---
title: "The High-End Logic Problem of Evergrande Spring Water"
description: "Evergrande Group's ambitious target of 10 billion yuan in sales for 2014 and 30 billion in three years for its new spring water brand seems far-fetched, but the company's aggressive marketing and rapid expansion have raised questions about whether it can overcome challenges in distribution, sales, and production capacity."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-07-26"
language: "en"
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---

# The High-End Logic Problem of Evergrande Spring Water

> Evergrande Group's ambitious target of 10 billion yuan in sales for 2014 and 30 billion in three years for its new spring water brand seems far-fetched, but the company's aggressive marketing and rapid expansion have raised questions about whether it can overcome challenges in distribution, sales, and production capacity.

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A target of 10 billion yuan in 2014, and 30 billion yuan three years later. For any new mineral water brand, such goals would be dismissed as pipe dreams. But when attached to Evergrande Group and Xu Jiayin, who were riding high in 2013, they seem somewhat plausible. After all, when he took over the football team and vowed to win the AFC Champions League, few believed it, yet it became reality within a few years. That was a difficult and thrilling achievement, and it came true. So selling 10 billion yuan worth of water—what's the big deal?

But what does 10 billion yuan actually mean? Anyone familiar with the water industry knows that C'estbon, which has been in the bottled water market for years, hasn't reached 10 billion yet; that's still a goal for 2015. Nongfu Spring's annual sales are only around 12 billion yuan.

If others can't do it, Evergrande must fail; if veterans can't, newcomers must fail—such logic seems strained and even unreasonable. To be fair, let's pretend Evergrande Spring Water can achieve it, and examine what it relies on to reach this 10 billion goal.

**High-Profile, High-End Strategy**

From a tactical standpoint, Evergrande Spring Water debuted on the back of Evergrande Football Club's championship victory. Xu Jiayin reserved the chest position on the team jersey for his own brand. It was a high-profile launch with intensive bombardment across CCTV, portals, local TV, metropolitan newspapers, and subways—a full-spectrum, all-encompassing campaign that pushed the product out in a short time.

It is said that at the January 2014 ordering conference, many distributors said they learned about Evergrande Spring Water through its overwhelming advertising and then contacted Evergrande. At the on-site ordering event, over 3,000 distributors and supermarket representatives gathered, and orders worth 5.7 billion yuan were signed on the spot.

It is reported that Evergrande Mineral Water Group has established sales branches in 332 prefecture-level cities nationwide, including key regions like Beijing, Shanghai, Guangzhou, Shenzhen, and Tianjin, with channels covering major hypermarkets such as Walmart, China Resources Vanguard, Carrefour, Lotus, and Tesco. Xu Jiayin said Evergrande Spring Water has created multiple miracles in the consumer goods industry. Within 100 days, Evergrande Mineral Water Group had over 4,000 employees and 363 sales branches; within a week, it acquired a Changbai Mountain mineral water plant and started production after 7 days of commissioning; in just over a month, it deployed over 200,000 sales outlets, with a recent pace of 8,000 new outlets per day; ultimately, it aims for 1.1 million stores.

From these figures, Evergrande Spring Water's first step can be considered quite successful. Leveraging the Evergrande brand and Xu Jiayin's "Xu Jiayin speed" style from real estate, it has jumped into the industry's first tier, making one marvel that the "rich second generation" can win at the starting line.

However, the high-profile, high-end approach isn't for everyone; it requires systematic operational capability and substantial financial investment. 5.7 billion yuan is a decent result, but in the face of Evergrande Spring Water's 10 billion or even 30 billion targets, it becomes less satisfying.

**Evergrande Spring Water Logic Problem**

When setting the targets of 10 billion yuan for 2014 and 30 billion yuan in three years, Xu Jiayin explicitly stated he would invest 10 billion yuan in the mineral water project, provided that Evergrande Spring Water sells well. For this diversification, Evergrande Group has also tried to find suitable logic, such as community services, to link with its original real estate main business.

However, everything is still just a concept. For Evergrande Spring Water, if several critical logic links are not completed, the outcome will not be good.

