China’s beverage market is vast but also fiercely contested, particularly when it comes to bottled water that’s peddled in virtually every convenience store, eatery and supermarket across the country. China Resources Beverage (Holdings) Co. Ltd. (2460.HK) is a leading player in that space, providing a new investment alternative when it listed in Hong Kong last year alongside industry leader Nongfu Spring (9633.HK). But Nongfu, known for its aggressive tactics, hardly sat by idly in the face of such a challenge, and responded with its own strategic countermeasures to stop this upstart rival in its tracks.
Nearly a year and plenty of twists and turns later, midyear results from both companies are casting Nongfu as the early victor in the battle for supremacy of China’s bottled water market. Nongfu reported its revenue jumped 15.6% to 25.6 billion yuan ($3.59 million) in the first half of this year, while its profit grew 22% year-over-year to 7.62 billion yuan. China Resources Beverage, also known as CR Beverage, moved in the other direction, reporting its revenue slid 18.5% to 6.21 billion yuan during the six-month period, as its profit fell 29% to 805 million yuan.
Nongfu’s water category commanded 9.44 billion yuan in sales in the first half of the year — up 10.7% — while the segment’s profit jumped 42.8% to 3.35 billion yuan. By comparison, CR Beverage’s core packaged water revenue sank 23% to 5.25 billion yuan.