China Consumer

The politics of water

Why a brand of Tibetan mineral water outsells the competition

The politics of water

‘It’s from a glacier – it’s classier’

The Repulse Bay, a luxury residential project on the southern shores of Hong Kong Island, was designed with a large hole through its centre. The intention is to facilitate a symbolic flow of water from a nearby beach through the structure. In feng shui terms, water brings money.

One company in Tibet has been particularly successful in turning water flow into a lucrative business. Located in Damxung, about three hours from Lhasa, 5,100 Mineral Water is now China’s largest mineral water producer. Its name comes from the altitude of the glacier that feeds its factory, 5,100 metres (16,700 feet) above sea level.

5,100 is also the only Chinese water bottler competing in the high-end segment against foreign labels like Evian and Perrier. At Rmb10 ($1.5) a bottle, it’s priced three times higher than domestic competitors and only slightly lower than that of the foreign brands. But the high price doesn’t seem to have deterred consumers. The bottler now produces more than 300,000 tonnes of bottled water a year, compared with only 50,000 tonnes in 2008.

So how does 5,100 manage to pass as a high-end product? For a start, it has been marketed cleverly as the purest, most nutritious beverage on earth (water derived from a 70 million-year-old glacier, the company claims, which then percolates underground for eight years, before being tapped for its mineral richness). That seems to have struck a chord with health conscious Chinese.

More importantly, the bottler knows how to make its water seem more prestigious. Last year the company struck a deal with Air China to serve 5,100 bottles to passengers in first and business class cabins, and it is also the official drink at many high-profile political events, including this week’s National People’s Congress and CPPCC. Delegates attending these meetings are often photographed taking sips from bottles with 5,100 labels. No doubt, such product placement was made possible by the fact that the powerful Central Party School (see WiC33) is a major shareholder of the bottler.

5,100 also plays on the patriotic heartstrings, making the case that buying its water bolsters economic development in Tibet. There’s some truth to that: 5,100 is now the autonomous region’s fastest-growing export, and almost all of the company’s workers are Tibetans.

Local investment continues; last year 5,100 spent Rmb500 million ($76 million) to set up a bigger bottling factory in Damxung, a grassy plateau, to collect further glacial runoff.

With success, of course, comes competition. Several other water bottlers are now keen to compete in the high-end segment. Kulun Mountains Natural Mineral Water promises its own water, sourced from Qinghai province, helps boost energy. Guangzhou Xinchen Water is promoting its 9,000 Years Dagu Glacier Spring Water (clever that, a bigger number than 5,100 metres) is the best choice because of the age of its Sichuan source.

“The capacity of China’s premium drinking water market will surpass Rmb10 billion in the next five years with an expansion rate of 80% each year,” Xiao Mingchao, deputy general manager of Sinomonitor, a Beijing-based market research firm, told the China Daily.

If Tibet does becomes a mineral water exporting giant, it owes a debt of gratitude to the Qinghai Tibet Railway. Before the opening of the new line, similar exports were commercially unfeasible because of the high transportation costs. Yu Yiping, chairman of Tibet Glacier Water, the parent company of 5,100, admits it has been the single biggest beneficiary of the new railway.

The railway has been kind elsewhere too. The company recently signed an exclusive deal with the Ministry of Railways to supply water on the country’s high-speed trains. Analysts reckon that will meet more than half of 5,100’s annual sales target, says 21CN Business Herald.

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