First, the widely reported 5.7 billion yuan in orders. This can be considered a decent achievement, but on closer inspection, it is a heavy burden for Evergrande Spring Water. Remember, this came after burning through 1.3 billion yuan in advertising expenses. After spending so much, it is still at the order stage. It only shows that Xu Jiayin is truly extravagant.

Veterans in the FMCG industry know that high-profile tactics are not uncommon, but the corresponding ground forces must also be very fast. If there is a disconnect, the consequences are unimaginable. "Hunger marketing"? That's something only companies like Xiaomi dare to play; no one in the FMCG industry dares.

Although Evergrande Spring Water's channel network layout speed is undeniably fast, at such speed, it's inevitable that quality suffers, and the effect will be greatly diminished.

Second, the issue of sales momentum. This is actually the core issue in FMCG, which can be broken down into channels, brand, pricing, target customer groups, market launch steps, and other aspects.

The author inquired about Evergrande Spring Water sales at several small grocery stores and convenience stores in the Binjiang East area of Guangzhou, which has strong purchasing power. During the current beverage sales peak season, Evergrande Spring Water is not selling well. "At most three or four bottles a day, sometimes not even one," said the shopkeeper. Among 500ml mineral waters, Evergrande Spring Water, positioned as mid-to-high-end, actually has little competitiveness. For channel partners, the retail price of Evergrande Spring Water's 500ml bottle is set at 5 yuan, but it actually sells for 4 yuan, while the purchase price is around 3.5 yuan, offering no advantage compared to other brands.

To boost volume, the mismatch between indiscriminate channels and mid-to-high pricing is not the only issue; Evergrande Spring Water has completely failed to clarify who it is selling to, or what direction the brand should take.

In the early batch of advertisements, Evergrande used opportunistic marketing with the slogan: "Not all natural water is good water. Evergrande Spring Water, one of the world's three best waters. We don't transport surface water; it's deep volcanic mineral water from the primitive forest of Changbai Mountain, 30 million years old." This directly targeted industry leader Nongfu Spring and might have been eye-catching.

But in the new round of ads featuring Gianna Jun and "Professor Do," the slogan became somewhat erratic: "Drink, brew tea, cook; strong, beautiful, healthy." Is this still a mineral water ad? It's more like a functional beverage ad. The problem is that at Evergrande Spring Water's water source, other companies like Nongfu Spring and Master Kong also draw water, but no one dares to use functional beverage claims as Evergrande Spring Water does.

Third, the issue of production capacity. Evergrande Spring Water claims "one source supplies the world," continuing its high-end image, but upon careful consideration, there are significant problems. Take the current order volume: 5.7 billion yuan means producing about 1.5 billion bottles, equivalent to 525,000 tons of water. With an average production capacity of 100,000 tons per production line, at least 6 lines are needed. According to media reports, Evergrande Spring Water currently has only 3 production lines with a capacity of 400,000 tons. By January this year, production and sales had already become unbalanced, with a gap of 125,000 tons.

With these issues intertwined, under the "Great Leap Forward" momentum, one cannot help but worry about Evergrande Spring Water's future. Xu Jiayin, as a real estate magnate, certainly has his strengths—diligence, strong execution, and unique vision—which allowed him to rapidly expand his main business and become a cross-industry celebrity. But when he extends his hand into the FMCG industry, he hopes to "crush" competitors and the industry with his wealth and prestige, yet he forgets that this field has its own unbreakable operational rules.

Therefore, my conclusion is that setting aside the 10 billion target for this year, if the above issues are not resolved, it will already be difficult for Evergrande Spring Water to smoothly digest the 5.7 billion yuan in orders from its ordering conference. And without the profit effect, Evergrande Spring Water's rapidly assembled distributor system will become a motley crowd.

This reminds me of the famous Battle of Fei River. Fu Jian led an army of 800,000 to attack the Jin Dynasty, disregarding all heroes under heaven, boasting that throwing whips into the river could block its flow. His momentum was mighty, but he was ultimately defeated by Xie An of the Eastern Jin, leading to the saying "every bush and tree looks like an enemy."

Why?

Because of impetuosity!

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