Zhongtai Securities: Bottled Water Industry Shifts to Value Competition, Leading Brands Gain Edge with Product Matrix and Responsiveness

Stock News12-07 07:56

The bottled water industry is transitioning from price wars to value-driven competition as consumer demand for product quality and scenario-specific offerings grows, according to a research report by Zhongtai Securities. With market segmentation accelerating, leading brands like NONGFU SPRING (09633) are expected to capitalize on their comprehensive product portfolios and agile market response capabilities.

Zhongtai Securities highlights that competition over water sources will become a critical factor, benefiting regional players with geographic advantages. Companies like Quanyangquan (600189.SH), which leverage high-quality local water sources, may gain traction in niche markets.

**Key Insights from 2025:** - China’s bottled water market (excluding bulk packaging above 8L) reached RMB224.23 billion, up 3% YoY, with intensified multi-dimensional value competition. - NONGFU SPRING led with a 33% market share, while Wahaha rose 2% to second place. Regional brands like Quanyangquan saw 13.86% revenue growth, aided by strong distribution networks and localized strategies. - Price indices dipped during peak season as PET costs declined, enabling competitive pricing. However, premium water segments grew 42% YoY, driven by health-conscious demand.

**Channel Dynamics:** - Specialty channels (e.g., airlines) surged 13.8% in GMV, while modern retail channels fell 14.2%. Quanyangquan expanded via partnerships like China Southern Airlines’ in-flight water supply.

**2026 Outlook:** - **Value Over Price:** Consumers prioritize health benefits (71.37% seek functional enhancements) and taste (60.39% prefer natural flavors), reinforcing premiumization trends. - **Scenario Diversification:** Packaging innovation for fragmented usage occasions (e.g., fitness, travel) will unlock growth beyond commoditized demand. - **Resource-Centric Competition:** Water source ownership will outweigh production scale, reshaping industry dynamics.

**Investment Strategy:** Focus on leaders like NONGFU SPRING for their scalability and regional specialists like Quanyangquan for resource advantages.

**Risks:** Macroeconomic volatility, supply chain disruptions, and slower-than-expected channel reforms.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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