A. The current state of the industry: China’s bottled water market demand rebounded, the market concentration is high
China’s economy continues to grow and the income level and standard of living of its residents are steadily improving, driving the development of China’s bottled water market. China’s rising obesity and overweight rates have also made people pay more attention to a healthy daily diet, and healthy, sugar-free bottled water is favored by more consumers, driving the growth of demand in China’s oh-so-bottled water market. Currently, China’s bottled water market is highly concentrated, with only the top six companies, whose bottled water market share accounts for more than 80%.
B. Import and export trade: imported bottled water to high-end products, the import amount is high
China’s bottled water imports are mainly high-end products, so even though the number of Chinese bottled water exports is always higher than the number of imports, the amount of exports is still lower than the amount of imports. 2021, China’s largest source of bottled water imports is France, Evian, Paris water, etc. are the more common French imports of bottled water in China, French bottled water mining, treatment and labeling and other strict compliance with EU and national standards, from the source of water French bottled water extraction, treatment and labeling strictly follow the EU and national standards, from the source to ensure the quality of bottled water, so loved by Chinese consumers.
C. Enterprise analysis: the overall growth of operating income is stable, gross margin maintained at a high level
Nongfu Quan’s operating income is on an overall upward trend, and although it declines in 2020 due to the epidemic, it picks up quickly in 2021. Nongfu Shanquan’s gross profit margin is stable at a high level, with a gross margin consistently above 50% and strong profitability. The most important product in Nongfu Shanquan’s corporate product layout is bottled water, and Nongfu Shanquan’s bottled water operating income is on an overall upward trend.
D. The development trend: the market demand for bottled water increased, mainly in the high-end products
More and more consumers are aware of the health hazards of carbonated beverages, juice drinks and other high-sugar beverages, and are beginning to choose bottled water to replace the demand for other high-sugar beverages, and the demand for bottled water in China will continue to increase. China’s population consumption level is rising, consumers’ awareness of healthy consumption and high quality consumption is gradually increasing, consumers’ demand for medium and high-end products is rising rapidly, especially the demand for high-end products may usher in faster growth.
Keywords: bottled water, industry status, import and export trade, enterprise analysis, development trends
E. The current state of the industry: China’s bottled water market demand rebounded, the market concentration is high
Bottled water refers to water that is sealed in plastic bottles, glass bottles or other containers and can be consumed directly without any additives. China’s economy has continued to improve and the income level and living standard of the residents have steadily increased, driving the development of China’s bottled water market. At the same time, improved economic conditions have led to a gradual increase in the health consciousness of Chinese residents, with consumers demanding a healthier diet and a faster growth in consumer demand for bottled water than for other high-sugar beverages. In addition, according to the Health and Welfare Commission, China’s obesity and overweight rates continue to rise, with the adult overweight rate rising from 30.1% in 2012 to 34.3% in 2020 and the adult obesity rate climbing from 11.9% to 16.4%. The rising obesity and overweight rates in China also make people pay more attention to daily healthy diet and limit the intake of high sugar beverages and foods in daily life. healthy sugar-free bottled water is preferred by more consumers, driving the growth of demand in the bottled water market in China Oh. market demand for bottled water in China declines in 2018 and 2020. advertising slogans in 2018 The “0 sugar, 0 fat, 0 calorie” sparkling water of Yuanqi Forest started the “sugar-free wind” in the beverage industry, which attracted a large number of consumers for a while and captured the market demand of other beverages including bottled water. However, as some consumers’ consumption impulse calmed down, China’s bottled water market demand returned to an upward trend in 2019. 2020, China’s bottled water once again reduced, mainly due to the outbreak of the new crown epidemic, offline restaurants, cinemas, scenic tourism, etc. were affected to a greater extent, which in turn reduced the consumption of bottled water, market demand fell, but as China’s epidemic prevention and control achieved better results , the demand for bottled water market rebounded once again.
From 2011-2017, China’s bottled water production rose steadily, growing to 95,357,300 tons in 2017. 2018 and 2020 were affected by the impact of competing products and the epidemic, leading to a reduction in China’s bottled water production, which was less than 90 million tons in both years. In 2021, China’s bottled water production was 93.3546 million tons, up 7.48% year-on-year. In the future, with the normalization of the epidemic and the gradual withdrawal of prevention and control restrictions, China’s market dynamics are expected to see a rapid recovery, which will in turn drive the growth of bottled water demand and increase production.
The main production areas of bottled water in China are located in South China and Southwest China, accounting for 25% and 23% respectively, followed by East China and Central China, both accounting for more than 10%. Among them, Guangdong Province is the first major province of bottled water production tea in China, producing 20,223,400 tons of bottled water in 2021. Guangdong Province is located in southern China, where more hilly distribution, and dense rivers and lakes, rich in groundwater, attracting many bottled water production producers to build plants here to take water, such as Nongfu Shanquan, China Resources Yibao, etc..
