Nongfu Spring's 2025 revenue and profit grow against the trend, rewriting the industry competition script through a win-win full industry chain approach

Ask AI · How can an all-industry win-win model rewrite fast-moving consumer goods industry “involution”?

In 2025, China’s packaged water industry has entered a stage of stock-based competition, online price wars are escalating, and most brands have fallen into the vicious cycle of “cutting prices to chase volume, losing both volume and margin.”

Against this backdrop, Nongfu Spring (09633.HK) delivered a performance far beyond market expectations: total revenue for the full year reached RMB 52.553 billion, up 22.5% year over year; net profit was RMB 15.868 billion, up 30.9% year over year.

The financial report also disclosed that in 2025 the company’s drinking water business resumed growth, up 17.3% year over year, and it continued to rank No. 1 in China’s packaged drinking water market share; revenue from its tea beverage business reached RMB 21.596 billion, up 29.0% year over year; and revenue from functional beverages and fruit juice beverages increased 16.8% and 26.7% year over year, respectively.

Nongfu Spring’s ability to grow against the tide is precisely the result of its long-standing refusal to undercut and drive low-price competition, its commitment to channel co-existence and win-win outcomes, and its deep value cultivation across the entire industrial chain to replace scale-based involution.

Strictly control the share of e-commerce, focus on stabilizing profitability offline

In recent years, the low-price chaos on e-commerce platforms has continued to undermine the foundation of the packaged water industry. From extreme “free shipping with orders under RMB 1” price cutting to price inversion where some brands show “a procurement price of RMB 1 per bottle and a terminal selling price of RMB 0.9 per bottle,” the entire industry has fallen into a zero-sum game. To sustain such irrationally low prices, companies can only subsidize distributors through fee rebates, which significantly compresses channel profit margins. Distributors’ confidence is shaken, and the brands’ long-term development momentum is continuously weakened.

From the industry’s typical profitability model, the mainstream price bands for domestic packaged water are concentrated at RMB 1–2 per bottle. Even if we assume a gross margin of 60% for leading companies, the gross profit per bottle for a standard 550ml specification is only RMB 0.6–1.2. After deducting rigid costs across the entire value chain—such as water source development, PET packaging materials, manufacturing, trunk-line transportation, channel distribution, and brand marketing—the final net profit per bottle is only RMB 0.2–0.44. Profitability therefore depends on massive volume for total earnings. This extremely fragile profitability structure is highly dependent on scale effects and channel efficiency, making it hard to withstand the sustained impact of price wars.

A report by NielsenIQ, “Dissecting New Momentum for Growth in China’s Beverage Industry,” shows that in 2025 the overall growth rate of the fast-moving consumer goods industry was 4.8% for the full year. Meanwhile, according to Euromonitor data, in the same year China’s packaged water market (excluding large-pack sizes of 8L and above) had a market size of approximately RMB 224.231 billion, growing by only 3% year over year—significantly below the industry overall—reflecting the inefficiency of a “trading volume for margin by cutting prices” model.

Against this backdrop, Nongfu Spring takes the opposite approach and explores a sustainable path to development.

As early as the beginning of 2015, when Nongfu Spring first entered the e-commerce domain, it set the principle of strictly controlling the scale of e-commerce channels. Over the years, the company has kept its e-commerce sales share at around 5%, devoting more effort to the deep cultivation and maintenance of offline channels. In 2025, the company, from top to bottom, consistently managed and controlled price-cutting behavior on online platforms, avoiding participation in involution-style price undercutting and effectively stabilizing the overall profit level. The company’s gross profit for the full year reached RMB 31.808 billion, up 27.7% year over year; gross margin increased by 2.4 percentage points against the trend, reaching 60.5%.

The financial report clearly states that by managing and controlling the sales share through e-commerce channels, the company effectively stabilized the pricing order within the distributor system, ensuring stable profitability of the distribution network and the healthy development of the Group.

Behind this strategy is Nongfu Spring’s profound understanding of business fundamentals: brands and channels are a community of shared interests and win-win outcomes, and this is a concrete reflection of its business philosophy of “a bit more stability, a bit slower pace, and a bit farther vision.”

Earlier, some media outlets analyzed the profit allocation structure of Nongfu Spring’s classic red-bottle water: for a bottle of natural water with a retail price of RMB 2, the ex-factory price is RMB 0.7; after deducting logistics and taxes, Nongfu Spring’s net income per bottle is RMB 0.55. Meanwhile, the combined gross profit of distributors and stores totals RMB 1.29, accounting for 64.5% of the retail price. In addition, industry insiders disclosed that Nongfu Spring’s distributor profit level is about 1.5–2 times the industry average.

Ceding the vast majority of profits in the circulation stage in exchange for deep trust from distributors and healthy channel development.

