CR BEVERAGE (02460.HK) and NONGFU SPRING (09633.HK), two companies that started by selling water, are now on starkly different performance trajectories, signaling an end to the era of relying solely on a single major product.
Recently, CR BEVERAGE, the parent company of the "C'estbon" water brand, disclosed its 2025 financial results. During the period, the company's revenue fell 18.63% year-on-year to 11.002 billion yuan, representing a decrease of 2.5 billion yuan compared to the previous year. Net profit attributable to shareholders dropped 39.8% to 985 million yuan.
This marks CR BEVERAGE's first full annual report since going public and the first simultaneous decline in both revenue and net profit since 2021. Due to the weaker-than-expected performance, several major institutions, including Goldman Sachs and CLSA, have downgraded their target prices and earnings guidance for CR BEVERAGE.
In 2025, the overall soft drink industry achieved mid-to-high single-digit growth, outperforming categories like baijiu and beer, with many beverage companies hitting new performance highs.
NONGFU SPRING's full-year revenue grew 22.5% year-on-year to 52.553 billion yuan, surpassing the 50 billion yuan mark for the first time. Dongpeng Beverage, which was once smaller than CR BEVERAGE, saw its revenue exceed 20 billion yuan, increasing 31.8% to 20.875 billion yuan.
CR BEVERAGE's decline against the market trend was primarily influenced by factors including decreased sales of packaged water, increased marketing resource investment, and changes in product mix.
For many years, the market for 2-yuan bottled water was largely shared between the C'estbon and NONGFU SPRING brands, with the former positioned as purified water and the latter as natural water.
The drinking water segment, where C'estbon operates, is the performance pillar for CR BEVERAGE, accounting for nearly 90% of total revenue. However, following the launch of NONGFU SPRING's purified water, C'estbon's sales were impacted. This was exacerbated last year by an escalation in the "1-yuan water price war" and increased channel promotions from competitors like Wahaha and Jinmailang, leading to a significant sales decline.
Financial reports show that CR BEVERAGE's drinking water segment revenue was 9.504 billion yuan last year, a year-on-year decrease of 21.6%. Across different package sizes, small bottles, medium-to-large bottles, and bottled water all faced pressure. The once most competitive small bottle water segment was hit the hardest, with revenue falling 23% year-on-year to 5.396 billion yuan.
When news of CR BEVERAGE's IPO emerged, the market anticipated it would further increase its market share after going public. However, the significant performance decline has starkly exposed the risks of the company's over-reliance on a single business line.
Currently, NONGFU SPRING operates five major business segments. Drinking water has been relegated to its second-largest business, accounting for 35.6% of revenue. The tea beverage segment, which includes products like Oriental Leaf and Tea π, has grown from a "second growth curve" to become the company's largest business, contributing 41% of revenue last year, reflecting a more diversified business structure.
In contrast, while CR BEVERAGE has also ventured into beverage products, its "second growth curve" has not yet materialized. The revenue contribution from these segments remains low and insufficient to offset the sharp decline in its core business.
The company launched 23 new products last year, such as "Cha Ban" and "Ben You," covering categories like tea drinks and functional beverages. It also increased the deployment of offline chilled beverage cabinets. Revenue from its beverage segment grew 7.3% to 1.499 billion yuan last year, but it only accounted for 13.6% of total revenue, failing to provide substantial support.
Gaining consumer acceptance for new products takes time. The company's selling and distribution expenses decreased to 3.779 billion yuan last year, but the selling expense ratio rose from around 30% previously to 34.3%, reflecting issues like low advertising efficiency and declining brand competitiveness. Simultaneously, the rising expense ratio continues to erode the company's profitability.
Earlier this year, CR BEVERAGE adjusted its management team. Former Board Chairman Zhang Weitong stepped down due to work adjustments and was succeeded by Gao Li, a veteran of the "China Resources system" with a financial background.
Gao Li previously held positions at China Resources Enterprise, Ltd. and China Resources Power. He served as CFO of CR BEVERAGE from 2012 to 2020 and became General Manager of the Finance Department of China Resources Group in January 2025. The market believes that appointing a leader with a financial background is conducive to optimizing the company's profit performance.
Regarding its 2026 business plans, CR BEVERAGE stated it will continue to optimize its packaged water product matrix and strengthen the core competitiveness of the "C'estbon" brand. Simultaneously, it will increase investment in non-water beverage businesses, enrich its product portfolio, and reduce reliance on a single business. The company aims to deepen channel reforms, improve efficiency, control costs, alleviate performance pressure, and steer operations back onto a stable track.
Amid a highly complex international market environment, there is a risk of significant price increases for PET, the primary raw material for beverage bottles, this year. This will also test the company's profit management capabilities.
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