The following article comes from Lion Sitting, written by Zhu Lingjun

Lion sits.

Sit and discuss Tao, stand up and act

Recently I heard that Nongfu Spring has another "crime":The pictures on the packaging of the product tea π look like Japanese buildings.

It is no exaggeration to say that the increasingly intense choreography has plunged Nongfu Spring into an unprecedented brand crisis.

After Zong Qinghou died, why did Zhong Shanshan, another richest man in Zhejiang who had always been low-key, become an ungrateful "villain" who worshiped foreigners?

This matter also starts from the "business war of the century" over drinking water.

1

Turn the clock back to 1996.

This year, Zhong founded Xin 'anjiang Yangshengtang Drinking Water Co., Ltd. in Zhejiang, which was the predecessor of Nongfu Spring. In 1997, Yangshengtang began to produce Nongfu Spring drinking water. At first, it sold bottled water as its main product in major cities in East China, and began to enter the bottled water market the following year.

With the slogan "Nongfu Spring is a little sweet" and the unique sporty bottle cap design, Nongfu Spring quickly stood out, and its sales volume that year broke into the top three in the industry, second only to Wahaha and Robust.

At that time, the bottled water industry was still the world of pure water, with Wahaha and Robust taking the lead. The former's advertising creativity of "I only have you in my eyes" is deeply rooted in the hearts of the people, while the latter focuses on the concept of twenty-seven layers of purification, which almost unifies the artistic conception of pure water. For many years, no creativity has surpassed it.

It should be explained here that bottled water, as a product with almost no differences, wins the world, and more than 60% of its sales are driven by advertising.

In order to compete for the market, Nongfu Spring did not follow the routine, introduced a new category of "natural water" to the market, and planned a interlocking marketing campaign.

In April 2000, Nongfu Spring launched the "Little Scientist Event", implying that purified water is not conducive to people's healthy growth; in May, it publicly announced that Nongfu Spring had stopped producing purified water, which triggered a debate about purified water and natural water. In August, before the Sydney Olympics, Nongfu Spring advertised "Nongfu Spring, dedicated water for the Chinese Olympic delegation" during prime time on CCTV, with popularity covering the whole country.

Newspaper advertisement published by Nongfu Spring in 2000.

Faced with the latecomers 'behavior of "lifting the table", Wahaha angrily sued Nongfu Spring to court, and also joined forces with six pure water companies to form a complaint group to jointly accuse Nongfu Spring of unfair competition.

At the same time, Wahaha quickly launched a counterattack in the media. For example, advertisements comparing pure water and mineral water are put in, and the survival rate of goldfish is used to demonstrate that the quality of pure water is safer.

In the end, Nongfu Spring was fined 200,000 yuan, and this "water war of the century" slowly came to an end.

On the other hand, this sensational commercial war can be said to be completely an "overt plot" back then. At the height of the heat, the two companies even invited the same media to hold a press conference to debate in public and explain their respective arguments. On the other hand, many of the discussions that have arisen at the moment have added a lot of random speculations of "conspiracy theories".

2

There were still some unfinished stories back then.

Nongfu Spring was famous across the country after this battle, but it was not a real winner. That year, Nongfu Spring's performance was flat, only half of Robust's and one-quarter of Wahaha's. There was no increase compared with the previous year.

According to industry analysts, this is due to Nongfu Spring's own sales system being imperfect and unable to respond to market demand in a timely manner.

However, while Wahaha gained high exposure, it also relied on better channel construction and cost control to further consolidate its leading edge.

Wahaha's pure water sales in 2000 were nearly 2 billion yuan, with a market share of 25%, an annual growth rate of over 40% and high profits. In Northeast, Northwest, Central and Southern regions, Wahaha Pure Water's market share once reached 40%-60%, almost in a monopoly position.

In contrast, Nongfu Spring is more like a "catfish", stirring up the bottled water market. This open marketing war quickly drove sales of bottled water. According to expert estimates, in 2000 alone, the domestic bottled water market grew by more than 20%, with a scale of approximately 6 million tons and more than 8 billion yuan.

"Liberation Daily" reported in 2001 that "Zhejiang Water" became the domestic leader.

This rapid growth has also virtually consolidated the moat of Chinese-made brands-in the beer, beverage and other industries, international giants such as Coca-Cola are seizing cities through mergers and acquisitions, while in the drinking water field, overseas brands have not yet been large-scale domestic listed, and Chinese-made brands have gained the lead in their own fight.

Then in 2004, Master Kong entered the market with mineral water, mainly following the low-price route. The "1 yuan water" launched was once popular. In just three years, it surpassed Wahaha and became the champion in the bottled water market. It has been sitting on it for ten years.

Nongfu Spring has only reached its peak in recent years. In 2022, in the bottled water market, Nongfu Spring's market share will reach 26.5%, China Resources Ipoh ranks second with a share of 21.3%, followed by Master Kong and Wahaha with 10.1% and 9.9% respectively. Among them, China Resources Ipoh is also pure water.

3

Over the years, Wahaha's decline has been obvious to all.

From a commercial perspective, in addition to the strength of its competitors, there are also mistakes in its own strategic layout, including lack of product quality, insufficient innovation capabilities, and relatively conservative marketing concepts.

The failure to seize the popularity of the Internet era as soon as possible and the wavering policy in the choice of e-commerce and other channels have also caused Wahaha to be deeply involved in a "mid-life crisis" for a long time. After all, to this day, Wahaha's main products are still purified water, AD calcium milk and the "three old products" of Nutrition Express. In sum, these products are older than most people born in the 2000s. The AD Calcium Milk and Nutrition Express have a sweet taste and a thick taste, which is a bit incompatible with the current popular pursuit of low-sugar and carbon-cut diet.

Even Zong Qinghou's daughter Zong Fuli once complained that Wahaha was not young enough. In 2018, she terminated her contract with Wang Lihong, a popular singer who had been endorsing Wahaha Pure Water for 20 years, citing the grounds of "too old".

Zong Fuli once summarized Wahaha's development experience,"The reason why Wahaha has been able to maintain its growth rate is that it continues to launch new products. The trouble caused by this is the lack of long-term products. Nutrition Express products, which account for a large share of Wahaha's turnover, are in terms of market performance."

Photo source: Xinhua Agency.

And this cycle changes because of the death of a person. The blessing of feelings meets the wild consumption of "either or", and the surging tide of wealth flows to Wahaha.

On multiple e-commerce platforms such as Jingdong and Tmall flagship stores, many of Wahaha's products have been sold out, and it takes 15-20 working days to ship after placing an order.

However, is the temporary explosion of word-of-mouth and surge in sales a good medicine for Wahaha? Thinking about the massive debate back then, it actually did not bring about a surge in performance for Nongfu Spring in the end.

I am more worried that Wahaha will be "praised and killed" because of this.

Some self-media stories are really made up to the point of humor. Short Video say seriously that Wahaha has always used carton packaging because Zong Qinghou once said that if it is packed with plastic paper, it will cut off the source of income for those who rely on picking cartons to make a living. It is difficult to verify whether Zong Qinghou said such words, but according to Wahaha customer service response, the packaging of Wahaha drinking water is differentiated. The 24 bottles are packed in cartons, but the 12 bottles are clearly wrapped in film!

Is this kind of moral kidnapping a good thing for brands?

After all, traffic is a double-edged sword. Under the strong public sentiment, even the richest man has to tremble.

4

"When people hear commercial hype, they think it's a derogatory term. But I think that if a company doesn't hype it, it's a mummy, and the mummy must be sent to the grave as soon as possible." This was once Zhong Shanshan's classic line.