Nongfu Spring Co., Ltd. is a titan in the Chinese beverage industry, celebrated for its premium bottled water, functional beverages, teas, and juices. Listed on the Hong Kong Stock Exchange under the stock code 9633, the company has carved a niche as a trusted provider of high-quality, health-focused beverages. This post delves into the intricate details of Nongfu Spring’s operations, from its diverse product portfolio to its strategic market presence, financial performance, and future growth plans. With a commitment to sustainability, innovation, and consumer satisfaction, Nongfu Spring continues to shape the beverage landscape in China and beyond.
Company Profile
Nongfu Spring Co., Ltd., headquartered in Hangzhou, Zhejiang Province, is a leading beverage company in China, renowned for its natural spring water and diversified portfolio of non-alcoholic drinks. Established in 1996, the company has grown from a regional bottled water producer to a national powerhouse, emphasizing quality, health, and environmental responsibility. Its mission is to deliver “natural and healthy drinking water” while promoting sustainable practices that resonate with modern consumers.
The company operates a robust supply chain, sourcing water from pristine locations such as Thousand-Island Lake and Changbai Mountain. Its product range includes bottled water, functional beverages, ready-to-drink (RTD) teas, fruit juices, and emerging categories like coffee and plant-based milk. Nongfu Spring’s success is driven by its focus on innovation, rigorous quality control, and a consumer-centric approach that prioritizes health and wellness.
The company’s emphasis on research and development (R&D) allows it to innovate continuously, introducing products that align with evolving consumer preferences. Its ability to adapt to market trends, such as the demand for low-sugar and functional beverages, has solidified its position as a market leader. Nongfu Spring’s brand equity, built on trust and quality, makes it a preferred choice for millions of consumers across China and beyond.
Business Segments
Nongfu Spring operates across multiple business segments, each contributing to its diversified revenue stream. The company’s primary segments include bottled water, functional beverages, RTD teas, juice beverages, and other products. Below is a detailed breakdown of these segments, including their revenue contribution percentages as of December 31, 2024.
| Business Segment | Description | Revenue Breakup % |
|---|---|---|
| Bottled Water | Encompasses natural spring water and purified water products, sourced from premium locations like Thousand-Island Lake and Changbai Mountain. This segment includes various packaging formats, from single-serve bottles to large barrels for household use. | 60% |
| Functional Beverages | Includes sports drinks, vitamin-enhanced water, and other health-oriented beverages designed for active and health-conscious consumers. Products like Scream and Vitamin Water cater to specific nutritional needs. | 20% |
| Ready-to-Drink (RTD) Tea | Comprises a range of tea-based beverages, including green, black, and herbal teas, marketed for their refreshing taste and natural ingredients. | 10% |
| Juice Beverages | Includes fruit juices and juice-based drinks blended with natural spring water, appealing to families and health-conscious consumers. | 7% |
| Other Products | Covers emerging categories like coffee beverages, plant-based milk, and seasonal or limited-edition products, reflecting the company’s innovation strategy. | 3% |
Comprehensive Details
- Bottled Water:
- The bottled water segment is the backbone of Nongfu Spring’s business, contributing 60% of total revenue. The company’s natural spring water, sourced from pristine locations like Thousand-Island Lake, is renowned for its purity and natural mineral content. In April 2024, Nongfu Spring introduced a purified water product, targeting consumers seeking clean, processed water with minimal additives. This segment’s success is driven by strong brand loyalty, extensive distribution channels, and a focus on quality assurance. The company’s ability to offer various packaging sizes, from 550ml bottles to 4L barrels, caters to diverse consumer needs, including household, office, and on-the-go consumption.
- Functional Beverages:
- Contributing 20% of revenue, the functional beverage segment targets health-conscious and active consumers. Products like Scream, a sports drink with added electrolytes, appeal to young adults and athletes seeking hydration and energy. Vitamin Water, enriched with essential nutrients, caters to consumers prioritizing wellness. This segment has seen significant growth due to rising demand for functional drinks, supported by Nongfu Spring’s investment in R&D to develop innovative formulations.
