This summer, a group of major enterprises seem to have agreed to make a big push in the premium water market. Among them, Wahaha's glass-bottled natural mineral water features Chinese-style designs with ink-wash paintings of ten scenic spots in Jiangnan. Qingdao Beverage Group, parent of the internet-famous Laoshan Baihua Snake Grass Water, launched a new glass-bottled premium mineral water with a streamlined design, promoted in partnership with hotels of Guangzhou Wanda and Zhongxiang Hangtong. On May 11, COFCO Group announced on its website that COFCO Coca-Cola signed a processing and export transportation agreement with Russia's Baikal Sea Company at COFCO Plaza. According to the agreement, both parties will fully leverage resource advantages to jointly introduce the world's largest lake, Lake Baikal's naturally unpolluted drinking water into the Chinese market, making it another "family member" of COFCO Beverages' foray into the premium water market. Media also reported that Yili is planning a strategy for premium water products. Additionally, Nongfu Spring, Ganten, Hengda Ice Spring, Coca-Cola, PepsiCo, and Reignwood Group have all launched their own premium products in the past two years. It seems that premium water is a lucrative business. In recent years, with the strengthening of consumers' health needs, drinking water has become the largest category in beverages. According to incomplete statistics, sales of drinking water exceeded 150 billion yuan in 2017, with fierce competition among numerous local brands and a surprising number of centralized bottling plants. However, many water companies still primarily sell 1-yuan, 2-yuan, and 8-10 yuan barreled water, with many struggling and earning thin profits. On the other hand, let's look at the cost of premium water from the perspective of ordinary purified water: a 550ml bottle of ordinary mineral water selling for 2 yuan has a water cost of about 1 cent; auxiliary items like bottles and caps cost about 0.2 yuan; operating and advertising costs are about 0.2 yuan, totaling about 0.41 yuan per bottle. Although premium water has scarce sources, difficult transportation, and higher packaging and promotion costs, making it more expensive than ordinary drinking water, it is not dozens of times higher as some might think. This shows how profitable a bottle of premium water selling for tens of yuan can be. While premium water costs more, as low-end drinking water enters a micro-profit era, its profit returns are also more substantial than ordinary water. Foreign premium water brands like Evian, Perrier, and San Pellegrino are well-known and have opened up a market; domestic brands like Nongfu Spring, Ganten, and Jingtian have also launched their own premium water brands. Whether foreign giants or local enterprises, premium water has been regarded as a new business engine to share in the global health dividend. Generally, the marketing strategy for premium water is as follows: 1 Appearance matters Compared to ordinary mineral water selling for one or two yuan, many people choose premium drinking water not only for taste but also for the taste and identity it brings. 2 Have rare value Besides unique, exquisite, and tasteful design that doesn't leave a cheap impression, premium water must create a sense of rarity; ordinary mineral water found everywhere cannot be considered premium. 3 Tell stories Premium water sells not just the product but its cultural connotation, often with a legendary or touching story behind it, naturally integrating product features and cultural meaning so people can easily understand its unique charm. 4 Precise marketing The main profits of premium water come from its target consumers, i.e., high-income groups. It's not about distributing as much as possible but focusing marketing on areas where target consumers concentrate. Theoretically, the operational strategy for premium water is sound, but unfortunately, without a unified consensus on the definition and perception of premium water among consumers, the domestic premium water market is not in good shape. Phoenix Net published a report on China's premium water market in 2015. The report indicated that 35% of respondents believed the difference between premium and low-end water lies in the water source, while 20% thought it was the brand. But when asked what a 500ml bottle of premium water should be priced at, 35% set it in the 3-6 yuan range, the largest share, while 20% thought it could be over 10 yuan. This vague consumer perception has led to the current "high opening, low going" awkward situation in the premium water market: Nongfu Spring's zodiac glass bottles are only given away, not sold, serving as a medium to drive e-commerce