A FORAY INTO NEW WA­TERS

Hav­ing al­ready achieved suc­cess in the bot­tled wa­ter mar­ket in China, Nongfu Spring is now eye­ing a share of the global pie

China Daily (Canada) - - SHANGHAI - By XU JUN­QIAN in Shang­hai

xu­jun­qian@chi­nadaily.com.cn

Zhong Shan­shan knows very well what head­lines are all about, hav­ing writ­ten his fair share of them dur­ing his years of work­ing as a jour­nal­ist at Zhe­jiang Daily in Hangzhou, East China’s Zhe­jiang prov­ince.

Th­ese days, how­ever, as the chair­man of China’s lead­ing bot­tled wa­ter com­pany Nongfu Spring, Zhong has in­stead be­come ac­cus­tomed to mak­ing the head­lines.

In 1993, Zhong set up his first busi­ness, nam­ing it Yang Sheng Tang Group, and it sold health prod­ucts made from soft-shell tur­tles. It was only in 1996 that he de­cided to set up Nongfu Spring to en­ter the bot­tled wa­ter mar­ket. Not long af­ter its in­cep­tion, Nongfu Spring raised eye­brows when it an­nounced that it would cease sales of its pu­ri­fied wa­ter and fo­cus on pro­duc­ing just min­eral wa­ter, say­ing that the for­mer was found to pos­sess no health ben­e­fits.

Zhong said that the move was partly due to his train­ing as a jour­nal­ist, which taught him to con­stantly seek out the truth.

Al­though the bold ges­ture iso­lated Nongfu Spring from the other play­ers in the mar­ket, it ac­tu­ally man­aged to bol­ster their sales of bot­tled wa­ter. The com­pany had also di­ver­si­fied into other bev­er­ages with health ben­e­fits to build on this suc­cess. It in­tro­duced prod­ucts such as fruit juices, vi­ta­min wa­ter, bot­tled tea and even a sports drink called Scream which in 2010 be­came the only Chi­nese brand among the top five best­selling sports bev­er­ages in China, along­side Red Bull, Ga­torade and Sun­tory’s Su­per Ul­tima.

“Ev­ery prod­uct sold by my com­pany has been de­vel­oped to be ben­e­fi­cial to health. And we keep im­prov­ing them by chal­leng­ing the lim­its of our knowl­edge and un­der­stand­ing. There is only a start­ing point. There is no end to our quest for in­no­va­tion,” said the 62-year-old.

The com­pany grew steadily in strength and stature over the years un­der Zhong’s lead­er­ship, achiev­ing rev­enues of more than 10 bil­lion yuan ($1.53 bil­lion) in 2011. To­day, Nongfu Spring’s red-capped min­eral wa­ter bot­tles — the com­pany’s main rev­enue gen­er­a­tor — are so ubiq­ui­tous in China they can be found in prac­ti­cally ev­ery con­ve­nience store and su­per­mar­ket.

The com­pany again made the head­lines in 2013 when it got em­broiled in a mas­sive food safety scan­dal. In the course of a month, the Bei­jing Times had ran 76 news sto­ries ques­tion­ing the qual­ity of Nongfu Spring’s bot­tled wa­ter. In re­sponse, Nongfu Spring filed a law­suit against the news­pa­per, claim­ing that the pub­li­ca­tion had in­ten­tion­ally and sys­tem­at­i­cally ran the ar­ti­cles in an at­tempt to tar­nish the for­mer’s im­age and rep­u­ta­tion.

“It was to­tally fab­ri­cated,” said Zhong, who added that his com­pany suf­fered from a 25 per­cent drop in sales that year as many su­per­mar­kets pulled Nongfu Spring’s wa­ter from their shelves be­cause of the scan­dal.

Nongfu Spring’s name was cleared and its wa­ter deemed safe for con­sump­tion fol­low­ing tests done by the Zhe­jiang pro­vin­cial govern­ment, which pres­ence of ad­di­tional min­er­als with health ben­e­fits.

The pre­mium ta­ble wa­ter, pack­aged in an ar­tis­ti­cally de­signed glass bot­tle sport­ing sil­hou­ettes of an­i­mals found in the moun­tain range, is the prici­est wa­ter sold by Nongfu Spring, cost­ing about 50 yuan for a 750 ml bot­tle. The com­pany’s fa­mous red-capped, 550ml bot­tles usu­ally cost no more than 3 yuan.

“Th­ese are not just meant for quench­ing thirst,” said Zhong, in an ex­clu­sive in­ter­view with China Daily USA, about his new range of bot­tled wa­ter. “Twenty years ago, peo­ple were drink­ing wa­ter be­cause they were thirsty. Nowa­days, peo­ple are us­ing wa­ter to clear their palates af­ter in­dulging in a bot­tle of wine.”

Zhong be­lieves that the lux­ury wa­ter seg­ment in China will see ex­plo­sive growth over the next few years, and that this new prod­uct will help the com­pany dis­tin­guish it­self against the stiff com­pe­ti­tion in China.

Ac­cord­ing to re­search group Canadean, China had in 2013 over­taken the United States as the world’s largest bot­tled wa­ter mar­ket and is home to more than a thou­sand brands, lo­cal and for­eign. In an­other re­port by re­search firm Euromon­i­tor, China’s global con­sump­tion of bot­tled wa­ter had in­creased nearly two-fold since 2006. Euromon­i­tor also ex­pects sales in China to reach $16 bil­lion by 2017.

But Zhong is not con­tent with just be­ing a leader in China as he is also seek­ing to make an im­pact in the global scene with Nongfu Spring.

“In terms of our ca­pa­bil­ity of pro­duc­ing qual­ity prod­ucts, we can com­pete with any drink con­glom­er­ate such as Dan­non or Coca Cola, ex­cept in car­bon­ated soft drinks. How­ever, if you’re talk­ing in terms of brand im­age, we are at an dis­ad­van­tage be­cause we are, af­ter all, made in China,” said Zhong

In or­der to tackle this prob­lem, Nongfu Spring is al­ready plan­ning to man­u­fac­ture and sell its prod­ucts in for­eign mar­kets.

“Plans are al­ready in the pipe­line. The com­pany is set to go global in 2017,” added Zhong.

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