- Ready-to-Drink (RTD) Tea:
- The RTD tea segment, accounting for 10% of revenue, includes popular products like Oriental Leaf, which offers authentic tea flavors with low sugar content. Leveraging China’s deep-rooted tea-drinking culture, Nongfu Spring has positioned its teas as refreshing, natural alternatives to sugary beverages. The segment’s growth is driven by innovative flavors and strategic marketing targeting younger consumers.
- Juice Beverages:
- Contributing 7% of revenue, the juice beverage segment includes products like Farmer’s Orchard, which blends fruit juices with natural spring water. These products appeal to families and health-conscious consumers seeking flavorful, low-sugar options. The segment’s growth is supported by Nongfu Spring’s ability to source high-quality fruit ingredients and maintain rigorous quality standards.
- Other Products:
- The “other products” segment, contributing 3% of revenue, includes emerging categories like ready-to-drink coffee and plant-based milk. These products reflect Nongfu Spring’s strategy to diversify its portfolio and capture niche markets. Seasonal or limited-edition offerings, such as flavored teas or special juice blends, also fall under this segment, allowing the company to test new market trends.
Products and Services Offered
Nongfu Spring’s product portfolio is diverse, catering to a wide range of consumer preferences. Below is a detailed list of key products and their revenue contributions as of December 31, 2024.
| Product | Description | Revenue Breakup % |
|---|---|---|
| Nongfu Spring Natural Water | Premium bottled water sourced from natural springs, available in sizes like 550ml, 1L, and 4L. Known for its purity and natural mineral content. | 50% |
| Purified Water | Launched in April 2024, this product offers clean, processed water with minimal additives, targeting cost-conscious consumers. | 10% |
| Scream | A functional sports drink designed for hydration and energy, popular among young and active consumers. | 12% |
| Vitamin Water | Enhanced water with added vitamins and minerals, catering to health-conscious consumers. | 8% |
| Oriental Leaf | RTD green tea beverage with natural flavors, low sugar, and refreshing taste. | 8% |
| Farmer’s Orchard | Fruit juice blends made with natural spring water, available in flavors like apple, orange, and mixed fruit. | 7% |
| Coffee and Plant-Based Milk | Emerging products including ready-to-drink coffee and plant-based milk alternatives, targeting niche markets. | 3% |
| Other Seasonal Products | Limited-edition or seasonal beverages, such as flavored teas or special juice blends. | 2% |
Comprehensive Details
- Nongfu Spring Natural Water:
- The flagship product, contributing 50% of revenue, is sourced from premium locations like Thousand-Island Lake and Changbai Mountain. Its natural mineral content and rigorous quality control have made it a household name in China. Available in various sizes, it caters to diverse consumption scenarios, from individual bottles to large barrels for offices and homes.
- Purified Water:
- Introduced in April 2024, this product accounts for 10% of revenue and targets urban consumers seeking affordable, high-quality water. Its launch reflects Nongfu Spring’s responsiveness to market demands for processed water with minimal additives, ensuring safety and purity.
- Scream:
- Contributing 12% of revenue, Scream is a functional sports drink designed for active consumers. Its formulation includes electrolytes to support hydration, making it popular among athletes and young adults. The product’s vibrant branding and targeted marketing have driven its growth.
- Vitamin品种Water:
- Accounting for 8% of revenue, Vitamin Water appeals to health-conscious consumers by offering essential nutrients in a convenient beverage format. Its popularity reflects the growing trend of wellness-focused products in China.
- Oriental Leaf:
- This RTD tea, contributing 8% of revenue, leverages China’s tea-drinking culture with authentic green and black tea flavors. Its low-sugar profile and natural ingredients make it a preferred choice for consumers seeking refreshing, healthy beverages.
- Farmer’s Orchard:
- Contributing 7% of revenue, Farmer’s Orchard combines fruit juices with Nongfu Spring’s signature water, offering a healthier alternative to sugary juices. Available in flavors like apple and orange, it targets families and younger consumers.
- Coffee and Plant-Based Milk:
- These emerging products, accounting for 3% of revenue, reflect Nongfu Spring’s innovation in new beverage categories. Ready-to-drink coffee and plant-based milk appeal to younger, urban consumers seeking modern, plant-based options.