At present, the concentration of China’s bottled water market is high. 2021, Nongfu Shanquan’s market share reached 26.5%, followed by China Resources Yibao with 21.3%, only the top six companies, their bottled water market share accounted for more than 80%. As bottled water consumption tends to be more habitual, most consumers tend to be in the habit of buying bottled water when they buy bottled water brands they know, so the market concentration of bottled water is high.
F. Import and export trade: imported bottled water to high-end products, the import amount is high
China’s bottled water imports are mainly high-end products, so even though the quantity of China’s bottled water exports is always higher than the quantity of imports, the amount of exports is still lower than the amount of imports. in 2021, the quantity of China’s bottled water exports is 209,500 tons, 39,300 tons more than the quantity of imports, while the amount of bottled water imports is $132 million, $87 million higher than the amount of exports. By 2022, China’s bottled water exports increased but imports decreased. from January to October 2022, China’s bottled water exports were 247,700 tons, an increase of 65,000 tons compared to the same period of the previous year, while imports decreased by 20,600 tons compared to the previous year, only 127,300 tons. This is mainly due to the gradual transformation of domestic bottled water products to high-end bottled water, the development of domestic high-end bottled water, making the market share of imported high-end bottled water decreased.
South Korea is the country with the largest number of bottled water exports from China, and China exported about 160,000 tons of bottled water to South Korea in 2021, accounting for more than 70% of China’s bottled water exports. South Korea has a small land area and is surrounded by sea on three sides, with few rivers and relatively scarce freshwater resources, so its bottled water imports are in high demand. In addition, South Korea and China across the Yellow Sea, shipping traffic is convenient, so China’s bottled water is mostly exported to South Korea.
In 2021, China’s largest source of bottled water imports is France, the number of bottled water imports is about 100,000 tons, the import amount of about 86,276,400 U.S. dollars. Evian, Paris water, etc. are the more common French imports of bottled water in China. Chinese bottled water imports are mainly high-end products, mostly natural mineral water, while French bottled water mining, processing and labeling strictly follow the EU and national standards, from the source of water to ensure the quality of bottled water, and therefore loved by Chinese consumers.
G. Enterprise analysis: the overall growth of operating income is stable, gross margin maintained at a high level
China’s bottled water market is highly concentrated, with a market share of 26.5% for Nongfu Shanquan in 2021. 2017-2021, Nongfu Shanquan’s operating revenue is on an overall upward trend, and although it declined in 2020 due to the epidemic, it quickly rebounded to 29.696 billion yuan in 2021. 2022, Nongfu Shanquan’s total operating revenue continues to rise, with revenue from January to October 16.599 billion yuan, up 9.38% from the same period of the previous year. 2017-2022, Nongfu Quan’s gross margin stabilized at a high level, with gross margin always above 50%, and in October 2020-2022, Nongfu Quan’s gross margin rose to more than 59%, close to 60%, with gradually increasing profitability.
The most important product in the corporate product layout of Nongfu Shanquan is bottled water, with bottled water operating revenue accounting for more than 50% of the total. 2017-2021, Nongfu Shanquan’s bottled water operating revenue as a whole was on an upward trend, at 29.696 billion yuan in 2021, with a growth rate of 29.81%. in the first half of 2022, Nongfu Shanquan’s bottled water operating revenue continued to rise, with bottled water revenue 16.599 billion yuan, an increase of 9.38% over the same period of the previous year.
H. The development trend: the market demand for bottled water increased, mainly in the high-end products
Residents’ health awareness increased, the market share of bottled water increased
China’s economic environment as a whole has developed for the better, and residents’ income levels and consumption levels have improved substantially. Many consumers’ drinking habits have also changed, from directly boiled tap water to bottled water. In addition, with the rising standard of living of the population, there is also the problem of rising obesity rate in China. Due to the improvement of people’s living conditions and excessive intake of high sugar diet, the overweight rate and obesity rate of Chinese nationals have increased to varying degrees. As the population’s health awareness increases, more and more consumers are aware of the health hazards of carbonated beverages, juice drinks and other high-sugar beverages, and are beginning to choose bottled water to replace other high-sugar beverage needs. In the future, the demand for bottled water in China will continue to increase, and the market share will continue to rise.
Low-end bottled water market shrinks to mid- to high-end products
The dominant product in China’s bottled water market has gradually shifted from low-end bottled water below 2 RMB per bottle to mid-range bottled water of 2-5 RMB per bottle. On the one hand, is due to the rising production costs of bottled water producers, driving up the price of bottled water, on the other hand, is the change in consumer habits. China’s population consumption level, consumer awareness of healthy consumption, high-quality consumption gradually increased, so consumer demand for medium and high-end products rose rapidly. In the future, the market share of low-end bottled water in China will continue to decrease, and the demand for medium- and high-end products will continue to rise, especially the demand for high-end products may usher in faster growth.