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What Behind Nongfu Spring’s Success Is the New Idea for the Development of Multi-industry Chain

01-18

 

Brand represents a fundamental strategy for the long-term development of enterprises and non-profit organizations in market competition. China's first-tier enterprises urgently need to guide their brand construction with positioning theory so as to build up competitive advantages. Nongfu Spring, with 25 years of deep and firm roots in the beverage industry, has established itself as a leading giant with large-scale, growth and profitability in the Chinese market. From 2012 to 2019, it has maintained the first market share of packaged drinking water in China for eight consecutive years.

Currently the sales volume of Nongfu Spring is much higher than that of the industry average and the second place player. In the packaged drinking water segments, natural water with the fastest growing rate stands as the key product of Nongfu Spring. Nongfu Spring moves steadily to build competitive barriers and form long-term and stable competitive advantages by controlling the lifeline of water sources and distributing ten high-quality water sources prospectively. Beyond that, Nongfu spring also establishes production bases adjacent to water sources to ensure long-term supply capacity. Nongfu Spring holds that water enterprises with a high entry threshold require capital investment topping hundreds of millions of yuan. And it takes time to obtain mining license, water intake license and third-party water supply agreement. Those who can take control of the lifeline of water sources will gain a first mover competitive advantage. Obviously Nongfu Spring's prediction turns to be right. In the following decades, Nongfu Spring has taken a chunky share of the drinking water market by making good use of water source advantage and adhering to the "natural and healthy" concept.

Aside from drinking water, Nongfu Spring has been working hard to expand its beverage layout. It undertook a slew of new product launches from 2003 to 2019. Tea drinks, functional beverages and fruit juice drinks stand as its three main product categories at the moment. Beyond that, there is coffee, soda water and more. Among its product offerings, Tea π and Oriental Leaf grow well. Currently beverage has become the second growth curve of the company, the multi SKU business model effectively reduces the fluctuation risk of the company performance, and the crisscrossing and permeating channels enhance the market competitiveness. The company places great value on tea beverage category at the moment, which is second only to packaged water. There is still space for improvement in the market share of sugar-containing tea drinks with a scale of around 600 million yuan. Oriental Leaf in the sugar free sector has both brand power and product strength, empowering the company to go further in this subdivided aisle.

Nongfu Spring also attaches particular importance to intellectual property rights while creating various brands. Nongfu Spring Co., Ltd. has submitted thousands of trademark applications up to now. Its wide-ranging trademark registrations aim to facilitate the layout of whole industrial chain as well as build up its defensive mark so as to effectively defense copycat and reduce trademark infringement disputes. Moreover, Nongfu Spring owns more than 300 patents, with design patents taking the largest proportion. It has relevant patents for invention publication, utility model and invention authorization, and makes the list of the China's 21st Patent Award published in 2020.

The brand development of Nongfu Spring and its intellectual property layout are actually an epitome of the transformation and upgrading of Chinese enterprises. Driven by consumption upgrading, Chinese enterprises are going through a transition from chasing for quantity to striving for quality. As a part of them, Nongfu Spring has built a knowledge moat through strong channel network and marketing innovation ability. Its platform business feature will become increasingly obvious as it is making constant efforts to improve the product matrix and channels.

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