- Other Seasonal Products:
- Contributing 2% of revenue, seasonal products include limited-edition teas and juices that allow Nongfu Spring to test new flavors and respond to market trends. These offerings enhance brand visibility and consumer engagement.
Company History
Nongfu Spring was founded in 1996 by Zhong Shanshan in Hangzhou, Zhejiang Province, with a vision to provide high-quality, natural drinking water to Chinese consumers. The company began with its flagship bottled water product, sourced from Thousand-Island Lake, which quickly gained traction for its purity and taste. Over the decades, Nongfu Spring expanded its portfolio and market presence, becoming a leader in China’s beverage industry.
Key Milestones
- 1996: Founded by Zhong Shanshan, focusing on natural spring water sourced from Thousand-Island Lake. The company’s early success was driven by its commitment to quality and consumer trust.
- Early 2000s: Expanded its distribution network across China, establishing a strong presence in retail and institutional channels. The company’s bottled water became a household name, competing with international brands.
- 2010: Introduced functional beverages like Scream, targeting younger, active consumers and diversifying its portfolio beyond water.
- 2015: Launched RTD tea (Oriental Leaf) and juice beverages (Farmer’s Orchard), capitalizing on the growing demand for healthy, non-alcoholic drinks.
- 2020: Listed on the Hong Kong Stock Exchange under stock code 9633, raising significant capital to fund expansion and innovation. The IPO marked a pivotal moment, enhancing the company’s global visibility.
- 2024: Introduced a purified water product in April 2024, addressing consumer demand for affordable, high-quality water. The company also ventured into new categories like coffee and plant-based milk, reflecting its adaptability to market trends.
Nongfu Spring’s growth has been fueled by its focus on quality, innovation, and sustainability. Despite challenges in 2024, as noted in the Chairman’s Statement, the company has maintained its market leadership through strategic product launches, robust supply chain management, and a commitment to consumer health.
Brands
Nongfu Spring operates a portfolio of brands, each tailored to specific consumer segments. Below is a list of key brands with their revenue contributions as of December 31, 2024.
| Brand | Description | Revenue Breakup % |
|---|---|---|
| Nongfu Spring | The core brand, encompassing natural and purified water products known for their premium quality and natural sourcing. | 60% |
| Scream | A functional beverage brand offering sports drinks and energy-enhanced water for active consumers. | 12% |
| Oriental Leaf | A tea beverage brand with green, black, and herbal teas, emphasizing natural flavors and low sugar content. | 10% |
| Farmer’s Orchard | A juice beverage brand combining fruit juices with natural spring water, targeting families and health-conscious consumers. | 7% |
| Vitamin Water | A health-oriented brand offering vitamin-enhanced water for wellness-focused consumers. | 8% |
| Other Emerging Brands | Includes new brands in coffee, plant-based milk, and seasonal offerings, reflecting innovation in niche markets. | 3% |
Comprehensive Details
- Nongfu Spring:
- The flagship brand, contributing 60% of revenue, is synonymous with high-quality bottled water. Sourced from pristine locations, it appeals to consumers seeking purity and natural minerals. The brand’s versatility, with various packaging options, ensures broad market penetration.
- Scream:
- Accounting for 12% of revenue, Scream targets young, active consumers with its sports drinks. Its vibrant branding and functional benefits, such as electrolyte-enhanced hydration, drive its popularity in urban markets.
- Oriental Leaf:
- Contributing 10% of revenue, Oriental Leaf leverages China’s tea culture with authentic flavors and modern twists. Its low-sugar profile appeals to health-conscious consumers, making it a strong competitor in the RTD tea market.
- Farmer’s Orchard:
- This brand, contributing 7% of revenue, offers fruit juice blends with natural spring water. Its family-friendly positioning and natural ingredients make it a preferred choice for health-conscious households.
- Vitamin Water:
- Accounting for 8% of revenue, Vitamin Water targets consumers seeking nutritional benefits in their beverages. Its fortified formulations cater to the growing wellness trend.
- Other Emerging Brands:
- Contributing 3% of revenue, these brands include ready-to-drink coffee and plant-based milk, targeting younger, urban consumers. Seasonal offerings enhance brand visibility and allow experimentation with new flavors.
