Our reporter, Ye Bihua, reports from Guangzhou
On April 11, Nongfu Spring, which was pushed to the forefront of the trend by the standard controversy, suddenly launched an attack, directly denouncing the recent series of attacks on Nongfu Spring as being planned behind the scenes by rival China Resources Yibao.
"As a state-controlled drinking water company, it is regrettable that it uses public fears about food safety and environmental pollution as a marketing tool to target competitors and expand market share," Nongfu Spring said in a statement on its official Weibo account.
As of this writing, China Resources Yibao has not made any response to this.
In the first three quarters of 2012, among the top four sales of drinking water in bottles (cans) in China, Nongfu Spring ranked first in the country with a market share of 35%, leaving behind the second-placed Master Kong by 19 percentage points. But at the same time, a series of negatives such as "Water Source Gate", "Fake Donation Gate" and "Arsenic Gate" have been surrounding this drinking water market leader. Just recently, some media reported that Nongfu Spring’s standard is not as good as tap water, which once again triggered the public to rethink the drinking water source.
standard doubt
On April 8, some media exposed that Nongfu Spring used "DB33/383" Zhejiang local standards in the three major water sources of Wanlv Lake in Guangdong, Qiandao Lake in Zhejiang and Danjiangkou in Hubei, which is far lower than the "DB44/116-2000" Guangdong standard. Nongfu Spring is suspected of avoiding the use of standards. At the same time, Nongfu Spring also participated in the formulation of Zhejiang standards.
According to our understanding, compared with the Guangdong standard, the Zhejiang standard used by Nongfu Spring has twice the tolerance content of cadmium, arsenic and other harmful substances than the Guangdong standard. The Zhejiang standard tolerates the existence of fungi such as mold and yeast, while the Guangdong standard is "not detectable".
Subsequently, some media quoted Zhou Xiaolin, director of the Food Supervision and Administration Department of the Zhejiang Provincial Quality Supervision Bureau, as justifying the matter. According to the report, Zhou Xiaolin showed reporters the national standard GB19298-2003, the Zhejiang Provincial Standard DB33/383-2005 and the Guangdong Provincial Standard DBS44/001-2011, and said that the microbial indicators in these three standards are exactly the same.
But in fact, the national standard of "Bottle (Barrel) Drinking Water Hygiene Standards" mentioned by Zhou Xiaolin has been revised in January and September 2008, and the revised national standard is stricter than the Zhejiang standard. With the continuous fermentation of public opinion, Nongfu Spring finally responded to various doubts on the 11th.
"The arsenic and cadmium levels in Nongfu Spring products are below the detection limits, and the levels are so low that they cannot be detected. Mold and yeast are also undetectable." In its statement, Nongfu Spring did not provide a detailed explanation of the standard issue, but turned its attention to competitors. "We have reason to believe that the recent series of reports against Nongfu Spring are deliberately planned, and behind the scenes is the state-controlled drinking water company, China Resources Yibao."
Benchmarking Yibao
In the statement, Nongfu Spring cited negative online media coverage of its products since March 15, as well as a series of marketing campaigns by rival China Resources Yibao, and claimed that competitors had hired personnel in Hunan, Guangdong, Sichuan, Chongqing, Hubei and other places, and distributed articles attacking Nongfu Spring door-to-door to retail stores and consumers.
Luo Tan, president of the Guangdong Bottled Drinking Water Industry Association, told our reporter that Nongfu Spring is currently at the forefront of the bottled water market in the country, especially in the East China base camp, and has an absolute advantage. But in southern China, Nongfu Spring has to face competition from brands such as Yibao, Jingtian, Yili, and Watsons. Among them, Nongfu Spring and Yibao have the most intense competition in the Shenzhen market.
According to our understanding, the main product of farmers’ bottled water
At present, the price of 550ML in Guangzhou supermarkets is about 1.2-1 yuan, while in Shenzhen supermarkets in recent months has maintained 1.8-1 yuan/bottle, the price is close to the main competitor Yibao.
"Farmers seven or eight years ago had relatively good price maintenance, but with the rise of Master Kong and competition from other brands, farmers in southern China had to cut prices in exchange for market share," a drinking water company executive told the Financial Times on condition of anonymity.
According to it, the total bottled water market in Shenzhen rose by 11% last year compared with 2011, of which Nongfu Spring rose by 45%, and Nongfu’s bottled water market share in Shenzhen also jumped from 9% in 2011 to 12% in 2012.
China Resources Entrepreneurship (00291.HK), the parent company of Ipoh, reported last year that although it benefited from the rapid growth of sales and turnover of Ipoh pure water in Guangdong, Hunan, Sichuan, Jiangsu, Guangxi and Fujian, the total sales volume of the company’s beverage business in 2012 increased by 33% compared with the previous year to about 3507,000 kilolitres, with a turnover of 47.66 million Hong Kong dollars, an increase of 53.1% year-on-year, but the profit attributable to it decreased by 31.7% compared with 2011 to 86 million Hong Kong dollars.
The above-mentioned water company executives believe that the profit margins in the bottled water industry are currently very low, and for most brands, it is impossible to continue the downward price war.
Water source dilemma
From the original "Water Source Gate", "Fake Donation Gate", "Arsenic Gate", to the current "Standard Gate", water sources have always been the main aspect of Nongfu Spring’s criticism by the outside world. If the price cannot be beaten by Master Kong, the drinking water market can only go up the high-end route, and there are a variety of claims such as natural pure water and mineral water, but in the end, water sources are the commanding heights of major enterprises.
At present, the three main water sources of Nongfu Spring (Wanlu Lake in Guangdong, Qiandao Lake in Zhejiang, and Danjiangkou in Hubei) are basically lake water, which belongs to surface water. Nongfu Spring adopts the direct canning method, which is physically filtered according to certain standards (usually activated carbon and sand cans). If the water contains heavy metals, it cannot be filtered, and can only be controlled by the water quality of the water source itself.
"But from a natural science perspective, the control of lake and reservoir water has limitations." The above-mentioned water company executives believe that the so-called water source protection area is just a series of mandatory protection measures taken by the state for it. Compared with other water sources, the protection of water sources is much greater, but it does not mean that this water source is completely controlled.
In the opinion of the above-mentioned water company executives, it is already very difficult to find high-quality water sources, and even more difficult is how to maintain the water sources later.
"So far, the state’s supervision of agriculture has not been able to avoid the use of chemicals that affect human health, and these chemicals will gather in the catchment area with natural rainfall, so basically, if the unit that uses these water sources can control the safety of the water source 100%, I think this is a bit too much, it is impossible to do this," the water company executive said frankly.
Previously, some media went to the Danjiangkou Reservoir to investigate and found that there were all kinds of domestic waste on the shore around the water intake point of Nongfu Spring, but the staff of Nongfu Spring Factory said that the domestic waste had little impact on the water quality, just like "the sand in the rice".
