Nongfu Spring: Can the Chinese Bottled Water Market Leader Sustain its Position?
| Case Code: LDEN188 Case Length: 10 Pages Period: 1996-2021 Pub Date: 2022 Teaching Note: Available |
Price: Rs.400 Organization : Nongfu Spring Co., Ltd. Industry :Food & Beverage Countries : China Themes: Entrepreneurship, Environmental Sustainability, Sustainability |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Packaged Drinking Water Market In China
The packaged drinking water market in China had grown considerably over the years, and the bottled water segment was valued at US$ 53,337 million in 2020. The bottled water segment was expected to grow at a 5.7 percent compound annual growth rate from 2020 to 2025. Due to China’s rapid economic development, people were getting more exposed to western culture..
Zhong’s Entrepreneurial Journey
Zhong was born in 1954 in Hangzhou, the capital of Zhejiang province. Due to the Cultural Revolution in the 1950s, he dropped out of school in fifth grade and got by with odd jobs. He worked, among other things, as a construction worker and carpenter for around ten years. In the early 1980s, Zhong joined the Open University of China..
Nongfu’s Business Model
Since its formation in 1996, Nongfu had followed the basic rule of using only water from natural sources for its bottled water products and never used tap water. Respecting consumers’ right to information, the company ensured that its bottled-water products clearly stated the water source on the label..
Innovation At Nongfu
Innovation at Nongfu was a continuous process, and the company strove toward developing innovative products and processes. In 2012, Nongfu had implemented the Cordys Business Operations Platform (BOP) to enhance business operations, improve customer satisfaction..
Giving Back to Society
Nongfu undertook many CSR activities as part of its responsibility toward society. The company provided relief in areas affected by natural disasters such as floods, typhoons, earthquakes, and droughts and undertook social welfare activities and community development activities. In April 2013..
Is nongfu’s business sustainable?
Nongfu had water sources in ten natural locations with good water quality. But questions remained over their long-term availability for its production bases. According to China Water Risk (CWR) , an NGO based in China, six of Nongfu’s ten water sources were located in highly water-stressed regions..
The Bottled Water Market Is Heating Up
Intense competition was expected in the Chinese bottled water market. The market was lucrative and expected to attract international players shortly. Moreover, import tariffs for mineral water products, around 15.6 percent before 2018, had fallen to 7 percent by April 2021..
Exhibits
Exhibit I: Revenues for Nongfu from 2017 to 2020
Exhibit II: Market Share of Top Bottled Water Brands in China in 2018
Exhibit III: Various Sources of Water for Nongfu Spring
Exhibit IV: Detailed CSR Initiatives of Nongfu
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