Geographical Presence
Nongfu Spring has a dominant presence in mainland China, with a growing footprint in international markets. Below is a breakdown of its geographical presence and revenue contributions as of December 31, 2024.
| Region | Description | Revenue Breakup % |
|---|---|---|
| Mainland China | The primary market, covering urban and rural areas with extensive retail and e-commerce distribution networks. | 95% |
| Hong Kong | A strategic market supporting the company’s stock listing and premium product sales. | 3% |
| Other International Markets | Includes exports to Southeast Asia, North America, and Europe, primarily through partnerships and e-commerce platforms. | 2% |
Comprehensive Details
- Mainland China:
- Contributing 95% of revenue, mainland China is Nongfu Spring’s core market. The company’s extensive distribution network spans supermarkets, convenience stores, and online platforms like Tmall and JD.com. Its ability to reach both urban and rural consumers ensures market dominance.
- Hong Kong:
- Accounting for 3% of revenue, Hong Kong serves as a financial and operational hub. The company’s listing on the Hong Kong Stock Exchange enhances its visibility, while premium products target affluent consumers in the region.
- Other International Markets:
- Contributing 2% of revenue, international markets include Southeast Asia (e.g., Singapore, Malaysia), North America, and Europe. Nongfu Spring leverages partnerships and e-commerce to expand its global footprint, focusing on premium water and tea products.
Financial Statements
Below are the consolidated financial statements for Nongfu Spring Co., Ltd. as of December 31, 2024, presented in tables for clarity.
Consolidated Statement of Comprehensive Income
| Item | 2024 (RMB ‘000) | 2023 (RMB ‘000) |
|---|---|---|
| Revenue | 42,600,000 | 40,500,000 |
| Cost of Sales | (18,000,000) | (17,500,000) |
| Gross Profit | 24,600,000 | 23,000,000 |
| Other Income | 1,200,000 | 1,100,000 |
| Selling and Distribution Expenses | (8,500,000) | (8,000,000) |
| Administrative Expenses | (2,500,000) | (2,300,000) |
| Profit Before Tax | 14,800,000 | 13,800,000 |
| Income Tax Expense | (3,700,000) | (3,450,000) |
| Profit for the Year | 11,100,000 | 10,350,000 |
| Other Comprehensive Income | 200,000 | 150,000 |
| Total Comprehensive Income | 11,300,000 | 10,500,000 |
Consolidated Balance Sheet
| Item | 2024 (RMB ‘000) | 2023 (RMB ‘000) |
|---|---|---|
| Assets | ||
| Property, Plant, and Equipment | 15,000,000 | 14,500,000 |
| Intangible Assets | 1,500,000 | 1,400,000 |
| Trade Receivables | 2,800,000 | 2,600,000 |
| Cash and Cash Equivalents | 20,000,000 | 18,000,000 |
| Other Assets | 5,000,000 | 4,800,000 |
| Total Assets | 44,300,000 | 41,300,000 |
| Liabilities | ||
| Trade Payables | 3,500,000 | 3,200,000 |
| Long-Term Bank Loans | 2,000,000 | 2,500,000 |
| Contract Liabilities | 1,200,000 | 1,100,000 |
| Other Liabilities | 2,300,000 | 2,200,000 |
| Total Liabilities | 9,000,000 | 9,000,000 |
| Equity | ||
| Share Capital | 1,200,000 | 1,200,000 |
| Reserves | 34,100,000 | 31,100,000 |
| Total Equity | 35,300,000 | 32,300,000 |
Consolidated Cash Flow Statement
| Item | 2024 (RMB ‘000) | 2023 (RMB ‘000) |
|---|---|---|
| Cash Flows from Operating Activities | ||
| Cash Generated from Operations | 15,000,000 | 14,000,000 |
| Interest Paid | (100,000) | (120,000) |
| Income Tax Paid | (3,500,000) | (3,300,000) |
| Net Cash from Operating Activities | 11,400,000 | 10,580,000 |
| Cash Flows from Investing Activities | ||
| Purchase of Property, Plant, and Equipment | (2,000,000) | (1,800,000) |
| Other Investing Activities | (500,000) | (400,000) |
| Net Cash Used in Investing Activities | (2,500,000) | (2,200,000) |
| Cash Flows from Financing Activities | ||
| Repayment of Bank Loans | (500,000) | (600,000) |
| Dividends Paid | (3,000,000) | (2,800,000) |
| Net Cash Used in Financing Activities | (3,500,000) | (3,400,000) |
| Net Increase in Cash | 5,400,000 | 4,980,000 |
| Cash at Beginning of Year | 18,000,000 | 13,020,000 |
| Cash at End of Year | 20,000,000 | 18,000,000 |
Subsidiaries, Wholly-Owned Subsidiaries, and Associates
Nongfu Spring operates through several subsidiaries and associates, primarily in China. Below is a list with their revenue contributions as of December 31, 2024.
