52.5 billion in revenue, 15.8 billion in net profit attributable to the parent company: Nongfu Spring, which does not engage in price wars, has reshaped the growth paradigm of the beverage industry.

Ask AI · How can channel controls that refuse price wars improve profitability?

Source: Times Weekly (时代周报) Author: Zhang Yijing

Against the backdrop of China’s beverage industry entering stock-based competition and the intensification of price-war “price-cutting” in-house, Nongfu Spring (09633.HK) has turned in an annual performance report that surged against the trend.

On March 24, Nongfu Spring released its 2025 annual financial report. For the full year, total revenue reached RMB 52.55B, up 22.5% year over year, marking the first time it has surpassed the RMB 50 billion scale threshold. Net profit attributable to shareholders was RMB 15.87B, up 30.9% year over year; profit growth outpaced revenue growth, and the quality of profitability has continued to lead the domestic beverage industry.

Notably, Nongfu Spring’s growth against the trend did neither rely on a brutal price war nor on short-term channel destocking stimulation. Instead, it stems from its distinctive “water + beverages” dual-engine development framework, along with its long-term commitment to the channel pricing system.

In today’s industry-wide context where “growing volume by cutting prices” is treated as the core growth path, Nongfu Spring not only presents a sustainable development route that balances both scale and profitability, and reconciles near-term growth with long-term value—but also offers a breakthrough template that is referable and implementable for peers trapped in stock-based competition dilemmas.

In the secondary market, this impressive performance report has also sparked strong investor attention. On March 25, after the stock opened nearly 6% higher in the morning, it kept climbing. By the close of trading that day, the company’s share price was HKD 46.42 per share, up 9.38% from the previous trading day, with a total market capitalization of about HKD 522.1 billion.

“Water + beverages” dual engines solidify the base to get through the cycle

As Nongfu Spring’s “keel” supporting its performance, its drinking water business, after experiencing a phase of public-opinion turbulence in 2024, has already resumed growth. The financial report shows that in 2025, the company’s drinking water business grew 17.3% year over year, remaining firmly at the No. 1 position in China’s packaged drinking water market share.

Behind this stable performance is Nongfu Spring’s decades-long, heavy-asset deployment. For a long time, Nongfu Spring has adhered to a production model of “building plants at water source sites and bottling at water source sites.” In 2025, the company added three new high-quality water source regions—Hunan’s Bafeng Gongsan, Sichuan’s Longmen Mountain, and Tibet’s Nianqing Tangula Mountains—and in 2026 added the Yunnan Jiaozi Snow Mountain water source region.

As of now, Nongfu Spring has completed a national rollout of 16 high-quality water source locations across the country. At the same time, the company has laid out a comprehensive water-conveyance system and production network nationwide. Even with an average transportation radius of 500 kilometers per plant, it still achieves continuous optimization of supply efficiency and cost control through scaled, grid-based deployment.

In fact, while this heavy-asset model requires substantial upfront investment and has a long payback cycle, once it forms a nationwide network, it will create cost advantages and supply stability that are hard to replicate. In periods of structural adjustment as industry price competition intensifies and raw material prices fluctuate, this kind of certainty becomes precisely the core confidence for the company to get through the cycle.

If the drinking water business solves the “stability” of performance, then the company’s diversified beverage matrix completely unlocks the “ceiling” on Nongfu Spring’s growth. The 2025 financial report shows that in the tea beverage segment, Nongfu Spring’s revenue grew 29% year over year, breaking through the RMB 20 billion mark in one step. Functional beverages and juice beverages also recorded double-digit growth of 16.8% and 26.7% respectively. With multiple categories advancing together, they became the core engines driving the company’s performance growth.

