Recently, the beverage industry has been abuzz with the announcement of a new mineral water product from Nongfu Spring, which is said to have a promotional price below 2 yuanWhen approached for confirmation, representatives from Nongfu Spring confirmed that the new product has been officially announced, and retail pricing would be based on market standardsSources from industry distributors indicated that while the exact retail price remains uncertain, it is assuredly going to be lower than that of current mainstream mineral water products.

Throughout the bottled water sector, mineral water has traditionally been regarded as a premium product, often priced above 3 yuan per bottle for various brandsIf Nongfu Spring manages to set the price of its new mineral water at around 2 yuan, this could bring it in line with some purified water offeringsSuch a strategy could signal that the bottled water market is poised for an even more intense price war.

According to Zhu Danpeng, a food industry analyst, since Nongfu Spring launched its purified water, the bottled water market has descended into a pricing conflict, shattering the existing pricing structure and embroiling the entire industry in fierce competition

He pointed out that in the first half of this year, Nongfu Spring's packaged drinking water business experienced a notable decline for the first timeCoupled with aggressive moves from competitors like Yibao launching on the market and Wahaha undergoing a reform, Nongfu Spring is compelled to innovate or risk losing its top industry position.

Many brands are now following suit with aggressive pricing strategiesIn April of this year, Nongfu Spring reentered the purified water market after a twenty-year hiatus, igniting a price war in the bottled water industryChairman Zhong Shanshan stated that the motive behind re-entering the purified water segment was to "give consumers choice."

Other brands are not slouching eitherFollowing a leadership transition, Zong Fuli promptly began internal and channel reforms at Wahaha, focusing on revitalizing first and second-tier distribution channels as key targets

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As bottled water constitutes one of Wahaha's primary businesses, it became a focal point for this strategyReports in November indicated Wahaha's impending foray into the mineral water market.

Interestingly, Wahaha has had mineral water products and production lines for quite some timeThe recent surge in attention signals what many view as Wahaha's definitive move into a more substantial presence in the bottled water sectorAdditionally, Yibao, leveraging resources from China Resources Beverages, completed its listing in October and has increased upstream capacity construction across various regions to boost its production levels.

Currently, reports suggest that the retail price for the much-discussed new Nongfu Spring mineral water is still unconfirmed, with many rumored prices being actually channel pricesIt is suggested that this new product will be priced lower than some existing mineral waters on the market

The distributor emphasized that this product comes in a smaller 380ml package, suggesting that it might not significantly impact the current 500ml to 600ml bottle segment.

In terms of single-bottle pricing (for both natural and purified waters), many store products are retailing between 1.5 to 2 yuanThe crux of the ongoing price war largely hinges on bulk packaging prices, where prices for 12-bottle packs have witnessed considerable reductionsCurrently, Nongfu Spring's bulk retail price stands at 9.9 yuan for 12 bottles, with channel prices around 12 yuanWhen broken down, the profit per bottle is under 20 centsIt is expected that the retail price for the new 380ml mineral water will follow the prevailing pricing strategy of natural and purified waters, focusing on high volume and low margin.

The market has observed that brands like Yibao and Wahaha are also rapidly aligning with the low pricing tactic

In various supermarkets and online platforms in Beijing, the bulk retail prices of Yibao and Wahaha's purified water have reportedly dropped to between 9 and 11 yuan.

While this year's price war in the bottled water sector predominantly features natural and purified waters, it is evident that the mineral water market is also becoming increasingly affectedFor instance, Baishan, which holds the highest market share in the mineral water sector, maintains a retail price of 2.5 to 3 yuan for its 570ml bottled water, while bulk 6-pack retail prices remain above 2 yuan, with smaller 348ml packs hovering around 10 yuan in offline stores in BeijingThe channel price for the new 380ml mineral water from Nongfu Spring is reported at 18 yuan per case (15 bottles), indicating that Nongfu Spring is poised to challenge the existing market price structure for mineral water once again.

Some reports have highlighted that the retail price of Wahaha’s green bottle mineral water has plummeted to as low as 1.5 yuan per bottle

Unlike purified water, mineral water typically originates from remote mountain sources, usually resulting in higher production and transportation costsHistorically, the price for a single bottle of mineral water has been about twice that of purified water.

Director Shen Meng of Xiangsong Capital emphasized that Nongfu Spring's core product profitability is currently squeezed by both shrinking consumer space and pressures from competitorsIn order to reverse its relatively passive market stance and expand growth opportunities, diversification into multiple product categories has become essential.

Compared to other brands, Nongfu Spring has long occupied many domestic mineral water sourcesAs it fully commits to the mineral water segment, it faces two challenges: competitors are slashing prices in the mineral water sector, posing a 'devaluation attack' on its naturally sourced and purified water lines; simultaneously, Nongfu Spring holds upstream industry advantages

In the context of an overarching price battle in the bottled water market, it seems inevitable that a price war will emerge in the mineral water sector.

The market share reports from Zhazhishi Consult depict that in 2023, the leading brands, namely Nongfu Spring, Yibao, JingTian, Wahaha, and Kang Shifu, occupy 23.6%, 18.4%, 6.1%, 5.6%, and 4.9% of the market, respectively, together commanding over 58% of the bottled water sector.

Data from Qichacha indicates that there are approximately 259,300 registered beverage-related companies in ChinaThe registration numbers have shown growth over the past decade, rising from 14,800 annual registrations in 2014 to 25,800 in 2023. In the last three years, the increase in registrations varied significantly, with 2022 exceeding 44,200 registrations— a year-on-year increase of 60.77%, marking peak figures across the decadeCurrently, by 2024, 6,600 new registrations have already been documented

Regionally, Guangdong leads with 28,000 existing companies, followed closely by Hunan with 27,400, and Shandong with 22,200.

Although the top five brands dominate more than half the market share, new entrants continue to emerge, showing a steady upward trendZhu Danpeng notes that in today's bottled water landscape, there are indeed many players in the purified water arena, but many brands are ephemeral and lack sustainable brand influence or market position; numerous brands rely on one or a few production facilities for manufacturing.

From a market positioning perspective, these emerging brands cannot compete with leading names in terms of pricing or supply chain stabilityZhu further critiques that, despite having a relatively low market entry threshold, the bottled water industry has entered a phase of brutal competition, demanding high standards from brands regarding their supply chain and distribution capabilities

Most burgeoning brands are short-lived, with only a few capable of establishing nationwide distribution networks.

This round of price wars initiated by industry giants is predicted to compress the viability of smaller manufacturers and brands significantlyLarge brands possess cost-reduction capabilities that smaller companies cannot matchFor instance, developing mineral water demands a governmental mineral resource exploitation license and appropriate development machinery, combined with high transportation costs that limit operational geographyCompanies like Nongfu Spring and JingTian, however, have already claimed access to many of the nation’s premium mineral water resources.

Moreover, it has been disclosed that many leading brands have rapidly upgraded their plastic bottle processing technologies, enabling them to manufacture compliant plastic bottles using significantly less material

"Many major manufacturers are visibly improving their plastic bottle production, making thinner bottles without compromising quality, which continuously lowers their overall production costs—an area where smaller manufacturers struggle to catch up quickly," revealed an industry insider.

In the packaged water sector, bottled water priced between 2 and 3 yuan boasts impressive profitability, which is why a diverse range of products can often be seen in convenience storesHowever, when leading companies engage in unified price reductions, the profitability of bottled water can plummet dramatically, driving many brands out of the marketConsequently, during this price war, prominent brands are unlikely to be wiped out by competition but will instead absorb a larger market share as smaller manufacturers gradually exit the scene, effectively consolidating the market under their control.