China Food

Just now, the IPO market value of Nongfu mountain spring exceeded HK $445.2 billion! Guess how the interior celebrates today?

Just now, farmer Shanquan, who is more than 20 years old, has ushered in the “shining moment of life”. Today, Nongfu spring was listed in Hong Kong with an opening price of HK $38.3, up 78.14%, with a total market value of HK $445.29 billion.


Interestingly, even at the historic moment of listing, Nongfu Shanquan did not appear the happy picture of senior executives ringing the clock like most companies. If you are familiar with Zhong Fu, the boss of Shanquan, who is known as the “lone wolf”, this arrangement may not be so unexpected.


Xiaoshidai learned from Nongfu mountain spring that the bell ringing was not arranged. In addition to the fact that the team of the company affected by the epidemic did not arrive in Hong Kong, what’s more, Zhong did not plan to ring the bell, and even the whole company did not arrange any celebration activities.


Now that Nongfu Shanquan is in the spotlight and its founder, Zhong Hu, has become a popular candidate for China’s new richest man, let’s try to have a second look: what did Zhong Fu and his Nongfu Shanquan do right?

Zhongfu, founder of Nongfu mountain spring

“The biggest moat”


If we want to talk about the core competitiveness of Nongfu mountain spring, we can’t do without the water source of its natural drinking spring. And this has been in place since 20 years ago.


According to reports, Nongfu mountain spring announced in 2000 that it would stop producing pure water and replace it with natural water. That is to say, Nongfu mountain spring has to go to the deep mountains and forests to find water source, build factories around the water source and complete the filling. At that time, many people in the industry believed that the resulting high transportation costs might become the straw for “bending” the farmer’s spring.


However, what was expected did not happen. “In the first decade, the company did bear the storage and transportation costs far higher than the industry average. But never thought about giving up. We have reduced the management cost and gradually balanced the freight through fine and brand operation. ” Nongfu mountain spring deputy general manager Zhou Li said today.


Later, these water sources even saved money for Nongfu Spring Festival. According to the post hearing data set of Nongfu Shanquan, the company has 10 water sources in the country, which not only covers the national market supply, but also effectively shortens the transportation radius, which helps to reduce the time for products to be transported from the production line to the shelf, controls the logistics expenses and ensures the profit level.


This also helped to create Nongfu mountain spring drinking water gross profit to lead the industry. According to the above documents, the gross profit rate of Nongfu mountain spring packaged drinking water is 60.2% in 2019, which is also the highest gross profit margin category of the company.


“The insistence in those years has made the layout of natural water source the largest moat in Nongfu mountain spring. This is a competitive advantage that no competitor can shake in the short term. ” Zhou Li (please confirm) said.

Zhou Li, deputy general manager of Nongfu Shanquan

Next, Nongfu mountain spring will continue to expand the advantages of water source.


After looking at the company’s listing hearing data set, it was noted that the key plants in the Nongfu spring project were all located in existing water sources, and they were expected to be completed in 2022-2023. “We continue to look for new high quality water sources to lay the foundation for future business development.”.

Nongfu Shanquan previously said that about 20% of the proceeds from the listing will be used to increase the capacity of existing production facilities and build new production facilities. However, due to the limited water sources suitable for drinking water business, coupled with the competition from many peers, it is more difficult to obtain water sources in the future. In addition, more and more enterprises continue to lay out mineral water to achieve product differentiation advantages and promote high-end. All these will bring challenges to Nongfu spring in the future.

“Fast” and “slow”


In a long period of time, every time Nongfu Shanquan introduces any new products, it will cause great concern of the whole beverage industry. However, compared with many beverage peers, the speed of Nongfu spring entering new categories is not fast.


After the company launched its first natural drinking water in 1997, the company launched its first fruit juice drink, farmer orchard, six years later. After that, it successively launched the first functional beverage products such as “scream”, “water soluble C100”, “Lidi vitamin water”, sugar free tea beverage “Oriental leaves”, 17.5 ° brand orange, Nongfu mountain spring natural mineral water, “tea π” and “tanhe series”, etc., which lasted six years and one year respectively.

However, in fact, Nongfu Shanquan produces more than 20 new products every year, but only a few of them have passed the evaluation and come into the market.


So, how does Nongfu spring plan and select new products? According to the company, they mainly look at whether the natural and healthy dimensions have obvious advantages over competing products, and the company will choose to continue to improve rather than blindly go public.


A typical example is that Nongfu Shanquan has spent eight years learning to manage the planting and management of orange trees in Gannan before the official launch of the 17.5 ° orange fresh fruit brand.

However, the company sometimes seems to move surprisingly fast.


For example, Oriental leaves, which have been sold for 10 years, as a sugar free tea drink, once became “net red” because of the controversy over its taste, and was said to have been “born” for at least five years.


According to Nongfu Shanquan, “fast” and “slow” exist at the same time, but there may be two words behind them: persistence. This is in contrast to many domestic drinks that have been delisted after only one year.


R & D investment


Nongfu Shanquan’s share offer states that about 25% of the proceeds from the IPO will be used for brand building. No doubt, relying on the media background of the founder, another advantage of the company is marketing, which has been repeatedly verified from the “water race” planned in the early years to the sentimental advertising film in the later stage.

However, Nongfu Shanquan’s investment in the research and development of beverage products may be ignored by the outside world.


“We hope to produce not only tangible products, but also intangible products – knowledge,” Zhong said in a public speech. There must be an equal proportion between the speed of knowledge production and the speed of talent gathering. “


According to Nongfu Shanquan’s post hearing data set, as of May 31, 2020, there were 106 technicians involved in product R & D, of which 62 had master’s degree or above. By the end of 2017, 2018 and 2019, and the five months ending May 31, 2020, the R & D expenditure of Nongfu mountain spring was 47 million yuan (RMB, the same below), 107 million yuan, 115 million yuan and 60 million yuan respectively.

For the sake of the scientific research team, Zhong even gave up his office. It is understood that in the park where Nongfu mountain spring headquarters is located, building 1 was originally the location of Zhong’s office. But he believes that “1” stands for leading, and leading the company must be knowledge, technology and talents. Therefore, he gave the best and most beautiful building in the whole park to the Research Institute.


For Nongfu Shanquan’s research team, Zhong also has his own special requirements. It is reported that he often told researchers that he would not require the project to have a clear commercial output, but hoped that researchers would explore and understand the future in a spirit of freedom. Because if researchers think about business all day long, the spirit of freedom is gone.


Interestingly, a person close to Zhong Li claimed that his favorite collection is the Ceramic Statue of Don Quixote on his desk: an art based on the characters who yearn for freedom and ideals.

Nongfu mountain spring has an internal flavor, doesn’t it?


A kind of

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