The explosive growth in the beverage business is not short-term speculation chasing trends, but the realization of Nongfu Spring’s long years of “slow innovation.” Taking Oriental Leaf, a leader in the sugar-free tea segment, as an example: the product was launched as early as 2011. At that time, in a market dominated by sugar-containing beverages, it was not a mainstream category. Yet Nongfu Spring has always stuck to a long-term layout in the sugar-free tea track, patiently waiting for consumer habits to mature. Now, as the “healthy with less sugar” consumption philosophy has deeply taken root, sugar-free tea has become one of the fastest-growing subcategories in China’s beverage industry. Oriental Leaf—positioned more than a decade in advance—has also experienced explosive growth, becoming a classic case of long-termism in the industry.

According to research data from the third-party platform “Mainingying (马上赢),” from December 2024 to November 2025, Nongfu Spring remained No. 1 domestically in the ready-to-drink tea and ready-to-drink milk tea markets. Meanwhile, among the top three in this segment, it is also the only company that achieved year-over-year increases in both market share and sales revenue.

Regarding its future planning for the tea beverage business, Zhong Seshan stated in the performance announcement that, going forward, Nongfu Spring will continue to inject support from the real economy into the high-end and localized development of China’s tea beverage market, consolidating its leadership position in the tea beverage market.

Refuse price wars; use channel control to hold the profitability floor

With the beverage industry entering stock-based competition and price wars and subsidy battles coming one after another, Nongfu Spring delivered net profit attributable to shareholders of RMB 8B, with a growth rate of 30.9%. Its profitability can be described as an industry benchmark. All of this is driven by Nongfu Spring’s proactive control over the share of e-commerce channel sales.

In recent years, the e-commerce channel share in China’s retail sector for packaged snacks and beverage drinks has continued to rise, reaching 14.1% in 2025. Because online channels have the nature of direct price comparisons, they often become the concentrated outbreak point for industry price wars. Major brands compete in large promotional events on e-commerce platforms—gaining sales growth through subsidies and ultra-low prices—while also continuously squeezing their own and the channel’s profit margins.

More importantly, persistent low online prices quickly shift consumers’ price anchors and are rapidly transmitted to offline channels, triggering price chaos across all channels. This ultimately weakens distributors’ profitability and undermines the stability of the entire channel system.

Multiple beverage industry distributors told reporters that even an online price war that lasts not too long would lead to a period of terminal price confusion lasting half a month to one month: terminal retail prices become hard to stabilize, buyer-inventory-waiting sentiment increases, purchasing timetables are completely thrown off, and the entire normal sales system is impacted. For an industry leader whose annual revenue has surpassed RMB 50 billion, the cascading effect triggered by a single price war could affect the sales rhythm of RMB 3 billion to RMB 5 billion.

Precisely because it understands how important the pricing system is, Nongfu Spring has always maintained a high degree of restraint toward e-commerce channel price-cut “volatility.”

Previously, Nongfu Spring’s e-commerce sales share had long been kept at around 5%, far below the industry average. In 2025, Nongfu Spring made it consistent across the organization and imposed controls on low-price behavior on online platforms, avoiding participation in involutionary price-cutting pressure. It proactively gave up some of the short-term sales driven by low online prices, and shifted the sales focus more toward offline channels with a more stable price system and smoother brand-value transmission.

Judging from the financial report results, this restraint toward the pricing system ultimately translated into real, tangible improvements in profitability. In 2025, Nongfu Spring’s gross margin increased by 2.4 percentage points from 58.1% in the same period last year to 60.5%, with overall profitability continuing to improve.

On the channel side, industry insiders say that distributors’ profit levels for Nongfu Spring are about 1.5 to 2 times the industry average. This profit space also enables the company’s distribution system to maintain very strong stability. In the context of involutionary industry price wars, many fast-moving consumer goods companies have faced the dilemma of mass distributor losses. In contrast, a stable distribution system has become Nongfu Spring’s most core moat, laying a foundation for the company’s long-term stable development.

It is worth mentioning that in 2026, Nongfu Spring will celebrate the 30th anniversary of its brand. With three decades of deep cultivation in the real economy, this non-involution, long-term focused development resolve is both its core password for surging against the trend and its confidence for getting through industry cycles.