How sweet! Nongfu plans to diversify

Chairman Zhong Shanshan is digging new channels to let China's bottled water flow into world markets

Zhong Shanshan wants Nongfu Spring's branded packaged drinking water to be more than just sweet.

The founder and chairman of Nongfu Spring, a household name in China known for its red-cap packaged water bottles - annual sales: 15 billion bottles - wants his aqua to taste and be "natural" as well.

For decades, Nongfu Spring rode on its popular catchphrase "a little bit sweet". So much so Chinese consumers believed sweet water is better water.

But, as competition in China's bottled water market intensifies with the entry of premium foreign brands such as Evian and Perrier, the 62-year-old journalist-turned-businessman is sharpening focus on Nongfu Spring "being natural".

In 2015, he inaugurated the company's latest factory that sources natural spring water from Changbai Mountains in Jilin province. Before then, he promptly got advertisers to portray Nongfu Spring as "the transporter in the natural world, instead of a manufacturer of water".

The new factory site is tucked north at the foot of the mountain range that forms a natural border with the Democratic People's Republic of Korea. The site's location, Changbai, means "perpetually white" in Chinese. It marks the eighth source of water for the company that now owns and operates 16 factories in China. It is estimated to contribute no more than a quarter of the total water supply used by the company.

But for Zhong, the factory signals "a new start for the company", if not the domestic bottled water market.

"They (the three new products made at the new factory) are not tailored for use as thirst-quenchers," said Zhong in an exclusive interview with China Daily.

They are labeled premium table water, water for baby and teenager drink respectively.

One distinguishing feature of the three varieties is they are value-added with minerals, unlike the regular purified water.

The premium table water also comes in attractive designer glass bottles, complete with a painted image of a silhouette and animals found in the mountainous region. Of the three new varieties, it is the most expensive at 50 yuan ($8) for 750 ml. The regular 550-ml packaged water bottle retails for no more than 3 yuan.

The premium table water variety is also Nongfu Spring's priciest ever.

"Twenty years ago, people drank packaged water because they were thirsty. Now, they drink it to wash down the bubbly or sour wine," said Zhong. "Wherever there is wine, there should be (packaged drinking) water."

He believes the market would see explosive growth over the next few years. At the moment, every brand, domestic or foreign, is well-placed in the game.

But back in 1993, the company was not even in the water business. Then, it had just started as a maker of nutritional supplements processed from turtle shells. It tasted success.

But Zhong eyed the bottled water market in 1996 after discovering a reservoir near his hometown in Zhejiang province. The company grew steadily in strength and stature over the years under Zhong's leadership, achieving revenues of more than 10 billion yuan in 2011.

A major breakthrough was the "purified water gate" in 1999 initiated by Zhong.

At a media conference that was supposed to unveil one of the company's factory sites, Zhong unexpectedly announced that Nangfu Spring would cease sales of its purified water and focus on producing just mineral water, saying that the former was found to offer no health benefits.

Although the bold gesture has isolated Nongfu Spring from many other players in the market, it also quickly boosted its sales.

"I used to be a journalist. I know exactly what goes on to the front page. On the other hand, it (the sudden shift in strategy) also harmed us, as the day before the announcement, we were still making purified water."

But, the experience of working as a journalist for five years helps him to constantly seek the truth "at any cost". The pursuit of truth, in this case, took the form of an attempt to figure out which variety of water was best for the consumer.

But that was not enough to pre-empt a 2013 controversy. The company made headlines after getting embroiled in a massive food safety scandal.

In the course of a month, the Beijing Times ran 76 news stories questioning the quality of Nongfu Spring's bottled water. In response, Nongfu Spring filed a lawsuit against the newspaper, claiming that the publication had intentionally and systematically ran the articles in an attempt to tarnish its image.

"It was totally fabricated," said Zhong, who added the company suffered a 25 percent drop in sales that year as many supermarkets pulled Nongfu Spring bottles from their shelves.

The company's water, however, was declared to be safe following tests done by the Zhejiang provincial government, which had performed checks on four batches of bottles from six production sites. "I don't like making friends with business-people. In the business world, I want it to be just business," he said.

Now back as the market leader, Nongfu Spring is looking to expand globally as well as diversify. Its product portfolio already includes freshly squeezed fruit juices, bottled Chinese tea and flavored water with added vitamins.

He is planning to not only sell his products overseas but manufacture them there. "It's already on our timetable." Come 2017, Nongfu Spring will go global.

xujunqian@chinadaily.com.cn