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Will Nongfu Spring Be Hurt By the Rumor?
Will Nongfu Spring Be Hurt By the Rumor?

Recently, Nongfu Spring, a major giant in the industry, is under pressure. Although it is the most powerful company in the market, it still faces the threat of 'death by a thousand cuts.’ To confront the intensive attacks from 'Social Media Marketers,' traditional enterprises must learn how to assess the impact of social media events reasonably and take rapid and effective countermeasures to minimize the damage.

After the industry entered the mature stage, the beverage giant could not secure its position by simply relying on its distribution networks. Once consumers have been influenced by the rumor, they may become irrational and demonstrate 'emotions' through their purchasing behavior. We will explore the impacts of this 'Social Media Trap' on the Nongfu Spring brand, specifically through its performance on e-commerce platforms in recent days

Sandalwood China Online data shows, that in 2023, drinking water was the major category of Nongfu Spring, and tea beverages as the second-largest category increased its value share from 15% in 2022 to 26% in 2023. In March 2024, the online sales of the non-alcoholic beverage(4EC), Nongfu Spring's overall market share decreased by 40% compared to the previous year, with the main brand Nongfu Spring suffered the most.

Since 2021, Nongfu Spring has consistently held over 20% of the e-commerce market share, often rising to 30% during major promotions. In January and February of 2024, its cumulative share remained at 27%. However, with the escalation of public opinion events, the share fell sharply to 18% in the first week of March, mainly by Wahaha, Baiushiyama, Watsons, Yineng and other brands.

Apart from its main brand, Nongfu Spring's other brands have also been significantly impacted. In the tea beverage sector, Dongfangshuye has shown strong sales momentum since 2023, surpassing Suntory in June to become the market leader and maintaining its top position in the following months. In January and February, its online value share remained at approximately 18%. However, in the first week of March, it dropped to 10%, losing its top position and falling behind Suntory and Uni-President, ranking third. Tea Π products also experienced a decline in sales, but with a smaller base, the impact was limited.

Although a one-week sales decline in the e-commerce channel is not likely to cause any concern for Nongfu Spring, the adage 'small leaks sink great ships' suggests that the company should pay attention to this matter. Nongfu Spring, like a dancing giant, faces the question of whether it can manage the risk arising from this challenge and demonstrate its indomitable spirit. The market and consumers are waiting for the answer. Sandalwood will continue to monitor consumer trends and provide timely feedback on market dynamics.

Disclaimer: The content and viewpoints expressed in this article are for reference purposes only and should not be construed as investment advice or recommendations. very investor should conduct thorough independent research and consult with professional investment advisors before making any investment decisions.
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