If Nongfu mountain spring is sold so much every year, will Changbai Mountain not be exhausted

 If Nongfu mountain spring is sold so much every year, will Changbai Mountain not be exhausted

The advertising company, which was delayed in selling water, once formed an unlisted alliance iron triangle with Wahaha and Lao Ganma. This summer, it started the Zhenxiang road of listing, and part of the funds raised will continue to be used to expand production capacity.

The terrible sales volume and the well-known slogan natures Porter make many people ask questions on Zhihu anxiously: will Changbai Mountain / Qiandao Lake not be exhausted if Nongfu mountain spring is sold so much a year?

Some people even doubt that there are so many mountain springs to be carried by the farmers Spring - the farmers spring is not filled with tap water, is it?

Such worries and doubts are not groundless. Anyone who has seen the video of Nongfu Shanquans automatic production line knows how powerful its production capacity is

There are 106 automatic production lines for packaged drinking water, 12 of which reach the filling speed of 81000 bottles per hour [1]. The winding full-automatic production line, densely packed with red bottle caps, converges into a flowing river.

From bottle blowing, filling, testing, packaging to packaging, the automatic production line of Nongfu mountain spring seems to be connected with tap water on the tap, which has the posture of emptying the water source.

On July 27, 2013, workers in the drinking water automatic production workshop of Nongfu mountain spring Co., Ltd. are busy on the packaging line

At the retail end, Nongfu spring is the best bottled water sold. In a Carrefour supermarket in Beijing, Nongfu mountain spring occupies position C with three piles. The length of the storage space is 2-3 times as long as that of other brands. Natural water, student water and baby water are available. The length of goods location in Baisui mountain is second only to Nongfu mountain spring [6].

How strong is the sales volume of Nongfu spring?

In 2019, the average person will drink 34 liters of bottled water, equivalent to 62 bottles of 550 ml bottled water. In this market, Nongfu Shanquan has the largest share of more than 20%.

Last year, Nongfu mountain spring sold more than 13 million tons of packaged drinking water products, excluding tea drinks and fruit juice drinks.

What is the concept? The water reserve of the West Lake is only 14.29 million cubic meters. If the West Lake is the only water intake for Nongfu mountain spring, more than 90% of the water from the West Lake will be removed by natures porters in 2019, regardless of evaporation and recharge.

In 2019, the total amount of packaged drinking water sold by Nongfu spring will almost equal that of a West Lake. The water reserve of the West Lake is 14.29 million cubic meters

If the capacity of 550 ml is estimated, the Nongfu mountain spring enterprise will sell 24.3 billion bottles of Nongfu spring with 2 yuan in one year in 2019.

The retail price of Nongfu mountain spring (natural water) has been rising from 1.5 yuan to 2 yuan. It is not only because of the price rise that the retail price of Nongfu mountain spring (natural water) has gone up, but the market share has also increased [7].

However, Wahaha and Master Kang, who were the first to enter the pure water business, were a little embarrassed.

The retail side has always had the sharpest sense of smell. A supermarket worker interviewed by Beijing business daily in 2018 said: in the past, many consumers bought Wahaha Purified water, but now they cant sell it. Another Carrefour supermarket sales staff also revealed that after the Spring Festival in 2018, they have never seen Wahaha Purified water [6].

Wahaha, Master Kangs pure water keeps the retail price of more than 1 yuan and the township market outside the third and fourth tier cities dare not act rashly.

At its most glorious time, Laoshan mineral water used to be national water for state banquets. In 1998, Qingdao steam water plant was bankrupt and reorganized due to poor management. Laoshan mineral water is also known as the declining water aristocratu201c

Nongfu mountain spring, which has a strong momentum, can laugh three times: those who are higher than me have no sales volume; those who sell more than me do not have my market price. Entering can attack the high-end market, retreating can hold down the sinking market, which is really lonely and hard to meet rivals.

Will Nongfu mountain spring empty Changbai Mountain

Nongfu mountain spring is regarded as the porter of nature. The sales increase is so fierce that it will not really empty the spring, right?

The answer is: no way. Not only cant move empty, Nongfu mountain spring is still trying to further expand its production capacity.

