995, Wahaha launched purified water.** In 1997, Robust aired an ad: "Every drop of Robust water goes through 27 layers of purification; it's truly pure water." Wahaha's classic ads, featuring Wang Leehom's "Loudly Say I Love You" and Jinggangshan's "My Eyes Only Have You," formed the public's main impression of bottled water.
At that time, a wave of water companies sold purified water. Purified water is essentially pure water, processed from tap water. The extra word "purified" was full of marketing wisdom.
Wang Leehom endorsed Wahaha purified water for 20 years, ending the contract at the end of 2017.
**The upstart Nongfu Spring had to take an unconventional path to get a share. Zhong Shanshan decided to break the predecessors' rice bowl.** In 2000, Nongfu Spring proposed the theory that "purified water is not beneficial to the human body" and introduced the concept of "natural water." This gave rise to the slogan "We don't produce water; we're just nature's porters." The dispute between purified and natural water caused a huge uproar at the time. It was the second time Zhong Shanshan and Zong Qinghou clashed.
**Zhong Shanshan, a former journalist and health products seller, is a master of marketing; advertising is key to Nongfu Spring's success.** This is also evident from Nongfu Spring's cost analysis: in 2019, sales expenses accounted for 24.2% of operating revenue, with the main costs being transportation and advertising, at 2.53 billion and 1.22 billion yuan respectively. In fact, not just Nongfu Spring, other water companies are similar.
Consumers don't bother to distinguish where water comes from; they buy concepts and packaging. No bottle of water sells well without being driven by advertising. You buy a bottle of water, but the water itself is the least valuable part—quite paradoxical.
Zhou Jingliang of Jingtian knows this well. Zhou, who worked at C'estbon and is a seasoned water expert, founded Jingtian and later launched its mid-to-high-end brand Ganten. But after much water quality promotion, sales didn't improve until he used the slogan "Aristocrat of Water" and the mysterious ads; Ganten's sales finally picked up, making it one of the top six brands and a 10-billion-yuan product.
Screenshot of Ganten ad
Master Kong tried to capture the market with low prices, so it squeezed costs and played with packaging. Among bottled waters on the market, Master Kong's bottles are the thinnest and caps the lightest, even with lower recycling value, but it sold for only 1 yuan, dropping to 0.69 yuan at its cheapest, significantly increasing market share, with annual sales reaching 8.071 billion yuan at one point.
In 2018, Master Kong tried to raise the price from 1 yuan to 2 yuan, but the market impression was extremely hard to change; consumers were used to Master Kong's poor quality and low price. Correspondingly, market share declined; in 2019, Master Kong's bottled water sales were 3.114 billion yuan, down 28.99%.
**-03-**
**Today, the bottled water world has entered an oligopoly era, with the six major brands—Nongfu Spring, C'estbon, Ganten, Master Kong, Ice Dew, and Wahaha—occupying nearly 80% of the market share, with Nongfu Spring and C'estbon together accounting for nearly half.** It's not easy to shake this ranking, so companies are shifting their focus from mid-to-low-end water to high-end water.
In the 1990s, new beverages like fruit-flavored milk impacted the mineral water market, leaving Qingdao Soda Water Factory with piles of unsold mineral water. Compared to bland water, consumers preferred spending money on soda or fruit-flavored milk.
History repeats itself. Decades later, with growing health awareness, the carbonated beverage market is shrinking. In 2015, Japan's Asahi Shimbun published an article noting that carbonated beverage sales, led by Coca-Cola, had declined for nine consecutive years. That same year, the bottled water market surpassed carbonated beverages.
Coca-Cola and PepsiCo, both focused on carbonated drinks, were affected: in 2017, Coca-Cola's net revenue was $35.41 billion, down 15% year-over-year. To cut costs, Coca-Cola began layoffs; at its peak, it had 150,900 employees globally, but by 2018, only 40,000 remained. PepsiCo's net profit also fell 23.36% year-over-year in 2017.
Drinking water has never been more emphasized. Now, both cola giants have laid out plans in the high-end water sector.
But in China, the high-end water market seems immature. Europeans and Americans can basically distinguish between purified water, natural water, and natural mineral water; they rarely drink purified water, consuming mostly natural mineral water. Japan also has a high degree of "mineral water-ization," but domestic consumers' understanding of water is still unclear.
For a long time, in the minds of domestic consumers, high-end water equaled Evian. Even though Tibet 5100, JDB's Kunlun Mountain, and Voss under Huabin have entered, Evian remains the leader.
But the emergence of new urban middle class and consumption upgrades still push manufacturers to bet on high-end water, competing with Danone, which holds Evian, and Nestlé, which holds Perrier.
Someone asked on Zhihu: When you drink Evian, what are you actually drinking?
Liang Wendao once bought a dozen bottles of water to taste. When he tasted the highly priced "Lurisia," he described the taste as "toilet water that has been sitting in the tank for years." He concluded: Our standard for buying water is not taste but image. The superstition and worship of packaging in this era have reached a shameless level.
But Cai Lan wrote a special piece on "water," and he can tell the differences: Perrier is not as good as Laoshan mineral water; for sparkling mineral water, S.Pellegrino is the first choice; FIJI is delicious; Hokkaido's "secret water" is the best in the world.
Woody Allen loves Perrier. In 1990, Perrier had a global recall due to quality issues. Unable to buy Perrier, Woody Allen exclaimed, "Without Perrier, how can we intellectuals survive?"
Steve Jobs also had his beloved water: Smart Water; he almost exclusively drank this brand. After Coca-Cola acquired it, it became a high-end water ace for Coca-Cola.
It seems drinking water is a matter of personal opinion. But one thing is certain: when you drink Evian, besides water, you might be drinking a sense of identity.
**Although domestic consumers are still vague about water, it doesn't mean Chinese people have never understood water.** The ancients were most particular about water for brewing tea and making medicine, classifying spring water, well water, rainwater, raw water, and boiled water meticulously. The Ming and Qing imperial palaces used water from Beijing's Yuquan Mountain, and Emperor Qianlong was quite knowledgeable about drinking water, even writing "Notes on Yuquan Mountain."
But after all, it was only the wealthy who had such leisure. Tracing these high-end water brands, they were initially for nobles and only later became a mass business.
Perrier only appears in Yi Shu's novels; a glass of Perrier with lemon and ice is a lunch essential. In "Ode to Joy," Andy wouldn't drink a 2-yuan bottle of Nongfu Spring; she must drink Evian.
In the late Qing and early Republic period, hosting guests at a Western restaurant involved a set of social rituals: opening foreign wine, opening Dutch water, serving snacks, and smoking cigars. Dutch water was the first sparkling water introduced to China, selling for 4 silver dollars per dozen, unaffordable and unavailable to ordinary people. Dutch water thus gained fame, and everyone wanted to know what it tasted like.
When a bottle of water carries social information like identity, class, and status, the water itself becomes less important. If low-end water sells the bottle, then high-end water sells more than just the bottle.
This source of life glitters with gold.
Source: Material Life Reference (ID: wzshck) Author: Wang Buyi


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