618 tops the list again: What makes Nongfu Spring as stable as a rock?

How did Nongfu Spring stay at the top of the list during the 618 promotion? This article reveals the logic behind its success and explores how brands can stay ahead in market turmoil. Recommended for marketing experts and brand managers.

The 618 e-commerce promotion has ended, and Nongfu Spring continues to dominate the list.

Nongfu Spring's total sales volume during the 618 shopping festival still ranked first in the industry and the entire network. This is not surprising.

But surprisingly, the total number of Nongfu Spring online members exceeded 10 million, a year-on-year increase of 58.9%. During the 618 shopping festival this year, more than 2.5 million new customers purchased Nongfu Spring products online, making it the year with the largest increase in new customers in Nongfu Spring's history.

When many people doubted Nongfu Spring's performance during this year's 618, Nongfu Spring withstood more than 100 days of online violence and remained as stable as a rock.

This brings us a lot of inspiration and confidence. It turns out that no matter how violent the inexplicable online violence is, the simplest and most reliable business law of "good products speak for themselves" will still work. When voting with money, consumers' needs will still return to the value of the product itself. As long as there are good products as the cornerstone, companies can win consumers sustainably.

At the same time, this is another intuitive reflection of Nongfu Spring's leading position in the industry.

The fact is that as a latecomer in the drinking water market, Nongfu Spring first tore out a piece of its own territory from a group of giants, then caught up, surpassed, and finally became the number one in the industry.

Statistics show that Nongfu Spring has maintained its leading position in China’s packaged drinking water market share for 12 consecutive years.

It is said that it is easy to build an empire but difficult to maintain it. Especially in recent years, the consumer market has been undergoing drastic changes all the time. For the leaders in any track, it is exponentially more difficult to continue to be the first in the industry. Being replaced is also happening constantly.

So, what is Nongfu Spring based on?

In fact, after analysis, the underlying logic of Nongfu Spring is three-pronged approach.

1. Find good water, a high barrier accumulated over time

In Nongfu Spring's view, a good water source is not only scarce, but also a key factor in determining product quality.

In order to find a high-quality water source, Nongfu Spring has been working for more than 20 years.

Nongfu Spring's water source explorers either hike in the heart of the primeval forest at minus 30 degrees Celsius all year round, or walk hundreds of kilometers on mountain roads, just to find high-quality water sources.

At the same time, in order to maximize quality assurance, Nongfu Spring's layout of each high-quality water source is a costly project, from water source exploration, water quality testing, to laying water pipes and building factories, which requires extremely high time and financial costs.

A story shows that it took six years to build the Emeishan factory of Nongfu Spring. Faced with the challenges of severe weather in the mountains and soil with a water content of up to 60%, it took more than 40 days to manually dig a foundation pile. Since there were no roads in the mountains, and even no decent flat land, the first batch of building materials for the factory was transported up by a team of mules and horses. Because they insisted on "building the factory at the water source", the time that Nongfu Spring spent on laying the foundation would have been spent on pure water companies around the city, and a factory would probably have been completed and put into production long ago.

Similar stories can be found at every water source of Nongfu Spring. The difficulties faced are nothing more than from deep water to frozen soil, from cliffs to rocks, from river valleys to dangerous rapids - if these are not considered difficulties, then at least they are Nongfu Spring's unique experience.

As of now, Nongfu Spring’s water sources include but are not limited to Qiandao Lake in Zhejiang, Danjiangkou in Hubei, Manas in Tianshan Mountains in Xinjiang, Mount Emei in Sichuan, Changbai Mountain in Jilin, etc., a total of 12 locations, spread across the country. These water sources not only have superior ecological environments, but also pure water quality.

It is precisely because of these high-quality water sources that Nongfu Spring has the best products. And because of the cumulative effect of time and the extremely high heavy asset investment, the so-called slow and clumsy work has created extremely high barriers, making it difficult for any company to imitate Nongfu Spring from now on.

2. Selling good water and building a stable ecological chain through the profit-sharing system

Now that we have good water, how do we sell it to consumers? This is also a huge commercial ecological project.