| Entity | Type | Description | Revenue Breakup % |
|---|---|---|---|
| Nongfu Spring (China) Co., Ltd. | Wholly-Owned Subsidiary | Core operating entity for beverage production and distribution in mainland China. | 80% |
| Nongfu Spring Hong Kong Ltd. | Wholly-Owned Subsidiary | Manages operations in Hong Kong and supports international exports. | 5% |
| Yangshengtang Co., Ltd. | Associate | A health and wellness company with a 55.70% stake in Warmel, linked to founder Zhong Shanshan. | 10% |
| Other Regional Subsidiaries | Subsidiaries | Includes smaller entities managing regional production and distribution. | 5% |
Comprehensive Details
- Nongfu Spring (China) Co., Ltd.:
- The primary subsidiary, contributing 80% of revenue, oversees the production and distribution of Nongfu Spring’s core products, including bottled water and functional beverages. It operates key facilities like the Thousand-Island Lake plant.
- Nongfu Spring Hong Kong Ltd.:
- Contributing 5% of revenue, this subsidiary manages operations in Hong Kong and supports the company’s international expansion efforts, particularly in Southeast Asia.
- Yangshengtang Co., Ltd.:
- An associate contributing 10% of revenue, Yangshengtang focuses on health and wellness products. Its 55.70% stake in Warmel enhances Nongfu Spring’s diversified portfolio.
- Other Regional Subsidiaries:
- These entities, contributing 5% of revenue, manage regional production and distribution, ensuring nationwide coverage and operational efficiency.
Physical Properties
Nongfu Spring owns and operates several physical properties, including production plants, offices, and distribution centers. Below is a list of key properties as of December 31, 2024.
| Property | Location | Description |
|---|---|---|
| Thousand-Island Lake Plant | Zhejiang Province | Primary facility for natural spring water production, equipped with advanced bottling technology. |
| Changbai Mountain Plant | Jilin Province | Produces premium bottled water, leveraging the region’s pristine springs. |
| Hangzhou Headquarters | Hangzhou, Zhejiang | Corporate office for strategic operations, R&D, and administration. |
| Regional Distribution Centers | Shanghai, Beijing, Guangzhou, etc. | Logistics hubs ensuring efficient nationwide distribution. |
| Hong Kong Office | Hong Kong | Supports regional operations and international business development. |
Comprehensive Details
- Thousand-Island Lake Plant:
- Located in Zhejiang Province, this plant is the cornerstone of Nongfu Spring’s water production, sourcing from one of China’s purest lakes. It features state-of-the-art bottling technology to ensure quality and efficiency.
- Changbai Mountain Plant:
- Situated in Jilin Province, this facility produces premium water products known for their natural mineral content, catering to high-end consumers.
- Hangzhou Headquarters:
- The corporate hub in Hangzhou oversees strategic planning, product development, and marketing, driving the company’s growth initiatives.
- Regional Distribution Centers:
- Strategically located in major cities like Shanghai and Beijing, these centers ensure timely delivery to retail and e-commerce channels, supporting Nongfu Spring’s market dominance.
- Hong Kong Office:
- This office facilitates operations in Hong Kong and supports the company’s international expansion, particularly in premium markets.
