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source | deepblue finance

written by | wu ruixin

at the end of august, nongfu spring finally announced its first half performance. the data was a bit unexpected, but it made sense if you think about it carefully.

the financial report shows thatnongfu spring achieved revenue of 22.173 billion yuan in the first half of the year, an increase of 8.4% year-on-year, and net profit of 6.24 billion yuan, an increase of 8% year-on-yearamong them, riding on the popularity of sugar-free tea drinks,tea products represented by oriental leaves saw the strongest growth, up 59.5% year-on-year. revenue from tea beverage productsthe proportion of total revenue also reached 38%., it seems to have completely become the second growth curve of nongfu spring.

however, despite the gratifying performance, nongfu spring's mainstay business, packaged drinking water products, performed below expectations compared with the same period.nongfu spring's packaged drinking water products fell by 18.3% year-on-year, which is really jaw-dropping.

however, this is also expected. after all, nongfu spring has been affected by online rumors since the end of february this year. even until now, online rumors are still continuing.

in the past, online rumors had limited impact, but now this new type of online violence has become extremely powerful with the dual blessing of algorithms and traffic. it has not only targeted zhong shanshan personally but also spread from online rumors to offline boycotts of consumption. it has lasted for a long time and has far-reaching impacts. it is a serious hidden danger and threat to the normal operation of private enterprises.

1

the tea beverage business is far ahead.

bottled water hit by online rumors

first, let's take a look at nongfu spring's half-year performance. it has to be said that against the backdrop of economic downturn and consumption downgrade, nongfu spring's revenue and net profit still achieved growth of more than 8%, which is really not easy.

in terms of product types, the tea beverage sector, which is the second growth curve, performed particularly well. according to the financial report, in the first half of this year, nongfu spring's tea beverage products achieved revenue of 8.43 billion, a year-on-year increase of 59.5%, continuing to maintain high growth.

the rapid growth of tea beverages is mainly due to the higher sales of sugar-free tea drink oriental leaves.

as the first domestic beverage brand to propose the "five zeros", oriental leaves, which has been deeply involved in the market for 13 years, has now become the "top stream" of sugar-free tea drinks. this is a natural thing. however, when it was first listed, oriental leaves was not understood and accepted by the market because its concept was too advanced. according to zhong shanshan in the "dialogue" program, oriental leaves was losing money in the first six years after its listing, and it was not until the eighth year that it finally accumulated a slight surplus.

what does this mean? nowadays, with new consumer brands emerging one after another, many internet celebrity products have not survived more than six years from birth, explosion, to demise. however, nongfu spring has never given up and insisted on making sugar-free tea drinks even though oriental leaves has suffered losses for six consecutive years, and finally waited for the explosion of the sugar-free tea trend.

with the consumption trend of sugar-free tea drinks, nongfu spring's tea drinks revenue has skyrocketed in the past three years. from 2021 to 2023, the revenue will be 4.579 billion, 6.906 billion, and 12.659 billion respectively.the year-on-year growth rate has exceeded 50% for three consecutive years. among them, the growth rate in 2023 is close to 90%.。

andin the first half of this year, when nongfu spring was suffering from online violence, oriental leaves was still "going crazy".according to nielsen data, in the first half of this year,oriental leaves’ sales increased by more than 90% year-on-year.among them, the first batch of 50,000 boxes of the limited-edition "longjing new tea" launched by oriental leaves in march sold out online 17 hours after it was released. the second batch was even sold out in just one hour.

however, compared with the strong performance of the "second growth curve", the main packaged drinking water products showed a year-on-year decline.

the interim report data shows that in the first half of this year,nongfu spring's packaged drinking water products achieved revenue of 8.531 billion yuan, down 18.3% year-on-year, and 1.911 billion yuan less than the 10.442 billion yuan in the same period last year.

nongfu spring disclosed in its interim report that the sales of packaged drinking water performed well in january and february this year, with sales revenue increasing by 19% compared with the same period last year. however, these two months are the "off-season" for packaged drinking water sales. in other words, the sharp decline in sales mainly occurred after february.

