NONGFU SPRING is seeking new avenues for revenue growth.
Recent investment project filings on the official website of the Zhejiang Provincial Government reveal that NONGFU SPRING plans to invest 28.42 million yuan to expand its edible ice production facility in Hangzhou’s Jiande Xinanjiang plant.
Upon completion, the project is expected to achieve an annual production capacity of 7,000 tons of edible ice, with 160g ice cups accounting for 80% of the output.
NONGFU SPRING first tested the waters in 2023 and officially launched the 160g ice cups last year, initially selling them in convenience stores such as Lawson and FamilyMart at a unit price of 3.5 yuan.
Last summer, the ice cup product gained traction in the consumer market as "DIY convenience store drinks" became a viral trend on social media.
This year, NONGFU SPRING has doubled down on its ice cup business.
The company has expanded its reach through promotional bundling, offering ice cups for an additional 1 yuan with juice purchases, and broadened its sales channels to include Sam’s Club. In June, NONGFU SPRING introduced 2kg bags of edible ice at Sam’s Club, sparking discussions due to their 22.8 yuan price tag. Despite the debate, the product quickly sold out, demonstrating strong summer demand for edible ice.
NONGFU SPRING’s edible ice cups differ from homemade ice cubes. Professional ice-making equipment ensures higher purity, transparency, and hygiene, making the cubes more durable and less prone to melting.
While new product categories typically require time to gain market acceptance, edible ice cups have been embraced relatively quickly.
For instance, the company’s Oriental Leaf tea, once dubbed the "worst-tasting beverage" after its 2011 launch, took eight years to become the top-selling sugar-free tea by 2019. In contrast, ice cups went from skepticism to acceptance in under two years.
Social media endorsements have given consumers a reason to buy, while the rapid growth of instant retail platforms has facilitated ice cup sales.
According to a white paper by Oliver Wyman and Meituan Flash Purchase, the ice beverage market in instant retail channels is projected to grow at 39% annually from 2024 to 2026, potentially exceeding 63 billion yuan by 2026.
The aggressive push into ice cups is also seen as NONGFU SPRING’s response to growth pressures.
Since last year, the company’s packaged water revenue has been surpassed by its tea beverage segment, no longer its top-performing business. This trend continues, with packaged water sales reaching 9.44 billion yuan in the first half of this year, up 10.7% year-on-year—below the company’s overall revenue growth of 15.6%.
As one of the most profitable players in the beverage industry, NONGFU SPRING maintains gross margins around 60%, with high-margin products spanning from bottled water to sugar-free tea.
However, ice cups are not the high-margin product they might seem.
While the direct costs for ice cups are minimal—just water and cups—NONGFU SPRING benefits from its water sources and supply chain expertise. Yet, cold-chain logistics remain a potential hidden cost.
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