As the online dispute between Wahaha and Nongfu Spring continues, the sales of both companies are changing both online and offline. Wahaha’s online purchasing enthusiasm remains strong, and some of its popular products have had to be temporarily taken down due to stockouts. For Nongfu Spring, its offline sales volume has not changed significantly, yet this situation has caused negative reactions from some merchants and consumers.
Since February 28, Nongfu Spring’s stock price has experienced fluctuations and declines, with a cumulative drop of 6%, and its market value has evaporated by about 30 billion Hong Kong dollars. As of the close on March 11, Nongfu Spring’s stock price was recorded at 42 Hong Kong dollars per share. Considering Wahaha did not rank in the top three in the 2023 packaged water market, whether the competitive landscape of the market will change this year is a question worth paying attention to.
In Wahaha’s official Douyin store, despite the company’s video appeals for rational consumption, the enthusiasm of consumers has not decreased. Some pure water products that were originally meant to be shipped after a month’s waiting period have been taken off shelves due to high demand exceeding supply. However, other hot-selling products, such as AD calcium milk, are still for sale, but the delivery time has been extended from 15 days to 25 days.
For Nongfu Spring, the public relations pressure it faces has affected the decision-making of some merchants and consumers. There have been reports that some 7-Eleven stores have removed Nongfu Spring products. In response, Jiangsu 7-Eleven clarified on March 11, indicating that the removal of Nongfu Spring products in two Changzhou stores was an individual action by the clerks and does not represent the company’s stance.
Since Golden Eagle Trade Group’s collaboration with 7-Eleven in November 2017, 7-Eleven stores have expanded in several cities across Jiangsu. The number of 7-Eleven stores in Jiangsu has reached nearly 200. It is understood that in the Jiangsu market, 7-Eleven has regional franchisees, and most stores that removed Nongfu Spring products are franchisees. Generally, the stocking and de-stocking of goods at stores should follow company procedures, and the purchase of major products is centralized, such as Nongfu Spring being a major product. If there’s a need to remove a product, it must be by a unified decision from the headquarters and notified to the supplier. Unilateral removal of products without proper communication could constitute a breach of contract, as the purchase and sale agreement typically includes terms that both parties need to adhere to.
A chain business professional with extensive experience in the retail industry shared their observations in an interview. The professional’s shopping center continues to sell Nongfu Spring products as usual, with no abnormalities or removals.
Several well-known large-scale supermarkets and convenience store chains, including Walmart, Metro, RT-Mart, Bailian, and Yonghui, all indicate that the sales of Nongfu Spring products are normal. In the Century Lianhua supermarket, staff emphasized to reporters: “The sale of Nongfu Spring here is very normal, and we have not received any notice to adjust. As it stands, for the drinking water business, Nongfu Spring is one of the hottest selling products in our store.”
Reporters found in the investigation that, even in the face of market fluctuations, the impact on products related to Nongfu Spring in private convenience stores is limited. A store in Huangpu District displayed its support for Nongfu Spring products prominently, placing them in a conspicuous position next to the mineral water of brands such as Yibao, while the Wahaha products were nowhere to be seen.
A closer observation reveals that Nongfu Spring’s products, “Tea π” and “Dong Fang Shu Ye” (Oriental Leaves), also occupy a prominent position on the shelves. Moreover, Wahaha’s AD Calcium Milk can be found in the refrigerator. The store owner explains: “Wahaha AD Calcium Milk is extremely popular, but as far as mineral water is concerned, we mainly sell Nongfu Spring and Yibao, as Wahaha has a relatively small market share in this area.”
In another convenience store in Pudong New Area, even the three ice chests at the store entrance are branded with Nongfu Spring’s logo, indicating their sales strategy. Nongfu Spring’s juices and tea beverages offer a wide variety, and although Wahaha’s star products have seen a rise in sales recently, it has had a minimal impact on Nongfu Spring’s business.
Despite this, the recent public opinion storm faced by Nongfu Spring is concerning, involving issues such as packaging controversy and corporate inheritance. In response, Nongfu Spring stated that the text and patterns on the labels of their Oriental Leaves green tea are based on precise history and authentic documentary descriptions, aiming to promote the profound influence of Chinese tea culture on the world and reflect national confidence. Oriental Leaves products are also regarded as an important force for Nongfu Spring’s future growth.
In the past year, Nongfu Spring has achieved significant financial performance in the tea beverage sector. In 2022, its tea beverage business revenue reached 3.31 billion yuan, and in the first half of 2023, the revenue increased to 5.29 billion yuan, a nearly 60% growth, with its proportion of the company’s total revenue rising by 5.9 percentage points. This growth is largely due to the performance of the Oriental Leaves brand.
Currently, the comments section of Nongfu Spring’s official flagship store on Douyin has been closed, and the latest updates on its account homepage have been stagnant since March 1. Considering the increasingly fierce competition in the soft drink market and the low entry barriers, industry insiders believe that the recent public opinion crisis faced by Nongfu Spring may have a certain impact on the market landscape.
A research report released by Haitong International points out that packaged water and ready-to-drink tea account for 35.6% and 18.7% of the soft drink market in 2023, respectively. In the packaged water market, Nongfu Spring, Yibao, and Jing Tian occupy the top three market positions, while Wahaha is ranked fourth. Since 2014, Nongfu Spring has seen a market share increase of 6 percentage points; in contrast, Wahaha’s market share has decreased by 3.3 percentage points over the same period. In the tea beverage market, Master Kong and Uni-President are in the top two positions, accounting for 45% of the market share combined, while Nongfu Spring, although ranked fifth, continues to see its market share rise.
It is worth noting that post-pandemic, the domestic soft drink market in China has seen a rapid recovery. According to Nielsen IQ data, in 2023, the soft drink industry’s all-channel sales increased by 6% year-on-year, with packaged water total sales increasing by 4.3%, online sales growing by 14%, and offline sales growing by 3.4%.
Driven by the consumer buying frenzy, Wahaha is also seeking to occupy more market space. Recently, an internal letter from the Wahaha sales system was exposed, which mentioned that Wahaha products have received unprecedented attention, and there have been instances of panic buying and stockouts. In response, Wahaha internally has implemented measures, introducing significant security deposit reward policies and promotional activities, and has organized project teams to carry out a rush to stock up.
Facing the potential impact of this public opinion crisis, Zhu Danpeng, Vice President of the Guangdong Food Safety Promotion Association, told reporters that Nongfu Spring’s market share, sales, and profits might be affected to various degrees, especially in channels like group buying and distribution. The market’s recovery still needs to be observed, and it is expected to gradually improve during the peak sales season in July and August of this year.