i believe everyone knows the reason. since the end of february this year, nongfu spring has suffered an unexpected disaster. not only has the founder zhong shanshan been caught up in online violence, but nongfu spring has also suffered a heavy blow. not only has the brand image and product quality been questioned, but online violence has also spread from online to offline. many physical stores and consumers have boycotted and purchased nongfu spring due to unfounded online rumors.

although we know that this unprovoked disaster will definitely affect the sales of nongfu spring packaged drinking water, the decline is still shocking. you know, in the same period last year, nongfu spring's drinking water product revenue increased by 11.7% year-on-year. the last time nongfu spring's drinking water sales declined was in 2020 when the epidemic just broke out.

it can be seen that cyber violence is very harmful to private enterprises.

how much has it lost? according to nongfu spring, since march this year, its growth has been hit hard by online violence.from january to june this year, nongfu spring lost more than 7 billion in sales revenue due to cyber violence.

2

not only nongfu spring, the entire water market has been hit

nongfu spring has not taken any action in response to the various rumors on the internet.

on may 20, nongfu spring clarified 20 online rumors and reported them to the police. the cyberspace administration of china also closed or banned a number of accounts that defamed nongfu spring and other companies. it even received strong support from the official media. in august this year, nongfu spring founder zhong shanshan accepted an exclusive interview with cctv's "dialogue" program, made a public appearance and spoke out, and responded to all online rumors candidly.

but even so, the rumors about nongfu spring have not stopped to this day.

with the help of algorithms and traffic, online rumors targeting private enterprises are more powerful and lasting than people imagine, and they also have a tendency to spread to the entire industry.

looking back at the 20 rumors that nongfu spring has clarified, there are some targeting the founder zhong shanshan personally, and some targeting nongfu spring products and enterprises. among them, there are 16 rumors targeting nongfu spring, and 6 of them are rumors about nongfu spring’s water quality problems, such as nongfu spring’s water source is polluted, the standard is not as good as tap water, it uses low-quality reservoir surface water, it transports japanese nuclear waste/wastewater, and there are insect eggs in the water.it not only affected nongfu spring, but also made consumers question the packaged drinking water industry, bringing a devastating blow to the entire industry.

according to nielsen data,from january to june 2024, my country's drinking water sales increased by about 4.0% year-on-year, while a year ago, the figure was 7.4%. it has almost halved.

as we all know, nongfu spring is the leading company in the domestic packaged drinking water market, and has ranked first in the market share of china's packaged drinking water industry for nine consecutive years. taking the data from 2022 as an example, data from the china business industry research institute shows that in china's packaged drinking water market share, nongfu spring accounts for 26.4%, and china resources yili accounts for 20.9%. baishuishan, master kong, and ice dew account for 9.6%, 9.3%, and 8.8%, respectively. it can be seen that although nongfu spring has a high market share, it has not been able to halve the industry's growth rate by its own efforts.

this also shows that this online rumor has spread from nongfu spring and has affected the entire drinking water market.

in this cyberbullying, nongfu spring alone lost more than 7 billion in sales revenue in the first half of this year. if the data from july and august are added, the loss may be even higher.

if even the industry leader can’t handle it, how many other innocent companies in the industry can withstand the huge losses caused by online rumors?

on the other hand, since the beginning of this year, purified water has been caught in a price war, with the price of purified water falling below 1 yuan. such low-quality and unhealthy competition has become an internal friction in the industry, which is absolutely not good for the entire purified water market.

3

conclusion:

nongfu spring is not the first case of cyber violence against private enterprises, and it will definitely not be the last.

the nongfu spring incident also sounded a wake-up call to the drinking water industry and the entire consumer industry: the harm caused by online rumors to companies cannot be underestimated.

even an industry-leading listed company like nongfu spring will inevitably suffer a major blow when faced with online violence. what should other private enterprises do when faced with online rumors?

obviously, the vigilance and efforts of enterprises alone are not enough, and joint efforts are also needed from major internet platforms and relevant departments to protect private enterprises from the harm of online rumors, prevent online violence from spreading offline, and provide a healthy market economy environment for private enterprises.