Gonggong Financial Bureau The water quality of Nongfu Spring has been questioned again
Nongfu Spring, is it pure water or mineral water?The answer is natural water. Mineral water is natural water, but natural water is not necessarily mineral water. The national standard for natural mineral water GB8537-2018 clearly requires that the source of mineral water is deep groundwater that naturally gushes out or is drilled, and at least one of the seven indicators such as potassium, sodium, calcium, magnesium, and metasilicic acid must meet the limit. However, according to the "China Business Daily", the seven indicators of Nongfu Spring have not been met, since it is not mineral water, then where does the natural water of Nongfu Spring come from?Recently, a certain brand positioning expert publicly questioned Nongfu Spring as "reservoir water", and the water quality is not as good as Evergrande Ice Spring.
In response to this statement, Nongfu Spring's customer service responded that the bottle was clearly marked as natural water, and the relevant labels had been strictly reviewed by the state and were all trueThe statement of the expert surnamed Gu is free speech, and (we) have no right to interfere, but if it affects the company, it will be reported to the higher authorities.
It is worth noting that this is not the first time that Nongfu Spring has been questioned about its inferior water quality. As early as 2013, Nongfu Spring was publicly "cracked down" by "Nongfu Spring because the standard of Nongfu Spring is not as good as tap water". At that time, the boss of Nongfu Spring, Zhong Sui, and a group of executives held a press conference to "refute rumors" that it was implementing the most stringent standards, including national standards, local standards, and enterprise standards. However, in the end, the incident ended hastily with "Nongfu Spring sued fruitlessly, withdrew the lawsuit in disappointment, and withdrew from the Beijing bottled water market". It should be noted that it was not until 2018 that Nongfu Spring issued and implemented the enterprise standard of "Natural Drinking Water" (Q NFS0001S-2018).
As for which is better, natural water or mineral water, experts have already given their opinions. The 2nd edition of the Drinking Water Guide for Chinese Residents, published in June 2019, clearly points out that natural mineral water is subject to relevant national standards in terms of water source selection and exploitation, water quality and production management, and the quality is more guaranteedAfter thousands of years of purification, mineralization and activation of geological rock formations, mineral water is relatively less polluting and contains natural mineral elements that are beneficial to the human bodyExperiments have shown that drinking high-quality mineral water has certain benefits for human growth and development, and physical health.
In addition to the core products, Nongfu Spring's subdivided baby water has also aroused public doubts. In 2022, the Shanghai Municipal Consumer Protection Commission compared the ingredient content of a batch of drinking water labeled "suitable for infants and young children" with the same brand of unlabeled infant water, and the results showed that there was no significant difference between the composition content of the same brand of "baby water" and ordinary water, including a Nongfu Spring infant water.
Zhong Sui once publicly declared to **: "I have been doing business for so many years just so that I can do advertising creativity as much as I want." "From natural drinking water to baby water, Nongfu Spring can be described as a marketing genius among porters and an advertising genius in the bottling industry. Zhong has become the richest man in China three times by selling water, but water is only water after all.
According to the latest research report of Bank of America**, if analyzed from a negative perspective, Nongfu Spring's non-tea business accounts for about 70% of total sales, and the sharp rise in tea business is not enough to support group-level growth, and a downward valuation reappraisal is inevitable. The deflationary macro environment may not be enough to support the rapid structural shift of the market to sugar-free tea, because it is actually a consumption upgrade. The bank raised Nongfu Spring's 2023 and 2024 earnings per share estimates by 7% and 8% respectively to reflect the rapid growth of the tea business, but lowered the target price by 14% from HK$50 to HK$43 in view of the normal growth outlook and limited upside in profitability from a high base, reiterating a "neutral" rating.
However, Macquarie reported that Nongfu Spring's revenue and net profit are expected to increase by 27% and 31% respectively in 20235% means that revenue and net profit increased by 31% and 38% respectively in the second half of last year8%, showing an accelerating trend. As of January 29, 2024, the price of Nongfu Spring** reached 42HK$35 shares, which is close to the target price of Bank of America.
On January 30, 2024, the reporter of the Gonggong ** Society and the Gonggong Finance Bureau will continue to pay attention to the follow-up situation of "Nongfu Spring Water Quality Questioned Again".
url: *in: Huabo Jingwei.
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