Business / Companies

How sweet! Nongfu Spring plans to diversify

By Xu Junqian (China Daily) Updated: 2016-03-28 07:33

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.

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