In the early nineties of the last century, Zhong Sui, who was still the first merchant of Wahaha children's nutrient solution, found that the nutrient solution products could not open the market in Hainan and Guangxi, but resold to Zhanjiang, Guangdong not only had a market, but also had a preferential price difference, so Zhong Sui began to "channel" to sell Wahaha nutrient solution.
The old things have become history, but I didn't expect that after the death of Zong Qinghouxian, the founder of Wahaha, this past incident became the evidence of "cyber violence" Nongfu Spring and verbal criticism of Zhong Sui.
A few days ago, Zhong Sui personally issued a response saying that he had never received a salary in Wahaha, let alone been fired because of his experience of fleeing goods.
The monstrous public opinion not only pointed the finger at Zhong Sui, but also affected the sales of Nongfu Spring. Since February 28, Nongfu Spring's official sales volume has been 5 consecutive days, and the single-day sales on March 3 were 50,000 yuan, which was only one-twentieth of February 27.
* It is reasonable to mourn the memory of Mr. Zong Qinghou and support Wahaha products, but it must not rise to the level of "praising and stepping on one" of competing products, or even attacking the personality of individual entrepreneurs, which is an absolute mistake.
However, the ** belongs to the **, and the commercial belongs to the business.
Returning to the business model itself, Zhong Sui, who has been elected as the richest man in China for three consecutive years (data from the Hurun Report), together with Nongfu Spring, which has a market value of more than 400 billion yuan behind him, will face any challenges in the era of the rise of the soft drink field?
"Marketing is king" changes the dynasty
In the Changbai Mountain forest, which is minus 30 degrees Celsius all year round, the stream flowing from the spring water source can be kept at about minus 9 degrees Celsius, and Nongfu Spring's water explorers climb the mountains and primeval forests every year to find more water for the snow forest.
At the beginning of 2014, the micro-documentary "A Story You Never Known" produced by Nongfu Spring began to be launched on various David TV and **, so as to implant a classic advertising slogan into the minds of consumers:
We don't produce water, we're just nature's porters. ”
The development history of Nongfu Spring in the past 30 years is almost half of the history of Chinese advertising after the reform and opening up, during which there is no shortage of popular advertising slogans, such as "Nongfu Spring is a little sweet year" in 1997, "what kind of water source, what kind of life is nurtured".
With the spread of advertising slogans, Nongfu Spring has gradually achieved an absolute lead in the field of bottled water.
At the end of 2000, the fourth year of Nongfu Spring's establishment, its market share reached 19 after a "natural water war".63%, ranking first in bottled drinking water in China.
Twenty years later, according to market consultancy Mintel, Nongfu Spring's market share in the domestic bottled water sector reached 257%, ranking first, far ahead of Cestbon (17%) and Baisui Mountain (9.).7%）。
Although Nongfu Spring has the leading market share, there are also many controversies surrounding its business model, such as Nongfu Spring's long-term "marketing-driven growth" business model under the frequent classic advertising slogan.
According to the prospectus submitted by Nongfu Spring in 2020, from 2017 to 2019, Nongfu Spring's advertising and ** expenses were 98.2 billion yuan, 123.4 billion and 12$1.9 billion; During the same period, Nongfu Spring's R&D expenses were only 04.7 billion yuan, 10.7 billion yuan, 11.5 billion yuan.
Even, according to the financial report for the first half of 2023, Nongfu Spring's sales and distribution expenses are as high as 469.5 billion yuan, accounting for the net profit of the same period (57.).7.5 billion yuan).
Continuing to create advertising sentences and occupy the minds of consumers requires extremely high marketing costs to maintain, and in the era of major TV stations, ** and other consumer eyeballs, Nongfu Spring's marketing strategy has achieved great success.
However, the era of "marketing is king" has begun to change, and consumers' attention has been rapidly divided by new social **, and the younger generation of Internet natives are more accustomed to searching for Internet celebrity hits and shopping strategies in Xiaohongshu, and are more often over-the-top live broadcast rooms to plant all kinds of products.
The new generation of consumers also put forward more requirements for "buying water and drinking water", and they have begun to pay attention to the sense of ritual in the consumption scene, the fashion sense of product packaging, and the health of the product itself.
At this time, a new king should be established.
In 2018, Yuanqi Forest launched its first sparkling water drink, focusing on "0 sugar and 0 calories", and in less than five years, the sales scale was as high as 7 billion yuan, while Coca-Cola took 15 years to achieve the same scale.
Latecomers are menacing, and Genki Forest caters to rapidly diverging consumer demand, focusing on online social** and more dense convenience store channels in first-tier cities, and their teams are younger and more daring to use young product owners.
For example, Li Feiyue, the product manager of the Yuanqi Forest Cola project, is a post-90s generation, and the product manager of another popular alien electrolyte water, UKI, is also a post-90s generation, and the average monthly sales of this product in the first quarter of 2022 exceeded 100 million yuan.
Dige.com has analyzed many times that new companies entering the market often show the attitude of challengers, daring to break the existing rules formulated with "people" as the core, while the original market leaders are more inclined to keep the success, and sometimes the lack of timely response leads to the loss of many market opportunities.
On the contrary, Yuanqi Forest not only developed new products more boldly, but also learned from Nongfu Spring's dealer model, and invested more funds to subsidize dealers in recent years to help dealers train salesmen and market promotion.
In the second half of 2021, according to a number of ** reports, Yuanqi Forest launched a "fierce attack" on the offline freezer points of Coca-Cola and Nongfu Spring, and some stores chose to switch to Yuanqi Forest's freezers under various preferential policies, and Yuanqi Forest requires that the top three layers of the freezer must be placed with their own products, and the word "gas" must be displayed at the front of the products.