Unlike Wahaha and Master Kang, the naming of Nongfu mountain spring gives people the illusion that it all comes from mountain spring or mineral spring.

The most common 2 yuan red bottle cap Nongfu spring on supermarket shelves is just natural water. This kind of natural water is mostly taken from lake water, reservoir water or mountain spring water, which preserves a certain amount of trace elements and minerals.

There are eight natural water sources in Nongfu mountain spring, one of which is Danjiangkou Reservoir in Hubei Province.

On December 22, 2003, hundreds of waterfowl flew over the water in Caodian wharf of Danjiangkou reservoir, Hubei Province, the water source area of the middle route of the south to North Water Diversion Project. Danjiangkou reservoir is the water source of the Middle Route Project of South to North Water Transfer, with a storage capacity of 29.05 billion cubic meters

Before taking water, Nongfu mountain spring will sign a water supply agreement with Danjiangkou reservoir to determine the annual water supply quantity and water supply price. Danjiangkou reservoir to open a pump type water intake for Nongfu mountain spring. The annual water intake limit of Nongfu mountain spring is 3.06 million cubic meters [5].

In fact, the annual output of Nongfu mountain spring in Danjiangkou reservoir is only 150 tons, including natural water and various fruit and vegetable juice drinks.

Regardless of the upstream supply of the reservoir, the annual exploitation of Nongfu mountain spring accounts for only one in ten thousand. For todays water storage alone, 9664 Nongfu mountain springs with 100% capacity are required to pump water from Danjiangkou reservoir, which takes one year to empty the reservoir.

On July 12, 2020, the first large net fishing after the flood discharge of Qiandao Lake Reservoir in Hangzhou. At 9:00 a.m. on July 8 this year, the Qiandao Lake Reservoir was opened for the first time since its completion in 61 years. The reservoir water poured down within 50 hours could fill hundreds of millions of bottles of Nongfu mountain spring

Even if the Danjiangkou reservoir gives Nongfu spring a higher water intake quota, the current production capacity of Nongfu mountain spring can not be digested.

The flood situation in the Yangtze River Basin is serious this year, and the Danjiangkou reservoir has to open its floodgate to discharge flood. The Qiandaohu reservoir, another source of water for Nongfu spring, has opened 9 holes for the first time since its completion in 61 years. The reservoir water poured down within 50 hours can fill hundreds of millions of bottles of Nongfu spring.

The real Nongfu mountain springs mineral water is far less common than the red bottle cap of 2 yuan.

On the market, Nongfu mountain spring has actually launched three types of natural mineral water. The most expensive mineral water is collected from Moya spring in Changbai Mountain. It costs 45 yuan per bottle of 750 ml.

Unlike the $2 plastic bottle with a red cap, Nongfu mountain spring mineral water with a price of 45 yuan is placed in a drop glass bottle. On the bottle body, the images of various typical animals and plants in Changbai Mountain, the water source area, are delicately painted, such as northeast tiger, red deer, flying osprey, Chinese merganser, hawthorn and begonia, Korean pine, wild ferns and snowflakes [8].

On May 19, 2019, in Qingdao, Shandong Province, a bottle of 45 yuan per bottle of Changbai Mountain aerated mineral water was displayed on the exhibition shelf. On the bottle body are painted the images of various typical animals and plants of Changbai Mountain, such as Amur tiger, red deer, e, Chinese merganser, hawthorn and begonia, Korean pine, etc

In contrast, the price of sports bottle cap containing mineral water and lithium mineral water is more people-friendly, and the price is between 3-5 yuan.

The reason why the price of natural mineral water is more expensive than that of natural water is that its exploitation is much more strict and complicated than that of water transferred from reservoirs.

Zhou Jingliang, founder of Jingtian Baisui mountain, once disclosed to the media that it would take more than 60 seals to complete a mining license application process and wait for five years [3]. The Department of land and land carries out evaluation and technical appraisal on the mineral water mined, and then through public auction, enterprises can only get it through bidding.

Nongfu mountain spring has only two mineral water sources, both in the northeast, one is Changbai Mountain, the other is Daxinganling.

