What is Nongfu Spring?
Nongfu Spring (农夫山泉) is a Chinese bottled water and beverage company headquartered in Zhejiang province. It is owned and chaired by founder Zhong Shanshan.
Founded in 1996, Nongfu had the biggest market share in China’s packaged drinking water market from 2012 to 2019, according to its prospectus, citing research by consulting firm Frost & Sullivan. It also makes tea and juice beverages.
The company recorded revenue of 24 billion yuan (US$3.4 billion) in 2019, up from 20.47 billion yuan a year earlier. Nongfu Spring recorded profit of 4.95 billion yuan in 2019, a 20.6% increase on its 3.61 billion yuan profit the previous year.
Recently, Nongfu Spring made an initial public offering on the Hong Kong Stock Exchange. The company raised approximately US $ 1 billion by valuing its IPO at HKD 21.50 / share, at the top of its IPO range.
Nongfu Spring is China's leading bottled water brand
There are no fixed best-bottled water brands in China as they change from year to year based on consumer preferences. In China, mineral water represents 91% of the bottled water market, while sparkling water has a share of 7% and flavored waters 2%.
Although there are no fixed brands, the local Nongfu Spring appears to continue to lead China’s bottled water through product innovation and channel optimization.
Nongfu currently has access to China’s top 10 fresh water spots and supplies 29% of the market.
China’s bottled water market is growing rapidly
According to The Economist, China has seen average annual consumption of bottled water increase from 41 liters in 2014 to 59 liters in 2019. Revenue in the Bottled Water segment amounts to US$53,337m in 2020. Market insiders indicate that bottled drinking water businesses will continue to grow in China in the future.
The growing awareness of health problems and the prevention of waterborne diseases among Chinese consumers has led to the continued growth of the sale of bottled drinking water in China. As Chinese consumers are more sensitive to food and beverages, bottled water is now a common daily drink for seniors and young people in China.
More and more Chinese consumers are adopting a more active and healthier lifestyle. Nowadays, most Chinese consumers consider bottled water the best health drink among other alternatives.
Nongfu Spring has a stock market debut
Chinese bottled water giant Nongfu Spring Co. is looking to raise up to HK $ 8.35 billion ($ 1.1 billion) in what may be the world's second largest initial public offering by a food and beverage company this year.
The Hangzhou-based firm is offering 388.2 million shares of HK $ 19.5 to HK $ 21.5 each in its Hong Kong stock sale, according to a prospectus on the Hong Kong Stock Exchange website.
The offering has attracted five key investors who will purchase a total of $ 320 million for the offering, based on the high end of the range.
At $ 1.1 billion, the first sale of shares in Nongfu Spring is set to become the second largest F&B IPO in the world following the $ 2.8 billion offering from coffee giant JDE Peet's BV in Amsterdam to May, according to data compiled by Bloomberg.
On September, Nongfu Springs went public in Hong Kong and, after a strong IPO, its founder was momentarily China’s richest person. Zhong Shanshan owns more than 80% of Nongfu Springs and was worth $52B (No. 2 in China, No. 21 in the world).
To know how can brands in the bottled water industry increase sales in China:
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Drinking water in China
Contrary to what is done in most Western countries, you do not drink tap water in China without first boiling it.
Drinking water in hotels
Today, most hotels provide their customers with water dispensers that deliver both cold and hot potable water. That said, some establishments still only offer simple electric kettles, or even thermos, which staff fill with drinking water on request. In some four or five star hotels, you will be provided with bottled mineral water (free or for a small fee). No matter what hotel you find yourself in, know that it is safe to use tap water to brush your teeth.