Of course, the national dealer system that Nongfu Spring has built up over the past decades is not something that Yuanqi Forest can shake for a while. By the end of 2022, there were about 4,500 Nongfu Spring dealers and 2.37 million terminal retail outlets nationwide.
However, the war between Nongfu Spring and Yuanqi Forest is a marathon race, in which the two sides not only have to compete for the right to speak in the channel, but also compete directly in multiple categories such as sugar-free drinks and functional drinks to see who can better keep up with the preferences of the new generation of consumers.
The biggest challenge is, can Nongfu Spring maintain its product leadership?
New products no longer lead
In the past, Nongfu Spring was also a challenger in the field of bottled water. At the beginning of 2000, the "natural water vs pure water" controversy initiated by Zhong Sui instilled the concept of "natural water is more beneficial to the body" to consumers, but the trace element content of water is very low, and the benefits of natural water and pure water to people are not much different, they are all minimal.
Although this battle ended with the court sentencing Nongfu Spring to unfair competition, it did boost Nongfu Spring's market share all the way to the lead, defeating old opponents such as Cestbon and Wahaha.
Eleven years later, Nongfu Spring launched the sugar-free drink "Oriental Leaf", but the sugar-free drink had not yet become a trend, and Oriental Leaf was once considered "difficult to drink" by consumers, until the rapid growth of the sugar-free tea market after 2017. According to the 2023 data of Yiou Think Tank, in the past five years, the sales of sugar-free tea drinks on the Taotian platform have increased by nearly 10 times.
The Oriental foliage is ushering in a good time.
According to the financial report, in the first half of 2023, the revenue growth rate of Nongfu Spring packaged drinking water will be 117%, but the growth rate of this business in 2021 is as high as 2214%。At a time when the growth rate of core business revenue is slowing down, tea beverage has become the fastest growing important business of Nongfu Spring. In the first half of 2023, the revenue of Nongfu Spring Tea Beverage Segment (Oriental Leaves, Tea) will reach 528.6 billion yuan, a year-on-year increase of 598%。
Oriental leaves are back in the hearts of consumers, but competition is still fierce. In August 2023, Xi Guohua, head of Suntory China's beverage sales, revealed that oolong tea now accounts for nearly 80% of the company's sales, and in the first half of 2023, Suntory China's oolong tea recorded an increase of about 200%, achieving its sales target well.
At the same time, the "Burning Tea" launched by Yuanqi Forest in 2017 achieved the second place in the sugar-free tea market after two years of listing, closely following Oriental Leaves.
With Oriental Leaves, Nongfu Spring is temporarily leading in the field of sugar-free tea, but in more beverage categories, Nongfu Spring is gradually being overtaken by new challengers.
In 2020, Nongfu Spring launched three types of sparkling water, driving the proportion of its business to revenue to reach 46%；By June 2021, Nongfu Spring has launched four fruit-flavored sparkling water in a row.
Nongfu Spring is determined to stop the Genki Forest sparkling water, but it seems to have had little effect.
Nongfu Spring's financial report for the first half of 2023 shows that the revenue of other products, including soda products, is 5900 million yuan, down 84%, the proportion of contribution to income from 59% (2021) to 29%。
In addition, Genki Forest entered the functional drink market in 2021 and launched Alien Electrolyte Water in April of that year. A year later, Alien Electrolyte Water became the fist product of Genki Forest to create a second curve.
According to the "2022 Electrolyte Drink Trend Report" released by HCR Huichen and TMIC (Tmall New Product Innovation Center), the alien brand ranks first in the cognition of electrolyte drinks, and 38% of consumers know electrolyte drinks through the alien brand.
On the contrary, in the first half of 2023, Nongfu Spring's functional beverage product revenue was 245.7 billion yuan, a year-on-year increase of 12%, its power emperor vitamin water, scream and other drinks have been launched for several years, among which the red bottle scream was once considered "unpalatable" by consumers.
The head of the city changes the king's flag.
In fact, Nongfu Spring's product line is richer than that of Yuanqi Forest, and the city wall is stronger in the field of bottled water, but Nongfu Spring and new beverage brands have to compete for the right to speak in the future market, that is, who is the first choice of most consumers in the subdivision of sugar-free beverages and functional drinks.
Beverage choices are inherently highly substitutable, and consumers will weaken their consideration of the brand in the context of instant purchase of beverages. Put simply, when you're thirsty and want to buy water, you only focus on what's on the shelf, not the brand.
To this end, Nongfu Spring must bet on marketing, lay out offline channels, and seize the minds of consumers, but today's Internet marketing has been difficult to achieve "a golden sentence to spread the world", and the voice of netizens is fully decentralized.
Channel diversification is also a trend that Nongfu Spring must keep up with, more consumers' purchase decisions and final transactions are often completed in Xiaohongshu or live broadcast rooms, and more brands are also using live streaming to create new brand labels, such as the coconut palm brand coconut water that is unique to the anchor and moves forward in the controversy.
At the same time, Nongfu Spring has to constantly adapt to new consumer needs and iterate its product matrix, and he has to face a competitor like Yuanqi Forest that is enough to "sneak attack Pearl Harbor".
There is no doubt that Nongfu Spring has played a pioneering role in China's beverage market, and its model and experience in building an offline distributor system have saved a lot of costs in the education market for latecomers. However, the new problem is that new brands such as Yuanqi Forest have continued to gain the favor of young consumers, and their teams are also younger and more aggressive, intending to shake the old king's country, and Nongfu Spring has to re-stimulate its combat effectiveness.
The "old revolution" encountered new problems, and Zhong still needed to solve them.