The mining rate of Changbai Mountain, a rich mineral water resource, is only 5%, and the production scale of 80% enterprises is less than 20 tons [4].

Therefore, if you are worried that Changbai Mountains mineral water resources will be exhausted by nature porters, you may be worried about the wrong direction.

Porter is also money printing machine

Nongfu mountain spring is not only the porter of nature, but also the printing machine of nature.

According to the financial report of Nongfu spring, the income of Nongfu spring will reach 24 billion yuan in 2019. The gross profit rate of packaged drinking water, which accounts for nearly 60% of the total income, is as high as 60.2%.

Coincidentally, Coca Colas gross profit margin is about 60%. Nongnong Shanquan, 24, has won the title of Chinese version of Coca Cola because of its earning power.

A worker works on the production line of Coca Cola bottling plant on April 22, 2011. The gross profit rate of Nongfu mountain spring packaged drinking water is as high as 60.2%, which is equivalent to that of Coca Cola. Therefore, Nongfu spring is called Chinese version of Coca Cola

Although selling water is a lucrative business, water itself is not worth much money at all.

Even though the mineral water is relatively scarce, for those enterprises that have obtained the mining license, in addition to the initial entry cost and the mineral resources tax that must be paid, the maximum exploitation can be carried out within the allowed scope, and the cost of water can be almost negligible.

Since the prospectus does not disclose the ex factory price of bottled drinks, we can only estimate the cost composition of a bottle of Nongfu spring by assuming the ex factory price.

If the ex factory price of a bottle of Nongfu spring with a retail price of 2 yuan is 1 yuan, then every time a bottle of 2 yuan of Nongfu mountain spring is sold, the enterprise can obtain 1 yuan of sales revenue from the dealer. According to the gross profit rate of 60.2%, a bottle of Nongfu mountain spring can obtain a gross profit of 6 cents, while the cost is only 4 cents.

The cost of Nongfu spring mainly comes from bottles. After excluding the cost of sugar and juice for the production of other drinks, PET materials used in bottle manufacturing and packaging materials such as cartons, labels and shrink films account for 28.2% of the total revenue [1]. In other words, out of the cost of 40 cents, 28 cents are spent on bottle materials and packaging.

You think bottled water companies sell water, but actually people sell bottles. You get a bottle of two yuan farmer spring, as the protagonist of the water itself costs less than 1 cent.

However, the actual net profit of Nongfu Shanquan must be less than 60 cents, and taxes, water and electricity, financial management fees, depreciation and other costs should be deducted from the gross profit.

This means that as long as the production capacity of Nong Shanquan, which is profiteering and overselling, is expanded enough, money will flow into his pocket like tap water.

The approved water intake of Nongfu mountain spring in the water intake area is often several times the existing capacity. The expansion plants of Qiandaohu reservoir in Zhejiang Province, Wanlu Lake in Guangdong Province, and Nongfu mountain spring expansion plants in Changbai Mountain of Jilin Province have not been completed, and the designed capacity is more than 2 million tons. And Nongfu mountain spring listed this time, part of the funds raised will be used to expand production [1].

[1] Nongfu Shanquan Co., Ltd. (2020). IPO prospectus of Nongfu Shanquan Hong Kong stock

[2] Wang Ping, Li Jiwen, Zhang Manli, & Mao Zhiguo. (2010). Distribution and utilization of natural mineral water resources in Jilin Province. Jilin geology, 29 (4), 161-162

[3] The underground tide of mineral water is surging: it takes 5 years for mining right to start from scratch. (2015)

[4] Jilin provincial government. (2015). Notice of Jilin Provincial Peoples Government on printing and distributing the protection and development and utilization plan of Changbai Mountain regional mineral water resources

[5] Danjiangkou Water Resources and lakes Bureau. (2019). The application for water intake of Nongfu mountain spring Danjiangkou beverage company was approved by the Yangtze River Commission

[6] Beijing business daily. (2018). No water source endorsement, purified water market cold

[7] Shen wanhongyuan research. (2020). In depth report on Chinas bottled water industry: a trickle down, bottle in heaven and earth (p.11)