traffic; Hengda Ice Spring dropped to ordinary water prices, with 4L barrel water prices halved, and its initial slogan "one source for the world" couldn't be implemented due to cost pressures. Hengda Ice Spring was eventually forced to sell; by 2017, Evian couldn't hold its 11-yuan price and quickly reduced to 8-9 yuan; Kunlun Mountain also couldn't resist the market's downward pull and was forced to bundle with Didi Express and shift to lower-tier markets in third- and fourth-tier cities; Tibet 5100 shifted to leasing production lines for daily chemicals, beer, and bottle preforms, and was forced to sell 18% of its original shares... In this regard, marketing expert Lu Shengzhen wrote: "When the market reaches a critical moment of tension, price wars are often the most common outbreak. When most premium water brands sink into the supermarket battlefield, a collapse in premium water prices can already be foreseen." In fact, premium water has its own "original sin." Perhaps due to the ambiguity of the premium mineral water concept, anyone can claim to be "premium" and carve out their own "premium" selling point. Ganten's catfish effect actually uses the name of premium water to activate the mid-to-low-end market. Later followers also adopt the usual tactics of operating mass FMCG products, grabbing the largest possible share. Premium water is just a banner raised; everyone knows it tacitly. The last straw for the low-end movement of premium water was not Ganten's intentional price cut, but Evian's inability to hold on. Evian seems to have realized the limits of growth in China's premium water market. Since 2015, the minimum promotional price for 500ml Evian water has been 11 yuan. Evian also expanded massively into second- and third-tier supermarkets like China Resources, Renrenle, and Lotus. Of course, it was only a matter of time before Evian couldn't hold on. Evian is not actually premium; it just took advantage of a time gap in the early inland mineral water market. Now, more and more consumers who have traveled to Europe and the US complain that Evian costs only 0.79 euros in France, or even less. Evian's "fall" triggered a collective price self-harm among foreign water brands. Perrier, San Benedetto, and others all began discounting promotions. The chain effect didn't stop there. The most serious consequence is that true high-end consumers have withdrawn from choosing existing brands. A good example: in 2015, China's premium water market had retail sales of 500,000 tons, with retail value of only 10.8 billion yuan. "Premium water brands face a single choice: either stay premium to the end, focusing on the top market for a small group; or shed the halo of premium water and directly compete for the vast mid-to-low-end market," Lu Shengzhen believes. Perhaps the 100-billion-yuan premium water market is foreseeable. But true premium requires sticking with top consumers, maintaining an elegant distance from the mass market, always keeping supply scarce, and always staying insulated from price wars and advertising wars. Premium water should exist only in most people's ears, not in everyone's bag. Creating a space gap between true premium and mass premium is not the right path for premium water. In this context, premium water seems like a pseudo-concept. For example, Tibet 5100, once called "China's first premium mineral water," relied on its cooperation with China Railway Express to provide bottled water to about 200 million passengers on high-speed trains and bullet trains. Although its market share once surpassed Danone's Evian and Nestlé's Perrier, this channel experience is hardly "premium." Long-term reliance on exclusive supply channels to build its brand image makes it more like "high-speed rail water" or "chauffeured car water." Another example is Nongfu Spring. Despite its award-winning bottle design and its role as designated water for national summits and forums, which boosted its brand influence, it still cannot increase sales volume; its benchmark image value outweighs its market value. If the 100-billion-yuan premium water market is a bubble, it's a bubble created by Ganten, triggering a chain effect of concept substitution. Most participating products have positioned themselves in the awkward mid-range price band (6 to 10 yuan). This makes mid-to-low-end consumers think the price is inflated, while true high-end consumers cannot accept the low-endization of premium water. The pseudo-premium approach ends up losing both high-end and mid-to-low-end consumers, making it difficult for the premium water market to thrive. Source: Shiyu Ping; Some viewpoints from Lu Shengzhen's "The 100-Billion Premium Water Empire Dream: Only by Cutting Prices Again and Again" -END-