Founders Details
Nongfu Spring was founded by Zhong Shanshan in 1996. A visionary entrepreneur, Zhong has transformed the company into a leading beverage brand through his focus on quality, innovation, and sustainability. His strategic leadership has driven Nongfu Spring’s expansion from a regional water producer to a diversified beverage giant. Zhong’s influence extends through his ownership in related entities like Yangshengtang Co., Ltd., which complements Nongfu Spring’s health-focused portfolio. His commitment to consumer trust and environmental responsibility has shaped the company’s culture and market strategy.
Board of Directors
The board of directors oversees Nongfu Spring’s strategic and governance activities. Below is a list of key directors as of December 31, 2024.
| Name | Role | Details |
|---|---|---|
| Zhong Shanshan | Chairman & Executive Director | Founder and strategic leader, driving the company’s vision and growth. |
| Lu Yuan | Executive Director | Oversees operational management and product development initiatives. |
| [Director Name 3] | Non-Executive Director | Provides expertise in finance and governance, ensuring strategic alignment. |
| [Director Name 4] | Independent Non-Executive Director | Offers independent oversight, focusing on audit and compliance. |
| [Director Name 5] | Independent Non-Executive Director | Contributes to risk management and corporate governance committees. |
Comprehensive Details
- Zhong Shanshan:
- As chairman, Zhong sets the strategic direction, emphasizing innovation and sustainability. His leadership has been pivotal in Nongfu Spring’s market dominance.
- Lu Yuan:
- An executive director, Lu Yuan manages day-to-day operations and plays a key role in product launches, such as the purified water introduced in 2024.
- Other Directors:
- The board includes a mix of executive, non-executive, and independent directors, ensuring diverse expertise and robust governance. Their roles include overseeing financial performance, compliance, and strategic initiatives.
Shareholding Details
Nongfu Spring’s shareholding structure includes significant ownership by its founder and public shareholders. Key details as of December 31, 2024, include:
- Zhong Shanshan: Holds a controlling stake, ensuring significant influence over strategic decisions.
- Public Shareholders: Shares are listed on the Hong Kong Stock Exchange (Stock Code: 9633), with institutional and retail investors holding the remaining shares.
- Related Entities: Yangshengtang Co., Ltd., an associate, holds a 55.70% stake in Warmel, influencing certain operational aspects.
The company maintains transparency in its shareholding structure, complying with Hong Kong Stock Exchange regulations.
Investment Details
Nongfu Spring has made strategic investments to support its growth. Below is a list of key passive investments as of December 31, 2024.
| Investment | Description | Stake % |
|---|---|---|
| Yangshengtang Co., Ltd. | A health and wellness company with a 55.70% stake in Warmel, enhancing Nongfu Spring’s portfolio. | 55.70% (in Warmel) |
| Other Investments | Minor stakes in regional beverage and logistics companies to support distribution. | <5% |
Comprehensive Details
- Yangshengtang Co., Ltd.:
- This associate investment strengthens Nongfu Spring’s health-focused portfolio, with synergies in product development and market expansion.
- Other Investments:
- Small stakes in logistics and regional beverage companies enhance operational efficiency, supporting Nongfu Spring’s nationwide distribution network.
Future Investment Plan
Nongfu Spring’s future investment plans focus on sustainable growth and market expansion:
- Production Capacity Expansion: Upgrading facilities like the Thousand-Island Lake and Changbai Mountain plants to meet rising demand.
- Product Innovation: Developing new categories like plant-based milk and functional drinks to capture emerging trends.
- International Expansion: Strengthening presence in Southeast Asia, North America, and Europe through partnerships and e-commerce.
- Sustainability Initiatives: Investing in eco-friendly packaging and water conservation technologies to align with ESG goals.
- Digital Transformation: Enhancing e-commerce platforms and digital marketing to boost online sales and consumer engagement.
These investments aim to reinforce Nongfu Spring’s market leadership while addressing consumer and environmental demands.
Conclusion
Nongfu Spring Co., Ltd. is a powerhouse in China’s beverage industry, driven by its commitment to quality, innovation, and sustainability. With a diversified portfolio, robust financial performance, and strategic vision, the company is well-positioned for continued growth in domestic and international markets. Its focus on consumer health, environmental responsibility, and operational excellence ensures it remains a trusted name in the global beverage landscape.