In the consumer goods industry, most companies do not deliver products directly to end customers, but need to entrust wholesalers to deliver products through channels. This is determined by socialized mass production, market characteristics and social division of labor. Channels are the bridge and bond between companies and customers, and channel capabilities are the core capabilities of companies to realize the value of goods. Especially for consumer goods companies, there is a saying that "channels are king."

Nongfu Spring also attaches great importance to channels.

Previously, some media analyzed the profit structure of a bottle of Nongfu Spring water. A bottle of 550 ml natural water at 2 yuan has a factory price of 0.71 yuan. Distributors buy it at a price of about 0.7 yuan and resell it to stores, generating a gross profit of 1.29 yuan. This part of the gross profit coefficient is attributed to the sales channel, accounting for as high as 64.5%, while Nongfu Spring's profit per bottle is only about 0.7 yuan, and it also needs to bear the logistics costs. Nongfu Spring's own heavy asset investment has made the asset-light mid- and downstream industries gain greater profits.

It is through the emphasis on channels and concessions to distributors that Nongfu Spring has built a win-win channel system with distributors, which also provides consumers with more stable prices and better services and occupies the minds of users.

As of now, Nongfu Spring has covered more than 2.37 million terminal retail outlets across the country through 4,280 distributors, ensuring that consumers can buy Nongfu Spring "anytime, anywhere" and building a strong channel barrier.

Finally, productism. Compared with its contemporaries, Nongfu Spring is always innovating.

The popularity of Oriental Leaves is a typical case.

In 2011, Nongfu Spring launched the sugar-free tea product "Oriental Leaves" which could not be called a "beverage" into the market, but it was once ignored by the market. However, Nongfu Spring has been determined to this day, and it was not until recent years that Oriental Leaves became popular in the market.

This also boosted Nongfu Spring's performance. Data shows that in 2023, Nongfu Spring's tea beverage business revenue exceeded 10 billion yuan for the first time, accounting for 29.7% of revenue, becoming the company's second 10 billion-level business category after the packaged drinking water business.

More importantly, such innovative and confident cases are everywhere in Nongfu Spring: Fruit Tea Tea Pi, Scream Sports Drink, Nongfu Orchard that shakes when you drink it, Water-soluble C100, and 17.5° juice that is not from concentrate have all been groundbreaking products. And Nongfu Spring is still innovating them, instead of remaining unchanged like other beverage companies of the same era.

For example, in 2021, Scream launched a new isotonic series of products, using a more scientific "isotonic" formula to upgrade sports drinks; for the new Longjing tea that will be launched in 2022, Nongfu Spring will complete the picking and bottling of the special Longjing within 5 days; in November last year, Nongfu Spring challenged the limits of 17.5°NFC orange juice and launched the seasonal freshly squeezed orange juice with simultaneous picking, juicing and bottling; just this month, the old brand Nongfu Orchard also innovated again, upgrading and returning to tomato juice and carrot juice with no sugar, 0 flavors, 0 preservatives and 0 artificial colors, without any additives.

Consumers are constantly iterating and consumption trends are constantly changing. Only by constantly adapting to trends and maintaining long-term investment in product research and development and innovation can we have the opportunity to maintain long-term vitality. In fact, this is also the conscious responsibility and sense of mission of the industry's leading companies, and Nongfu Spring has indeed achieved this.

Of course, among these three strategies, there is one commonality that runs through them all – that is long-termism.

Whether it is the layout of high-quality water sources, the joint construction of channels, or the promotion of new product development, even though there are difficulties and twists and turns in the process, Nongfu Spring still works hard in it, undisturbed by the outside world, and rarely follows the trend to launch a large number of shoddy products, carrying out the so-called trial and error iteration of the Internet.

As a deep moat is gradually built, Nongfu Spring will naturally be more relaxed in dealing with market competition. Consumers are of course smart and can tell which products are made with care. This is the real cornerstone behind Nongfu Spring's fearlessness of online violence and its failure to be affected by it.

Author: Ye Er; Editor: Wei Xiao; Source public account: AI Blue Media (ID: 1089327)