Two key figures in the 2025 financial report also confirm this: first, contract liabilities increased 17.6% year over year, indicating that distributors’ payment intent continues to strengthen; second, the turnover days of trade receivables and bills receivable decreased by 0.7 days to 4.1 days, further improving channel cash collection efficiency.

“I require that (the company’s) e-commerce channel sales revenue (share) cannot exceed 5%. Otherwise, how would those (offline) small shops be supported, and what would small shop owners sell?” Nongfu Spring’s Chairman Zhong Qizheng once said plainly. In his view, the many husband-and-wife corner stores and community convenience stores across the country are China’s economic capillaries, and also the most solid foundation of the real economy.

At the most difficult time for the industry, Nongfu Spring kept countless small shops alive: during the pandemic, even though many offline stores could not operate normally, Nongfu Spring still paid display fees for more than one million retail outlets as usual.

Through continuous and mutual commitment over time, Nongfu Spring has built deep, trust-based ties with its distributors, making the cooperative relationship increasingly close. This is also an important reason why, when Nongfu Spring faced public opinion pressure, distributors chose to firmly support the brand.

Don’t compete on price—compete on value, unlock long-term** growth space**

Co-existence and maintenance of channels is only one part of Nongfu Spring’s value layout across the entire industrial chain. Zhong Qizheng hopes Nongfu Spring will become a vertically oriented company, rooted in the fields—from farmers to consumers—so that all parties participating in the industrial chain can win together.

Therefore, when most companies in the industry are competing on price and chasing scale, Nongfu Spring chooses to compete on value upward and drive innovation, thereby reaping growth returns that can pass through market cycles.

In the core packaged water track, Nongfu Spring has, for more than 20 years, consistently adhered to the model of “building factories at water source locations and bottling at water source locations,” continuously expanding into high-quality natural water resources. In 2025, the company added three new water source locations: Bada Gongshan in Hunan, Longmenshan in Sichuan, and Namcha Barwa Tanggu La Mountain in Tibet. In 2026, it will add the water source at Jiaozi Snow Mountain in Yunnan. The company has now built a nationwide layout of 16 high-quality water source locations, ensuring the core quality of products from the source.

In terms of beverage innovation, Nongfu Spring, with its commitment to long-termism, has created a first-in-its-kind approach to category subdivision. The most representative example is Eastroc Super Tea. As early as 2011, Nongfu Spring launched its unsweetened tea beverage, Eastroc Super Tea. Even if it was not accepted by the market in the beginning, it never sacrificed quality or sold at a discounted price; it eventually led the trend of unsweetened tea in China, becoming a super single-product with annual revenue exceeding RMB 10 billion. In 2025, Eastroc Super Tea continued to introduce new offerings and launched two new flavors—“tangerine peel white tea” and “chrysanthemum puer”—to precisely meet consumers’ diverse needs.

In the upstream industrial chain, Nongfu Spring upholds the win-win philosophy to promote industrial upgrading and increase farmers’ income: in Pu’er, Yunnan, faced with local tea farmers’ predicament of “begging with a golden rice bowl in hand,” Nongfu Spring proactively raised the purchase price for fresh tea leaves. The price difference alone enabled local tea farmers to increase their annual income by RMB 4 million. The company also donated to build a modernized tea leaf primary processing plant and dispatched technical personnel to guide standardized cultivation, deeply transforming the local tea industry chain. In Ganzhou, Jiangxi, for 10 years running, Nongfu Spring has purchased navel oranges at prices higher than the market price, helping more than 4,000 fruit farmers in the area get rich.

These initiatives not only drove local farmers’ income growth and regional industrial upgrading, but also ensured, from the source, a stable supply of high-quality raw materials for Nongfu Spring, building a supply-chain moat that is difficult for the brand to replicate. This model does not engage in low-price zero-sum competition; instead, it drives win-win outcomes across the entire industrial chain, allowing Nongfu Spring to truly take root in the industry and the land. It also provides a replicable template for China’s agricultural industrialization and for the transformation of the fast-moving consumer goods industry.

Looking across all consumer brands worldwide that have managed to pass through cycles, none has ever reached the end by relying on low-price involution. Brands like Apple and Dyson have enjoyed long-term success not because of low prices, but because of irreplaceable product value and brand strength.

What China’s fast-moving consumer goods industry lacks is never low-priced products, but long-term-oriented players who can uphold quality and drive win-win outcomes across the entire industrial chain. Nongfu Spring’s growth against the tide proves that refusing low-price involution is not giving up on growth; it is choosing a healthier, more long-term path to growth. Sticking to offline channels is not resisting changes in the times; it is safeguarding the foundation of the real economy and protecting the economy’s capillaries in China. Through more than two decades of practice, it has written the most straightforward answer to long-termism for China’s fast-moving consumer goods sector: the essence of business is never extraction, but win-win outcomes; the foundation of a brand is never traffic, but value.